Governmental entities are prohibited from taking legal action against startups, as per the recent order announced by President Ebrahim Raisi, the Vice Presidency for Legal Affairs.
Information and communications technology activists believe countless complaints filed by authorities have increased the hurdles facing new businesses. The halt in economic activities of startups, as a result of such lawsuits and prolonged judicial procedures, has driven many new businesses into bankruptcy, EBINewscom reported.
Experts assert that the directive preventing executive organizations from filing complaints against new businesses is a highly supportive and effective measure. They also believe that the new law will help address the startup ecosystem's problems at a faster pace.
"The directive was put forward by the previous administration, but it was not welcomed by the authorities who managed to force the government to remove three paragraphs from it," Reza Olfat-Nasab, a board member of the Union of Online Businesses, said.
He noted that the new directive issued by President Raisi, instead of the vice presidency, prevents executive bodies from resisting the implementation of the order, which is a very helpful step for the startup ecosystem.
"The issuance of the directive and the formation of the Digital Economy Working Group indicate that the new government aims to promote the growth of online businesses and startup," he said.
Olfat-Nasab added that the union, as a representative of private sector interest, welcomes the new measure.
Also, Mohammad Jafar Nanakar, Iran Information Technology Organization’s deputy for legal affairs, said he believes that the new directive can help the problems of startup ecosystem.
He added that in case of a dispute between the public and private sector, the issue can be studied by experts as per this directive before banning startups.
“If a license is needed for certain startup activities, it can be issued with the help of the private sector,” he said.
"With regard to stopping the unnecessary blockage of startups and new businesses, the executive bodies are only one side of the story. However, as the government encompasses a large area of legal-judiciary actions and services, this move can help the development of the digital economy."
The number of complaints filed by executive bodies, especially the Ministry of Industries, Mining and Trade, against new businesses through e-symbol has increased. Henceforth, they need to notify the working group related to the directive and the group will consider if it is necessary to block the business.
Usually, the case is resolved in the workgroup and there's no need for filing a lawsuit, according to Reza Ayazi, an ICT legal researcher.
He added that alongside the directive, the government should update the computer crime law, as another necessary step for startup development.
Support for Startups
Government officials have declared the startup ecosystem to be Iran's future business sector because it has the potential of reducing the country's reliance on natural resource sales and boost economic growth.
Over the last few years, government entities have rolled out an increasing number of loan and aid packages to assist the sector's expansion.
According to ISNA, financial assistance was recently extended to startups and technology teams of North Khorasan Province.
As per an agreement signed late last week between the state-backed Iran National Innovation Fund and the provincial research and technology fund, 50 billion rials ($179,468) were allocated to help the region’s startups and tech firms grow.
According to Mehdi Khaleqi, an INIF official, the total worth of aid packages and loans paid to the tech community in North Khorasan did not exceed 7 billion rials ($25,125) in 2019, which has increased to 400 billion rials ($1.44 million) this year.
He emphasized that granting seed money to the nascent technology ecosystem is essential, if they are to boost the local economy and generate jobs.
"Private and state investors should take high investment risks because the country's knowledge-based community has proven to be financially viable enough to recoup the initial outlay," he said.
INIF 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), the fund lent 50 trillion rials ($179.47 million) to knowledge-based businesses.
Ali Vahdat, the CEO of INIF, said depending on the scale and field of activity of startups, low-interest loans worth 500 billion rials ($1.79 million) were paid.
“These firms have matured to the point where they know how to invest 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 needed capital, the fund will pay the remaining 80%.”
According to Vahdat, the strategy would curb the government’s role in financing the startup ecosystem and help firms become more independent of state support.
INIF has hosted 20 such events in the last Iranian year, connecting 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 regular events.
