EghtesadOnline: Praising venture capital funds, Iran's Vice President for Science and Technology believes that old-school means of financing are of no use to startups, as the creative and dynamic nature of such firms requires equally innovative funding methods.
"Providing financial support for startups and knowledge-based firms is a vital component of the entrepreneurship ecosystem," Sorena Sattari was quoted as saying by CITNA.
He noted that bank loans do more harm than good to burgeoning startups, adding that other sources of finance namely venture capital funds should be used to help expand the startup ecosystem.
Nonetheless, he acknowledged the constructive role of bank loans in development of large knowledge-based firms capable of paying back their debts in a timely manner, Financial Tribune reported.
Up until now, startups and knowledge-based firms had to resort to banks in order to gain monetary assistance; however, with the emergence of venture capital funds, the old-school financiers no longer are the exclusive source of monetary aid.
Venture capital firms or funds invest in early-stage companies which hold out good prospects in exchange for equity, or an ownership stake, in the companies they invest in.
Sattari further lauded the active role that the academia is taking in assisting startups through investment, establishing venture capital funds and startup accelerators.
"Establishing venture capital funds is of great help to the entrepreneurship ecosystem," added Sattari. "The current involvement of academic institutions and the Securities and Exchange Organization in provision of financial aid to startups marks a historic event in Iran's finance culture."
The first academia-affiliated venture capital fund, the fifth in Iran's capital market, was established by the University of Tehran back in late May. The fund is set to help transform ideas into inventions and get them commercialized through provision of financial support.
University of Tehran has also established a Science and Technology Park and its own Investment and Development Organization. The three entities own 34% of the fund's shares, while the remaining 66% belongs to active investment firms in the capital market namely Sepehr, Parsian Lotus and Tamadon investment banks.
Sattari also acclaimed the achievements of the youth in fields such as nanotech, biotech and stem cells. He is of the opinion that successful local startups encourage Iranian diaspora to return to their homeland.
According to Sattari, there are 3,500 active knowledge-based companies and thousands of startup firms currently working toward realizing the dream of an oil-independent economy.
Sattari was speaking during a meeting with University of Tehran's officials. The university's president, Mahmoud Nili-Ahmadabadi, said the development of entrepreneurship is much more tied to the provision of required infrastructures than creative thinking. Establishing science and technology parks, as well as research and technology funds were mentioned as examples of such efforts.
Other attendees in the event were Shapour Mohammadi, CEO of Securities and Exchange Organization of Iran and Ali Mohaqar, head of UT Investment and Development Organization.