The government-backed Innovation and Prosperity Fund (NSFund) has given 11.6 trillion rials ($270 million) in loans to 2,128 knowledge-based firms since its inception in 2013.

According to the fund’s report available on its website nsfund.ir, so far one-third of the projects supported by it have reached the commercial stage creating 16,700 jobs. The fund says almost 55% of the loan applications it has received have been processed. Loans are offered at 4-11%.

In addition to loans, the fund also provides knowledge-based companies with working space. It has built six ‘Technology Centers’ with a total investment of 2.2 trillion rials ($51 million). Offices in the centers are leased and sold to startups with loans and discounts.

NSFund also operates as a business accelerator and offers educational courses to company owners and entrepreneurs. So far, 44 courses have been held by the institute.

The fund has supported companies active in the fields of biotechnology, electronics, information and communication technologies, programming and software development, construction technology, pharmaceuticals, petrochemical technology, space technology, nanotechnology, optics and photonics, renewable energy and medical equipment.

Knowledge-based firms active in biotechnology ($50 million), ICT ($31.4 million) and electronics ($29 million) respectively have had the biggest share of the loans made available by the fund __ accounting for 41% of the total lending.

Some of the other services offered by NSFund include sponsoring companies to attend international events and expos.

On the NSFund website there is a special section for companies supported by the institute. It offers details of all the companies that have received loans from the fund.

The fund also operates as a database of local knowledge-based companies. The report says over the past four years the number of knowledge-based firms has increased significantly and crossed 3,000 companies from about 100 in 2013.

 History and Financing

The Majlis in 2010 passed a law ‘Support for Knowledge-Based Firms and Commercialization of Inventions.’ Before President Hassan Rouhani was elected in 2013, the act was gathering dust. To get things going, create jobs and promote entrepreneurship, the Rouhani administration established the NSFund with an initial investment of 30 trillion rials ($697 million). As per the law, the government is required to allocate 0.5% of its annual budget to the NSFund.

According to the Majlis Research Center, the 0.5% share the government is obliged to give to the fund has long remained on paper. The influential think tank, affiliated to the Iranian Parliament, says that so far the government has largely drawn on the National Development Fund (a sovereign fund) to finance the NSFund.

The NSFund is affiliated to the Vice Presidential Office for Science and Technology and is financed by it.

According to the 2017-18 fiscal budget bill submitted by the president to the Majlis in December, the government has proposed that $200 million from National Development Fund be allocated to the Vice Presidential Office for Science and Technology. Given the economic constraints and sliding oil prices it remains to be seen how much will be allocated to NSFund this year.

Earlier in december, NSFund and Parsian Bank signed an agreement under which the latter will offer loans to knowledge-based businesses and startups and invest in the fund. The agreement was signed by Parsian Bank CEO Kourosh Parvizian and the NSFund director Behzad Soltani.

The private bank will also issue letters of credit for knowledge-based businesses and startups that are backed by the NSFund. Soltani said, “Startups that have registered with the fund will be introduced to Parsian Bank for loans.”

Reference: Iran Economy Magazine