EghtesadOnline: Iran Fara Bourse, the junior market for trading bonds and equities, unveiled a crowdfunding platform on Sunday to help facilitate business financing, especially those active in a knowledge-based economy.
Amir Hamouni, the CEO of IFB, pointed to the willingness of enterprises to tap this novel financing instrument.
"IFB has reached an agreement in principle with seven companies and issued permits for four to gain finance through crowdfunding," he was quoted as saying by Securities and Exchange News Agency.
"So far, 72 companies have applied to use crowdfunding," he added.
Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. It provides easy accessibility of vast networks of people through social media and websites to bring investors and entrepreneurs together, with the potential of increasing entrepreneurship by expanding the investor pool.
Rules for crowdfunding in Iran was first announced by Securities and Exchange Organization in August 2018.
The unveiling ceremony was also attended by SEO's Managing Director Mohammad Ali Dehqan-Dehnavi and Vice President for Science and Technology Sorena Sattari.
Dehqan-Dehnavi underscored the capital market’s readiness and potential to finance knowledge-based economy and innovative activity.
Likewise, the vice president pointed to the country’s vast startup ecosystem that is unable to secure funds through the banking system.
"To expand their role in the economy, they need to top the capital market," he said.
Sattari also recalled the rising contribution of venture capitals in raising money for startups, stressing that currently 13 VCs are operating in the capital market, the biggest of which is worth 2.4 trillion rials ($10 million).
VC is a form of private equity and a financing instrument that investors provide to startup companies and small businesses with long-term growth potential, or to companies that have grown quickly and appear poised to continue to expand.
The government has often publicly said it supports the startups, given their gradually increasing role in the economy.