State Fund Extends $112 Million in Loans to SMEs, Startup Ecosystem
EghtesadOnline: The state-backed Omid Entrepreneurship Fund has paid 28 trillion rials ($112 million) in loans to small- and medium-sized enterprises, knowledge-based companies and startups since the beginning of the current Iranian year (March 2020).
Ali As’habi, the head of OEF’s Empowerment Office, said aid packages are extended to businesses active in the fields of tourism, information and communications technologies, and agriculture, which could create 63,000 jobs, ISNA reported.
“Of the total loans, 18% have been paid to 2,100 eco-lodges and tourism centers, and ICT units received 12%,” he added.
The fund has also boosted research and development in fledgling companies and startups with loans worth 5 billion rials ($20,000), in addition to allocating low-interest loans worth 4 billion rials ($16,000) to business units for renting or equipping workspaces.
As’habi noted that a share of the financial aid was earmarked for small agricultural and mining business units that were inoperative or semi-active.
“OEF has provided online platforms, such as web shop Cafekado.org, to let the less known local businesses introduce their products and expand their markets,” he said.
“Besides, the fund continues to finance tech and infrastructural development projects with over 70% of physical progress in rural areas to expedite their implementation.”
Omid Entrepreneurship Fund has been set up to support entrepreneurship and SMEs. It was formerly called Imam Reza Mehr Fund. The name change came after President Hassan Rouhani took office for the first term in 2013.
At present, the fund’s loans are mostly extended in less developed and rural areas, plus small towns deprived of bank credit.
In mid-December 2020, the Vice Presidential Office for Science and Technology said it gave 18 trillion rials ($72 million) in cheap loans to 166 knowledge-based companies from loans taken from the National Development Fund of Iran.
Based on a decree from the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei, the office is authorized to tap into the sovereign wealth fund to support knowledge-based companies.
Vice President for Science and Technology Sorena Sattari said the loans were taken by companies operating in the agriculture, industrial and mining sectors in rural areas.
“Thanks to the help, the companies have made noteworthy progress and grown,” he said without elaboration.
Sattari noted that the tech ecosystem has high potential for supporting the economy and transforming it into a “smart economy”, albeit with effective government backing.
Besides state support, private companies are also doing their share in funding startups and tech firms.
“VC funds are growing in Iran and becoming popular with investors. This should help underpin the work of startups and help them grow,” he said, adding that nine VC funds are now active and the number is expected to grow.
Banks too have helped in funding the startups. Hojjatollah Seyyedi, CEO of Bank Saderat Iran, said his bank has lent knowledge-based companies 8 trillion rials ($32 million).
“We want to expedite the lending process and increase the amount. Knowledge-based firms are important and have the potential to help the economy grow,” he stressed.
More Tech Support
The state-affiliated Iran National Innovation Fund declared last month that it has paid 30 trillion rials ($120 million) to knowledge-based companies and startups since the beginning of the current Iranian year.
Ali Vahdat, the head of INIF, said the fund’s goal is to increase the amount to 40 trillion rials ($160 million) by the yearend.
Vahdat noted that the total includes 12 trillion rials ($48 million) in credit guarantees for the tech companies.
“Credit guarantees will continue to the tune of 20 trillion rials [$80 million]. For startups, the amount was 13 trillion rials [$52 million] last year,” he said.
Elaborating on INIF’s other services to the tech ecosystem, Vahdat said that in the past couple of years, the fund supported 3,100 plus knowledge-based companies in attending domestic and international exhibitions.
“Last year, INIF launched seven stock exchange investment funds with 1.75 trillion rials [$7 million]. Seven more opened this year in collaboration with private firms,” he added.
Recently, the fund started contributing to developing workspace for knowledge-based units as innovation factories and tech centers and gave more than half a million dollars.
The official said the fund sponsors tech companies since their inception and helps them join the stock market.
Iran National Innovation Fund plans to encourage venture capital as another source of funding to help boost the tech ecosystem.
Venture capital is a type of financing that investors provide to startup companies and small businesses that have long-term growth potential. The capital is normally made available by big affluent investors, investment banks and financial institutions.
INIF’s agenda is in line with the government’s policies to mobilize the capabilities of knowledge-based companies and startups in the service of the economy, particularly to help promote production growth.