TEHRAN – Entrepreneurship ecosystem in the country is in need of new financing methods, Sourena Sattari, vice president for science and technology has said.

The way of financing in a knowledge ecosystem is a very important issue, IRNA quoted Sattari as saying on Saturday.

Up to now, the finance for startups and knowledge enterprises has been provided through loans, which is a disadvantage for entrepreneurs, he added.

He said that loans provided by banks are great aid for companies with stability but it is not a good method for providing finance for an early-stage firm.

“A startup with loans from bank will destroy in case of bankruptcy. However, venture capital funds can provide it with a finance needed,” he said.

Financing is no more possible with oil-based economy, he stressed.

New methods other than bank loans are available for financing in developed countries, he said.

Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential, or which have demonstrated high growth (in terms of number of employees, annual revenue, or both). 

Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake, in the companies they invest in. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the firms.

SB/MQ/MG