EghtesadOnline: State-owned Bank Melli Iran (BMI) has signed a memorandum of understanding with the Presidential Office for Science and Technology to create a new hub for startups and support innovative ideas.
As part of the plan, a new startup accelerator will be established by the bank in collaboration with the government, Mehr News Agency reported.
BMI seems the national bank is distancing itself from ‘traditional investments’ and moving towards creating venture capital funds to support new firms with solid business credentials.
Venture capital is a type of equity, a form of financing that is provided by firms or funds to small, early-stage and emerging companies that are deemed to have high growth potential, or which have already demonstrated high growth, Financial Tribune reported.
According to Alireza Daliri, the deputy director of the special presidential office, the main goal of the MoU is to “employ the capacities of the bank to underpin the knowledge-based economy” the government is going out of its way topromote.
“Considering the financial constraints and declining fortunes of traditional businesses, the administration is aiming to push banks towards investment in startups and knowledge-based businesses,” he said.
The bank is yet to announce the interest rate at which it will lend to the startups.
Since President Hassan Rouhani claimed the mantle in 2013, digital startups have had a growing role in the economy.
Moreover, unlike semi-state owned businesses — from carmakers to the struggling steel sector — knowledge based businesses have a relatively successful record of exports and have helped reduce Iran’s trade deficit.
In addition, the exponential growth of the knowledge-based economy has provided educated Iranians the opportunity to get a job, make a living and contribute to the national economy.
The administration’s new direction could and should have a domino effect as other state-owned lenders may well follow BMI’s example, experts and market observers say.
Late to the Party
Prior to BMI’s decision to join the emerging sector, several private banks and financial firms have been providing knowledge-based businesses with venture capital and startup acceleration services.
BMI is entering comparatively late compared to its peers like Bank Pasargad and its FANAP Accelerator based in Tehran. Meanwhile, other banks like Ayandeh and Saman have been supporting knowledge-based business for some years now.
According to Daliri, some projects already earmarked by the presidential office have already been proposed to Bank Melli for investment and talks are being held between the bank officials and project developers.