According to Siavash Malekifar, an INIF deputy, since October 2018, the state-backed institution has offered loans and grants to the tune of 520 billion rials ($1.8 million) to emerging startups, IRNA reported.
However, INIF is planning to make the investments more systematic and become a venture capital fund for backing startups, according to Financial Tribune.
Malekifar noted that startups managers are to be engaged in the process.
"Currently, INIF is only authorized to finance companies categorized as knowledge-based. Giving support to startups has been a challenge, therefore, establishing a VC can be an alternative for the institution to inject financial resources to startups," he said.
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 tech firms and even auto parts makers.
Malekifar said INIF, together with its provincial branches and startup managers, can create a group of investors for providing financial aid to the tech teams. "INIF will only join the group of investors for a limited time when the financial resources of the other two elements do not meet the requirement," he said.
Elaborating on the new investment strategy, Malekifar said, “The value of startups should be estimated based on their potential and technical knowledge. Then, the volume of financial aid required and the share of each venture capitalist will be defined.”
The INIF deputy further said the fund can provide up to four times the sum of money collected by the startup and the fund's branches, and will pull out of VC after five years.
Malekifar added that currently a growing demand for VC investment can be observed among startups.
INIF is working to further introduce the funding mechanism to innovative groups and encourage startup managers to get involved in the investment process.
The government is optimistic that giving financial, technical and spiritual support to firms can help them expand their businesses and consequently curb the country's reliance on oil-based revenues.
INIF, affiliated to the Vice Presidential Office and other tech authorities have played a major role in extending vital resources.
The administration of President Hassan Rouhani established the fund with an initial investment of 30 trillion rials ($222 million). As per the law, the government is required to allocate 0.5% of its annual budget to INIF.
The fund’s officials say INIF will continue to give financial support to fledgling tech firms and startups.
The Vice Presidential Office for Science and Technology says 4,787 knowledge-based companies have so far been registered by the office and their names are available on its website, Isti.ir.
Unofficial estimates show that the number of both registered and unregistered startups in the country is almost equal to that of established knowledge-based firms.