Annual Revenues of Tech Firms, Startups Surpass $12 billion

EghtesadOnline: The revenues of Iranian startups and knowledge-based companies have exceeded $12 billion annually, Vice President for Science and Technology Sorena Sattari says.

News ID: ۷۸۶۲۴۰

10 March 2021

The vice president added that startups and tech firms, which are mainly involved in nanotechnology, biotech, information and communications technologies, and aerospace, are gradually gaining a bigger share of Iran’s economy, IRNA reported.

Sattari noted that a significant portion of medical and laboratory equipment have been indigenized and 98% of medicines in the domestic market are manufactured in Iran, in addition to the tech achievements in transportation, auto production, mining and steel industries.

“This has resulted from trusting the young, talented generation. The ecosystem is expected to become a game changer in the domestic economy and slash Iran’s dependency on foreign resources,” he said.

“Iran has over five million university students who constitute a valuable driving force in the country's growth efforts. The government and private sector should seize this opportunity to invest in the young generation to mobilize their potentials and generate long-term benefits.”

Mohammad Sadeq Khayyatian, an official with Iran’s National Innovation Fund, affiliated to the vice presidential office, earlier said the share of tech firms in Iran’s GDP has been increasing exponentially and is expected to hit 10% in the coming years.

Calling on the government and private investors for bolstering the contribution of tech ecosystem in the country’s revenue, he said more support should be extended to accelerators and innovation centers to help develop tech units.

“Iran’s technology ecosystem is growing fast and so will its share in GDP. In the 2000s, there were only 52 knowledge-based companies in Iran, which figure today stands at 5,700. In fact, Iran’s first science and technology park was launched 10 years ago in Isfahan Province. Today, 46 tech parks are operating nationwide,” he said.

Because of Iran’s dependence on oil revenues, the government did not seek to generate income from the knowledge-based sector in the past.

Khayyatian stressed that the government’s policies have changed, such that Iran is increasingly counting on the technology ecosystem for wealth production and the state is extending more support to knowledge-based companies.

“The government is planning to provide tech firms with tax and customs exemption, ease commercial license issuance, cut social security fee, reduce military service and extend business empowerment consultancy,” he said.

Export Promotion

Tech experts and officials believe greater financial support should be directed to boost knowledge-based exports and make domestic tech industries more self-sufficient.

INIF is planning to achieve the goal by designing a scheme that offers tech firms four kinds of support, namely loans, warranties, investments and empowerment services.

Siavash Malekifar, a deputy at the fund, said tech firms undertaking international trade can receive financial support, foreign leasing and other services to expand their export market.

“Offering grants worth 800 million rials [$3,200] to firms for attending foreign expos is one of the other services offered by the fund to help tech firms develop foreign business ties,” he said.

According to the official, export centers have been established in China, Azerbaijan, India, Iraq and Kirgizstan last year, which showed high capacity for introducing Iranian high-tech products to the target market.

“After opening a tech hub in Kenya in late January and in Syria last week, officials are holding talks to open similar centers in Afghanistan, Qatar and Oman,” he added.

Malekifar said export centers provide tech firms with shared working space, the opportunity to employ local professionals for marketing their products in small-scale exhibitions, market analysis and sales consultancy, in addition to deploying commercial teams to introduce the firms and attract customers.

Government Loans

Government officials never miss an opportunity to name the startup ecosystem as Iran’s major business of the future, which would help curb the country’s reliance on the sale of natural resources.

They say fiscal support to tech companies will continue to help convert the conventional domestic economy to a knowledge-based one.

The government is offering loans to startups and tech firms to support the sector. Iranian knowledge-based companies and tech firms received 191 trillion rials ($767 million) in loans during the first nine months of the current Iranian year (started March 20, 2020), the Central Bank of Iran said.

Based on a recent CBI report, the amount has increased by 128% compared with the same period of last year.

CBI Governor Abdolnasser Hemmati had earlier said Iran has over 10,000 startups and knowledge-based companies, and if they receive sufficient support and attention, they will yield valuable results.

Hemmati stressed that state support for tech units will continue to ensure their constant growth.

“The technology ecosystem is on its way to flourish further and will soon claim a large share of the domestic economy,” he said.

NDFI Resources

In mid-December 2020, the Vice Presidential Office for Science and Technology said it gave 18 trillion rials ($72.28 million) in cheap loans to 166 knowledge-based companies from the resources of the National Development Fund of Iran.

Based on a decree issued by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei, the office is authorized to tap into the sovereign wealth fund to support knowledge-based companies.

According to Sattari, the loans were taken by companies operating in the agricultural, industrial and mining sectors of rural areas.

“Thanks to the assistance, the companies have made noteworthy progress and grown,” he said without elaboration.

Sattari added that the tech ecosystem has high potential for supporting the economy and transforming it into a “smart economy”, albeit with effective government backing.

Besides state support, private companies are also funding startups and tech firms.

“Venture capital funds are growing in Iran and becoming popular with investors. This should help underpin the work of startups and help them grow,” he added.

Sattari said nine venture capital funds are now active and the number is expected to grow.