The investment will be made in collaboration with the Vice Presidential Office for Science and Technology during the next fiscal year (starting March 20, 2019).
During a meeting on Saturday, Defense Minister General Amir Hatami and Vice President for Science and Technology Sorena Sattari signed a deal in this regard, ISNA reported.
Speaking at the event, Hatami said the agreement envisages financial grants for startups and tech teams willing to develop and commercialize defense technologies, according to Financial Tribune.
In addition, parties to the agreement committed to provide knowledge-based firms with technical and legal mentorship, and assist the commercialization of their products.
Hatami said the deal includes sharing the ministry's infrastructure, like laboratories and working space, with the tech teams.
Underlining the necessity of enhancing cooperation between the defense authorities and the technology ecosystem, Hatami said, "Currently, the activities of about 10% of Iranian tech companies are in the field of defense."
He also noted that ties between Defense Ministry and startups will be strengthened.
Adding that the country's defense sector is closely linked with the economy, Hatami said development in the former can contribute to the latter's growth.
Also speaking at the event, Sattari said the agreement will definitely be extended with stronger support in case the current deal leads to desirable results.
The vice presidential office's website, Isti.ir, reports that at present, 4,490 tech firms have been registered in the country as knowledge-based.
The Iranian government has given full support to startups and tech firms, since President Hassan Rouhani took office in 2013 for his first term, although the move has been repeatedly censured by independent experts as being counterproductive.