$20 Million Loan for Iranian Startups

EghtesadOnline: Iran's National Innovation Fund has offered 2.69 trillion rials ($19.9 million) in loans to help emerging startups flourish during February-May.

News ID: ۷۴۷۶۱۹

19 June 2019

Siavash Malekifar, the deputy head of INIF, said 18 academic institutions across the country have helped INIF identify fast-growing tech teams and facilitate the loan allocation, Peivast news website reported.

In addition to the loans, Malekifar said, "Startup accelerators have also received support, including workspace and technical equipment."

He noted that the fund is footing up to 70% of local accelerators’ operational bill and will offer cheap loans to accelerators, according to Financial Tribune.

In addition, Malekifar said startups and knowledge-based companies willing to attend international expos will receive grants worth 100-600 million rials ($740-4,400) to cover some of their expenses.

He underlined INIF's goals as developing the country’s startup ecosystem, encouraging large industrial units to join and promoting the export of knowledge-based products.

However,  a clear definition of which businesses qualify as knowledge-based in Iran is still not in place, since the term is applied to startups, tech firms and even auto parts makers.

Vice Presidential Office for Science and Technology says 4,229 knowledge-based companies have so far been registered by the office and their names are available on its website, Isti.ir.

Downsides

Some experts believe offering loans is the worst kind of help that can be offered to a fledgling startup or tech company.

Iran E-Commerce Union is strongly against “cash handouts and loans”, rejecting such a policy as the “worst nightmare for Iran’s startup ecosystem”.

In an interview with Financial Tribune in January, Shayan Shalileh, secretary of the union, said, "Government-sponsored loans will divert startups from the right path. Over time, they will get deep in the red and instead of relying on their own resources and capabilities, they will seek more and more of the same."

“Instead of loans, the government should focus on taming the bloated bureaucracy, cut insurance costs for startups and offer tax holidays,” he added.

Impaired Loans

The authorities' extravagance in "supporting knowledge-based companies" has been repeatedly censured by market observers.

The latest report published by the Central Bank of Iran on unpaid loans of knowledge-based companies has revealed startling data, raising concerns among experts.

On its website on Feb. 24, CBI said unpaid loans of knowledge-based companies until Dec. 21, 2018, amounted to a staggering 70.1 trillion rials ($519.2 million), of which 18% (13.1 trillion rials/$97 million) constitute bad debt.

As the unpaid debt report spread in the social media, many business owners and market observers complained about the issue, lamenting that the never-ending process of getting loans reserved for knowledge-based companies is a disappointing affair.

They demanded clarification about the identity of firms receiving the large loans and conditions set by the banks.

After the CBI report was released, authorities have not responded to calls for revealing the details of these multimillion-dollar loans.