Iranian Private Bank Funneling Funds to Tech Firm

EghtesadOnline: Privately owned Bank Pasargad is poised to increase its investment in startups and knowledge-based firms through its venture capital fund named Shenasa.

News ID: ۷۴۵۵۰۶

23 June 2018

During a press conference on Wednesday, the VC’s director Hamed Sajedi outlining Shenasa’s activities told reporters that the fund is set to extensively increase its investment in Iran’s startup ecosystem and knowledge-based companies.

“Shenasa was founded some six years ago. Aiming to assist Iranian entrepreneurs, the VC has invested unceasingly in fledgling firms and startups,” Sajedi was quoted as saying by local technology website Shanbe Press.

According to the fund’s website, Shenasa registered as Pishgaman Amin Sarmayeh Pasargad was founded in 2012 and is one of the firs Iranian venture capital funds in the country, Financial Tribune reported.

Furthermore, he noted that employing the fund’s financial potential, Bank Pasargad has established a startup accelerator named Trig Up.

Mismanagement of Resources

Just like many business insiders and professionals, Sajedi is of the opinion that the main hurdle hindering Iranian startup ecosystem’s growth is not a lack of funds but “mismanagement of resources”.

He says, “In recent years, the government has invested in startups and knowledge-based firms. However, the mechanism employed for directing money toward such firms was not well-thought-out.”

He notes that offering loans to startups and knowledge-based companies is not the best way to support such entities. Sajedi stresses that venture capitalism is a better option to address the financial needs of startups.

Shenasa’s director also urged investors active in other fields of business to funnel some of their funds toward VCs as well. He believes that if owners of major businesses direct a small portion of their funds toward venture capital investment, it can boost Iran’s startup ecosystem.

Sajedi is not alone in holding the view that VCs are the more efficient way to finance startups. Earlier last week, Iran’s Vice President for Science and Technology Sorena Sattari told reporters 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.

He noted that bank loans do more harm than good to burgeoning startups, adding that other funding sources such as venture capital funds should be used to help expand the startup ecosystem.

Startup Accelerator

In addition to the venture capital fund, Pasargad has tried to expand its presence in Iran’s startup ecosystem through its startup accelerator Trig Up.

Shenasa’s deputy director Hamid Reza Alavi listed the fields that Trig Up is active in as information and communications technology, fintech, health, educational technologies, environment and water management and lifestyle.

He further noted that Trig Up’s services cover a wide range of areas and the accelerator supports entrepreneurs from early stages, even before they have established a group, all through the way to maturation.

According to Alavi, “Trig Up invests up to 400 million rials [$9,520] in each startup and in return claims up to a 15% share in the firms.”

Alavi added that Shenasa has extensive ties with Iranian decision-making bodies, educational and research institutions and has also been able to build up a solid reputation with businesses and investors. “Shenasa has also forged ties with firms across the continents, which enables the VC to attract investment from foreign countries.”

Open-Door Policy

He pointed out that the VC follows an “open-door policy” and therefore does not consider any limits for the startups that can cooperate with it, neither in term of numbers nor the business model.

Trig Up was launched some three years ago. So far 19 startups have been created with the assistance of the accelerator. According to Alavi, 70% of these firms are still active and are successful in their respective fields.

He notes that two of these 19 startups have been able to attract foreign investment. He did not elaborate further.

One of the successful startups which started its operations with Trig Up’s assistance is Arvan Cloud, an Iranian content delivery network.

According to Alavi, managers of Arvan Cloud have set their eyes on foreign markets and the firm is poised to offer services in the European Union in addition to Asia.

Head of Shenasa’s department for investment in health startups Asie Saffarzade was also present at the presser. She noted that Shenasa has fostered extensive relations with Ministry of Health which can pave the way for startups active in the sector.

The VC is in touch with companies active in medical sciences and healthcare. “Utilizing the relations, Shenasa can assist startups which want to work in fields of medical equipment, smart healthcare, biotechnology and more.”

“The fund also collaborates with research institutes which can create proper infrastructure for the establishment of startups and knowledge-based companies in the field.”

According to Trig Up’s website, the accelerator has surveyed 873 startup ideas and is set to boost its operations in the coming months.