New Government-Backed Plan for Supporting Startups in Iran

EghtesadOnline: To promote technological firms and startups, the Ministry of Cooperatives, Labor and Social Welfare has reached an agreement with the Electronic Support Fund for Research and Development, affiliated to the Industries Ministry.

News ID: ۷۴۸۲۴۵

25 August 2019

Mohammad Kabiri, a deputy head at the Cooperatives Ministry, and Reza Naqipour, the fund's chief, signed a deal to jointly boost support for knowledge-based companies and startups, Webna reported.

Kabiri said one of the main objectives of the agreement is to use the valuable experience of ESFRD in backing tech companies.

"The deal will enhance productivity and apply technological solutions to business activities," Financial Tribune quoted him as saying.

Naqipour said the deal envisages providing tech firms with financial support in the form of grants and loans, while easing the issuance of permits and licenses and extending professional mentorship to help firms attract investments.

"The support packages will also cover cooperatives, which are not registered as knowledge-based companies along with startups, whose activities are considered innovative and technological," he added.

This is while 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.

The Vice Presidential Office for Science and Technology says 4,480 knowledge-based companies have so far been registered by the office and their names are available on its website, Isti.ir.

Although the government of President Hassan Rouhani prioritized supporting knowledge-based companies and tech firms since taking office in 2013, excessive and direct financial grants have been repeatedly censured by experts in the field.

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

Shayan Shalileh, secretary of the union, believes, "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 resources and capabilities, they will seek more and more of the same."

Shalileh noted that instead of loans, the government should focus on taming the bloated bureaucracy, cut insurance costs for startups and offer tax holidays.