The government has injected 30 trillion rials ($111 million) into the Iran National Innovation Fund to strengthen the domestic knowledge-based ecosystem.
Aside from the capital injection, the fund has been granted the legal authority to partner with various sectors of the domestic capital market and support the growth of knowledge-based firms, Tasnim News Agency reported.
INIF is the state’s arm for providing the growing technology ecosystem with financial aid. The government of former president, Hassan Rouhani, established the fund with an initial investment of 30 trillion rials ($111 million). As per the law, the government is required to allocate 0.5% of its annual budget to INIF.
Esfandiar Ekhtiari, chairman of Majlis Research and Technology Commission, said the funding has followed the formation of a “knowledge-based management council” chaired by President Ebrahim Raeisi.
According to Ekhtiari, the council is entrusted with the implementation of a scheme known as "knowledge-based production leap", which is in line with a bill passed by the parliament in support of technology enterprises.
As per the 2010 bill, the government is tasked with extending multidimensional support in the form of financial, legal and technical services to emerging and established tech enterprises.
The official said the objective was to enhance the share of knowledge-based economy in Iran's GDP and lessen the country's dependency on oil-based revenue.
“The upgraded scheme envisions closing legal gaps in the bill and reducing bureaucracy that impedes the tech firms' march toward economic expansion. With the growing number of knowledge-based companies and startups, and the emergence of challenges over the years, a modification of support policies was necessary,” he added.
Ekhtiari noted that the leap scheme and the newly-formed council necessitate some changes in the tasks assigned to state’s executive entities.
“As per the scheme, with the exception of major knowledge-based policies, as per the decision of the High Council for Science, Research and Technology, all affairs related to the field will henceforth be governed by the knowledge-based management council,” he said.
“The council will be shortly joined by several ministers and vice presidents to help formulate support measures for the target community.”
INIF Support
Based on its ongoing plans, INIF is to pay 100 trillion rials ($370 million) in loans to fledgling technology firms via banking system in the current Iranian year (started March 20).
According to the fund’s chief, Ali Vahdat, the amount of allocation has been increasing in recent years, rising from 30 trillion rials ($111 million) in 2019-20 to 50 trillion rials ($185 million) in 2020-21.
This year’s expected amount is 100% higher than the cumulative loans paid out last year.
In an earlier meeting with Bank Saderat Iran CEO Hojjatollah Seydi, Vahdat presented an overview of the fund’s total capital for the current year.
“The National Development Fund of Iran, the sovereign wealth fund, is expected to transfer $200 million to INIF,” Vahdat said.
“The banking system will also assist the institution by continuing to offer help packages to budding tech firms.”
Vahdat noted that Bank Saderat's share would amount to 3 trillion rials ($11 million).
Seydi stated that his bank is ready to extend its share of the loan and hoped that the seed capital will be of assistance to new entrepreneurs and tech companies.
“The bank plans to reduce the loan application process for Tehran-based applicants to seven days and other cities to 30 days, if all necessary documents are submitted with their application,” he added.
To relieve the burden on businesses, Seydi noted that financial aid would be lent without any interest.
Last Year’s Lending
Iran National Innovation Fund is the state’s arm for providing the growing technology ecosystem with financial aid.
In the last Iranian year (ended March 20, 2021), INIF lent 50 trillion rials ($185 million) to knowledge-based businesses.
Vahdat said depending on the scale and field of activity of startups, low-interest loans worth 500 billion rials ($1.85 million) were paid.
“These firms have matured to the point that they know how to invest the money into their development,” he said.
“INIF also held weekend events, during which startups introduced their products and achievements to attract private investors. If they raise 20% of the money they need, the fund will pay the remaining 80%.”
According to Vahdat, the strategy would curb the state’s role in financing the startup ecosystem and help firms become independent of state support.
INIF has hosted 20 such events in the last Iranian year, which linked up 125 startups with 300 investors.
“The fund is turning startup weekends into regular gatherings for tech firms seeking growth. A growing number of tech enthusiasts and talented students are attending these events,” he concluded.
