Iran’s Information Technology Organization, affiliated with the ICT Ministry, has paid 919 billion rials ($3.83 million) in cheap loans to fledgling tech firms in 14 months since January 2019.
Close to 19% of the loans were paid to curb the impact of coronavirus on startups. Loans to establish business-to-business infrastructures accounted for 18% while tech firms offering on-demand services have received another 18% share of the loans, Mehr News Agency reported.
According to ITO, tech units producing modems and smartphones, developing data centers, content developers and data transmission project managers, as well as mobile game and application developers, have received the remaining share of the financial assistance.
The organization reports that the loans have been allocated through ICT Ministry’s Noafarin Fund. Approved by the Cabinet in May 2019, the fund has served as the ministry’s arm for supporting tech firms.
The fund was founded with an initial capital of 1 trillion rials ($4.16 million), with the ministry contributing 20% and the rest coming from the private sector. The fund identifies and helps fledgling startups and tech firms in launching their businesses.
The initiative is expected to grow into a permanent sponsor of innovative community, creating mental and commercial safety for the entrepreneurs.
ICT Ministry’s Loans
In line with the Noafarin Scheme’s goals, the ICT Ministry announced that it has provided 1.4 trillion rials ($5.8 million) in loans to startups and tech firms in the last Iranian year (ended March 20, 2021).
According to ICT Minister Mohammad Javad Azari Jahromi, it’s the largest sum ever lent to tech firms in recent years.
“The technology ecosystem is supported by several entities, including the Vice Presidential Office for Science and Technology, which prefers to pump financial resources into well-developed tech companies and boost their activities. The ICT Ministry has taken a different approach, focusing on providing seed capital to startups,” Jahromi explained.
He said the startup ecosystem needs more venture capital funds than small loans, adding that Noafarin Fund has managed to invest in four startup companies, although it is only expected to provide loans.
“The state's small coffers are not a suitable resource for venture capital investments because such investments entail high risks,” he said, urging private investors to join the initiative.
Jahromi stated that the ICT Ministry has developed several digital economy parks across the country to empower tech units.
“Using the available capacities, digital economy parks in Mashhad, Semnan, Sari and Shiraz are working to increase the income of tech firms to 50 billion rials [$208,000] per year,” he said.
Tech Earnings
Officials believe that support for the technology ecosystem has already paid off, proving that efforts have been made in the right direction.
Mohammad Sadeq Khayyatian, an official with the state-backed Iran National Innovation Fund, said earlier that the revenue of Iranian tech firms and knowledge-based companies exceeded 1.2 quadrillion rials ($5 billion) in the first 10 months of the last fiscal year (March 20, 2020-Jan. 19).
He noted that the income shows a 40% rise year-on-year and is estimated to reach 1.5 quadrillion rials ($6.25 billion) annually.
Attributing the jump partly to the sudden outbreak of the novel coronavirus pandemic in February 2020, the INIF official said the technology ecosystem has boosted the production of health and medical products to ward off the virus.
“Surveys have shown that 1,418 knowledge-based companies in Iran are focused on information and communication technologies, 1,267 on machinery and equipment, and 1,111 on electrical and electronic products,” he added.
Khayyatian explained that the government’s next year plan for supporting knowledge-based companies envisages tax and customs duty exemption, issuance of commercial license, social security fee cut, military service reduction and business empowerment consultations.
Export Promotion
The government is planning to help boost knowledge-based exports and make domestic industries more self-reliant.
INIF helps realize the goal through a scheme that offers tech firms four kinds of support, namely loans, warranties, investments and empowerment services.
Khayyatian said firms with international trade can receive financial support, foreign leasing, loans for foreign customers and other services to expand their export market.
“Offering grants worth 800 million rials [$3,300] to firms for attending foreign expos is one of the other services offered by the fund to help tech firms develop foreign business ties,” he said.
According to the official, export centers were established in China, Azerbaijan, India, Iraq and Kyrgyzstan last year, which turned out to have high capacity for introducing Iranian high-tech products to the target market.
“After opening tech hubs in Kenya late January and later in Syria, officials are in talks to open similar centers in Afghanistan, Qatar and Oman,” he added.
Khayyatian said export centers provide tech firms with shared working space, the opportunity to employ local professionals for marketing, support for promoting products in small-scale exhibitions, market analysis and sales consultancy, while deploying commercial teams to publicize the firms and attract customers.
