Sales of Iranian Tech Firms Hit $7.6b

EghtesadOnline: Sales of Iranian startups and knowledge-based companies reached 1.8 quadrillion rials ($7.6 billion) in the last Iranian year (ended March 20, 2020), a senior official with the Vice Presidential Office for Science and Technology says.

News ID: ۷۸۶۳۴۱

14 April 2021

Esmaeil Qaderifar added that tech firms' earnings have been rising over the past few years, reaching 1.2 quadrillion rials ($4.8 billion) in the year ending March 2019 and 1.5 quadrillion rials ($6 billion) in the fiscal 2019-20 from 600 trillion rials ($2.4 billion) in the fiscal 2017-18.

Qaderifar noted that the number will continue to grow in the current year, Mehr News Agency reported.

“The growth has been achieved despite hurdles. The reimposition of US sanctions against Iran in the summer of 2018 and the Covid outbreak in February 2020 have been blessings in disguise for the technology ecosystem,” he said.

Tech firms spearheaded localization efforts while profiting from extensive state support and zero foreign competition.

The official also said Iran has over 5,700 knowledge-based companies and 1,300 startups operating in a wide range of fields.

According to Qaderifar, startups and tech companies, primarily engaged in nanotechnology, biotechnology, information and communication technologies, and aerospace, are increasingly gaining a larger share of Iran's economy.

“In addition to tech achievements in transportation, auto manufacturing, mining and steel industries, a large portion of medical and laboratory equipment have been indigenized, and 98% of medicines on the domestic market are produced in Iran,” he said.

“This is the outcome of putting faith in the young, talented generation. We expect the ecosystem to become a game-changer in the domestic economy, reducing Iran's reliance on foreign resources.”

Iran has over five million university students who are a vital element of the country's development efforts.

Qaderifar said the government and private sector should take advantage of this opportunity to invest in the young generation to maximize their potential and achieve long-term benefits.”

Share of GDP

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 growing exponentially and is projected to reach 10% in the coming years.

“Funding should be extended to accelerators and innovation centers to help expand tech units,” he said, calling on officials and private investors to boost the contribution of tech ecosystem in the country's revenue.

“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 Kyrgyzstan 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 for publicizing the firms and attracting customers.

INIF Loans

State-backed institutions, including INIF, 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.

According to the media, the fund has lent 50 trillion rials ($200 million) to knowledge-based businesses in the current Iranian year.

Ali Vahdat, the head of INIF, said depending on the scale and field of activity of startups, low-interest loans worth 500 billion rials ($2 million) were paid, according to the fund’s website.

“These firms have matured to the point that they know how to invest the money into their development,” he said.

“INIF also held weekend events, during which startups introduced their products and achievements to attract private investors. If they raise 20% of the money they need, the fund pays the remaining 80%.”

According to the INIF chief, the strategy would curb the government’s role in financing the startup ecosystem and help firms become more independent of state support.

INIF has hosted 20 such events in the past 11 months, connecting 125 startups with 300 investors.

Vahdat noted that over 25 startups have raised a total of 340 billion rials [$1.36 million] during these events.

“The fund is turning startup weekends into regular gatherings for tech firms seeking growth. A growing number of tech enthusiasts and talented students are attending these events,” he said.