Start Me Up: Iran’s Startup Scene Blossoms after Sanctions Are Lifted

The Islamic Republic of Iran has emerged as the land of opportunities for young entrepreneurs and investors after the sanctions which were imposed on the country for over a decade were lifted. Due the crippling economic sanctions by the US, EU and UN, the country was left far behind in the game, but now, the doors have been opened and smart investors have their eyes on this new market. One of the reasons why investors are attracted to Iran is because the growth rate of an emerging country such as Iran is two to three times that of the US or the EU. And while it is understood that ever emerging tech sector cannot be the next Silicon Valley, a country such as Iran certainly has a lot going on for it, and the following are some of the reasons why this kind of enthusiasm is justified.

The Iranian (Internet and Social Media) Revolution

Over the past few years, international interest in Iran’s startup scene has gained in popularity and for good reason. One of the reasons for this new found interest in the country is the fact that while there are some challenging that are facing Iranian tech startups, there are just as many opportunities for young entrepreneurs to take advantage of this somewhat virgin market.

One glimpse is enough for investors to know that Iran is a tech savvy nation, mostly because it has a large young population. This is also one of the reasons why both internet and smartphone penetration in Iran is extremely high with around 70% of its 80 million population being under the age of 35. According to studies, around half of the people have access to a smartphone. And while there have been conflicting reports on the exact number of internet users, Internet World Stats released a report which stated that the country had an internet penetration of 57.2% in 2014. This means that there are around 46 million internet users in Iran, that’s pretty much half the total number of internet users in the Middle East, pretty impressive for a country that has had sanctions put against it since the 70s.

With an internet savvy population, naturally there will be some who flex their entrepreneurial muscles. And a country like Iran has certainly got the talent to make that possible. Companies such as Digikala and Aparat are carving out a name for themselves in the new and vibrant market. Digikala is an online ecommerce platform, which has around 750,000 visitors per day, and is estimated to be worth around $150 million, thus making it the largest in the Middle East. Mobile internet access has also taken off rapidly even since the government made the decision to grant operators with 3G and 4G licenses. Aparat is the other star in Iran’s entrepreneurial scene. Aparat is Iran’s answer to YouTube, which has grown into a household name in the country, and is currently worth $30 million. Other players who have taken advantage of the startup scene in Iran are Takhfifan, which is a Groupon-style website and Mamanpaz, which is a website that offers home cooked meals to its customers.

Home-grown online stores and e-commerce websites are gaining popularity in Iran as more and more customers are choosing to purchase the products they need online instead of going to the traditional brick and mortar store. From electronics, clothing, accessories and cosmetics, more people are choosing to go online than ever before. In fact, Iran has emerged as one of the top ten countries in the world when it comes to cosmetic and makeup usage, and comes in second only to Saudi Arabia in the Middle East. Needless to say, the cosmetic market and many other markets in Iran is huge and there is plenty of room for entrepreneurs to try their luck in this massive, emerging market. The best part is that the popularity of online shopping is still spreading, which means that there is more potential for e-commerce websites.

Apart from that, Iranians are also adopting some of the advocacy techniques that are popular in the global social media landscape. #FreeIranianSoldiers and #MyStealthyFreedom are just two of the very popular viral social media campaigns in Iran that have also been picked up by foreign media as well.

Passionate and Talented Youth

As mentioned earlier, the majority of Iran’s population is under the age of 35, which is nothing short of a blessing for any emerging market. Secondly, a high literacy level means that the Iranian millennial is not only passionate and talented, but also tech savvy and highly educated as well. For investors, the high percentage of university graduates means that you get easy access to an educated and highly trained workforce. It is also worth mentioning that Iran has a noticeably higher ratio of female entrepreneurs when compared to other countries in the MENA region, which is mainly due to the fact that almost 70% of graduates in the fields of engineering, technology and science are female.

Startup Summits and Events

During the past two years there have been a number of events that have been hosted in cities across Iran for aspiring entrepreneurs. In 2014, Tehran hosted the TEDx Conference where experts from around the world talked about the opportunities that await Iran, especially when it comes to tech startups. Apart from that, the first ever Europe Iran Forum was held not too long ago. While the event was held in London, the panel there discussed the various opportunities for investments in Iran and drew in large crowds from the international community.

Crowdsourcing Week Summit Tehran is also scheduled to be held in May of this year. The summit aims to engage the international community of entrepreneurs on crowdfunding opportunities in Iran, and will also host panel discussions, keynote talks and workshops. In fact, I strongly recommend you to visit the event and listen to the interesting speech of my entrepreneur friend Genny Ghanimah. The event is scheduled to be held in the capital Tehran and looks to attract many international investors and both local and foreign entrepreneurs.

Financial Support

In order to further develop Iran’s entrepreneurship ecosystem, accelerators such as Avatech and the Omid Entrepreneurship Fund have been put in place. These initiatives provide low interest loans to entrepreneurs. The maximum amount of these loans can go up to 100 million tomans or $30 thousand with a low-interest rate. A comity has been formed to take over the processes of due diligence of the companies these loans will be given to. The national computer game foundation has also announced that it will take part in these initiatives to further support Iran’s gaming industry.

Along with accelerators, incubators and VCs, the current government is starting a wide range of initiatives to further support Iran’s entrepreneurship movement. There have also been reports that 104 billion has been pledged by the Iranian government for the IT and ICT sector, which will help further boost Iran’s booming entrepreneurial scene.

Popular VCs in Iran:

• Simorgh
• Shenesa VC
• SharifVC
• Sarava Pars
• Novin

Popular accelerators in Iran:

• Avatech
• Berkeh Business Accelerator
• Cafae It
• DMOND Innovation Group
• Maps Technology Center
• Sharif accelerator
• Nopayar Accelerator
• Technovation Program

Bottom Line

A booming young population that is educated and tech savvy, a vibrant market, and lots of potential are just some of the factors that make for a very lively and productive entrepreneurial sector in a country such as Iran. No wonder, more and more startup professionals from around the world are flocking to Iran to connect and collaborate with all that the country has to offer.

First published on LinkedIn on 29 April 2016. Read the original