Ready to Disrupt
Iran’s Startup Revolution
This article has been originally published on Muftah.org
Last week, President Hassan Rouhani’s government issued 3G and 4G licenses to Iran’s two main cellphone operators. This is great news for Iran’s hi-tech industry and Internet-based startups, which have been waiting patiently for the government to deliver on its promises to increase Internet speeds in Iran. Since the beginning of his administration, Rouhani’s support for rebuilding Iran’s economy, coupled with the possible lifting of international sanctions, have spurred optimism among Iran’s entrepreneurs and startup founders.
Iran is a highly innovative country with a population of approximately 80 million and 120% mobile penetration. The advent of higher Internet speed marks the beginning of a new era for traditional and tech entrepreneurs, who can breathe a sigh of relief now that doing business has become easier and faster.
For the past two years, Iranian entrepreneurs have embarked on a gradual and organized grassroots movement spearheaded by the Iran Entrepreneurship Association (IEA) to build their own startups. In a recent interview with IEA’s Hamidreza Ahmadi, he explained his motivation for founding the NGO stemmed from a desire among several young and ambitious entrepreneurs to understand the reasons underlying the growing rate of bankrupt businesses in Iran.
Although there is no consensus on the definition of entrepreneurship, the IEA has trained and coached many entrepreneurs, young and old, who are involved in various ventures throughout the country. One of the organization’s main goals is to build a self-sustaining ecosystem in which Iranian entrepreneurs can build startups locally and compete internationally by following global best practices. IEA’s flagship event, “Startup Weekend,” has drawn the support of many enthusiastic tech entrepreneurs on a regular basis. The organization also hosts mobile and web festivals in Iran.
Peyman Moghaddam, the founder of the Iranian Business Forum, describes Iran’s entrepreneurship scene as dominated by imported Western business models and “not built for the local conditions.” Moghaddam expressed concern regarding a general sense of confusion about entrepreneurship among Iranians, many of whom do not know whether the concept refers to owning a business or creating jobs. Moghaddam also believes tech startups are drawing considerable attention at the expense of traditional businesses. In his view, Iran’s entrepreneurship ecosystem has to support both types of entrepreneurship, as both add value to the overall economy.
After a recent trip to Iran, Roxanne Varza, an Iranian-American startup specialist at Microsoft, acknowledged that Iranian startups are adapting and borrowing ideas from Western models, although they continue to face many obstacles particularly from sanctions. In this regard, Moshen Malayeri, head of the Avatech startup accelerator in Tehran, believes the success of startups depends on the outcome of Iran’s nuclear negotiations with the P5+1. Certain aspects of Iran’s tech industry, including nanotechnology, have lagged behind because of sanctions, although e-commerce and mobile technology have soared. Other overarching business and cultural obstacles include lack of transparency and inadequate statistics to measure the value of Iran’s Internet economy.
Ultimately, this is the best time for both traditional and tech startups to evaluate their goals and update their business plans. A higher Internet speed serves as a promising signal to foreign businesses that have flocked to Iran since January 2014 to assess the opportunities of investing in the country’s potentially lucrative market. As for entrepreneurs, they have profited from a closed economy with young and tech savvy costumers who have an insatiable desire to use mobile and Internet technologies despite the sanctions.
