Analysis of the Legal Infrastructure of Venture Capital Development in Iran

Document Type : Research Article

Authors

1 Assistant Professor of Technology Management, Department of Science, Technology and Innovation Financing and Economics, National Research Institute for Science Policy (NRISP), Tehran, Iran

2 PhD in Technology Management, Faculty of Management, Science and Research Branch, Islamic Azad University, Tehran, Iran

3 Assistant Professor of Industrial Engineering, Faculty of Management, Kharazmi University, Karaj, Iran

Abstract

Despite the limited financial resources available for technological entrepreneurship in Iran, particularly in terms of bank-oriented financing, venture capital (VC) plays a relatively minor role in financing knowledge-based and technology-driven companies. Strengthening the legal infrastructure through appropriate incentives could promote VC growth. This article, after reviewing the theoretical foundations, performs an importance-performance analysis of the legal components affecting VC in Iran at two levels: macro policies and specific regulations related to VC funds. This analysis was carried out by distributing a semi-structured questionnaire among CEOs and vice presidents of VC funds, non-governmental research and technology funds, and other private companies. The current state of the legal infrastructure for VC was then examined by analyzing relevant laws and comparing them with prioritized legal components. The aim was to suggest solutions to address legal gaps and enhance relevant laws. The findings indicated that, except for tax incentives, other key legal components necessary for VC development are not adequately addressed in the existing laws. To address this deficiency, it is recommended that the social security law be revised to consider the nature of startups and technology companies, and that the intellectual property system be organized to increase demand for venture capital. Additionally, policymakers are advised to continue and streamline processes related to existing tax exemptions, provide tax exemptions for profits reinvested in production rather than distributed among shareholders, and impose taxes on speculative activities outside the innovation ecosystem to channel financial resources into technological entrepreneurship.

Keywords

References

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Iranian Journal of Public Policy
Volume 10, Issue 3
2024
Pages 9-29

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