Part 4: 4 Megatrends That Support Rising Tech Entrepreneurship in Iran
Private Capital is mobile and entrepreneurial
In a previous post, I talked about the 4 megatrends that support rising tech entrepreneurship amongst Iranians. In a series of posts, I’d like to explore how the demographic, economic, technology and private capital megatrends will contribute to the National Innovation Capacity and invite a discussion around reasons why this can or cannot help us build globally successful technology companies. This final post in a series of 4, discusses how private capital supports rising tech entrepreneurship amongst Iranians.
Private capital is mobile and entrepreneurial. In this context, private capital refers to capital coming from the private sector versus the public sector and not private and public equity markets. Private capital can see high returns because it can be flexible and move freely across borders and assets. Similarly, global value chains are spread across borders to optimise resources based on potential returns.
Our close experience of the recent history of successful Iranian businesses clearly shows this. Our own group was successful by joining the global value chains of Nokia and Samsung as an EPCM contractor and device distributor. There are dozens of similar successes stories, especially in Telecoms, Technology and Finance sectors, about business groups that have enjoyed tremendous growth by joining global value chains. This in turn helped them see growth in their private capital base and freedom to optimise returns based on cross-border opportunities.
However, most of these success stories in the private sector have been at the consumption end (Demand Chain in graph below) of the global value chains. What truly makes a difference is joining the production end of the global value chains. This is where exponential technology and long term value is created.
In order to achieve this, private capital needs to step up and take higher risks in inventions and intellectual property. It is only here where the impacts are sustainable enough to correct market failures.
Eliminating market failures by applying exponential technology solutions is something that tech entrepreneurs do tremendously well.
Providing the right type of capital to these tech entrepreneurs is what Iratel Ventures does best. The way we think about supporting entrepreneurs is by providing these three types of capital:
- Venture Capital → solves the lack of risk capital
- Social Capital → solves the lack of neccessary networks
- Organisational Capital → solves the lack of access to global markets
We believe the right approach to a venture capital investment process is to focus only on those technologies that can help us join the production side of the global value chains. We don’t believe this can be solved only through risk capital (venture capital). It will be achieved best by accessing the social capital locked in the technology communities that have yet to build large enterprises. In order to effectively tap into this social capital, we need to organise and build the right organisation and align all three capital types to level the playing field and provide similar opportunities to global entrepreneurs from Iran and countries with similar entrepreneurship dynamics.
This is how we support global entrepreneurs and build an innovation flywheel that is powerful enough to have a large enough impact and create successful global players.
This is the eleventh in a series of posts about our investment criteria and ecosystem resources and the final in a series of four posts about global tech entrepreneurship amongst Iranians which was also posted on LinkedIn. We’d love to hear from teams with crazy (but commercial) startups. Get in touch or attend our breakfast series. Finally, don’t forget to get your IV Score or talk to our FundingBot to prepare for your next VC meeting.
