Bank Melli Iran, the biggest state lender, opened two special branches in Tehran to help fund knowledge-based companies, the CEO said.
Mohammadreza Farzin said Sunday the special branches will help improve the financial clout of knowledge-based companies.
“In addition to providing funds, these branches will provide financial consultancy to knowledge-based companies,” Farzin was quoted as saying by the BMI’s public relations website.
The BMI has been a pioneer in giving loans to knowledge-based economy, he said. “So far 687 companies received 12 trillion rials [$40 million] in loans from the BMI last year [March 2021-22].”
Underscoring the priority to aid knowledge-based firms, he said enterprises involved in this sphere apparently need financial support during inception.
“As these businesses are usually different in nature, they may face risks at their early days and it is at this stage that lenders should step in with financial support and consultancy.”
The specialized branches will employ a variety of tools and funding methods to accommodate the diverse need of knowledge-based companies.
He particularly pointed to the possibility to tap into innovative financing instruments, such as venture capital fund (VC) and Corporate Venture Capital (CVC).
VCF is a form of private equity and a financing instrument that investors provide to startups and small businesses that are believed to have long-term growth potential, or to companies that have grown quickly and appear poised to expand.
Venture capital generally comes from big investors, investment banks and diverse financial institutions. VCFs in Iran largely operate in the fintech, nanotechnology, health and pharmaceutical sectors.
CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise with the aim to gain a specific competitive advantage.
Data from the Vice Presidential Office for Science and Technology in Tehran published in July 2021, showed 6,035 knowledge-based firms were active nationwide.
Such companies seem to be expanding their footprint in the economy. Observers say knowledge-based companies are making a decent contribution to economic growth by increasing added value.
According to the data, total goods and services handled by these companies on average exceed 900 trillion rials ($3 billion) a year. This amount was barely 2 trillion rials ($7.5m) a decade ago.
A knowledge-based economy is a system of consumption and production based on intellectual capital, in which a significant part of the company’s value may consist of intangible assets, mainly the value of its workers’ knowledge (intellectual capital).
While the knowledge economy has largely relied on banks for funds, there are plans to help them find capital via the stock market.
