Part 1: 4 Megatrends That Support Rising Tech Entrepreneurship in Iran
The gift given to Iranian Millennials
In a previous post, I talked about the 4 megatrends that support rising tech entrepreneurship in or among Iranians. In a series of upcoming posts, I’d like to explore how the demographics megatrend 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.
Millennials (those between the ages of 17 and 36) have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviors and experiences than their parents.
In particular, Iranian Millennials have a unique opportunity to use this experience to make an impact by adopting a #givefirst mentality and help the previous as well as the future generations. They are the first generation that experienced big education and culture change in the country first hand. They are the last generation that remembers a world without internet. They are the generation that will build global companies in Iran the likes of which never existed before.
Human Capital
Iran, like many other frontier or emerging markets, has a youthful population that can be a boon to growth. However, let’s start with the other side of the coin first:
The country faces great pressure to generate employment for the children of the 1980s population boom. The number of young people entering the labor market has risen by four- fifths over the last two decades and is at an all-time high. This coupled with infrastructure and economic factors have made Iranian youth highly cynical, even angry, about their prospects for employment.
So looking back at the change formula, we see that
D = dissatisfaction = Iranian youth highly cynical, even angry, about their prospects for employment.
From the composition of the general demographic we can clearly see the potential of the 1980s and Millennial generation’s human capital. We need to then map their skills to current or future economic and employment possibilities.
This is a highly educated (of which around 50,000 studied abroad in 2013), skilled and digitally savvy generation that will be able to apply a global mindset to contribute to an innovative culture and enhance productivity beyond the status quo.
The bulk of the population falls between 15 and 34. On the other hand the decreasing population growth rate which is below replacement rate (meaning families are becoming smaller) means this generation will remain the largest for the foreseeable future. Hence, it has increased opportunities as well as responsibilities.
According to an IMF paper, improvements in human capital due to higher levels of education have been the most important contributor to growth in Iran since the 1960s.
Productivity
Connecting the demographic to economic history, future potential and increases in productivity, we see that this generation’s economic experience has been shaped by a major shock followed by rapid educational and technological advances that has handed it a great gift (the good mix of local and international education and professional experience) to contribute to growth in productivity through innovation. In its simplest form, productivity means getting more output from the same inputs. As we saw above, the human capital which has been the most important contributor to growth as an input is forecast to decrease, therefore the only way to increase productivity is to come up with innovative ways to increase output. Our bet is that tech entrepreneurship is the most efficient way of getting to outstanding levels of productivity.
In the next post, we’ll explore the second megatrend, economic, that supports rising tech entrepreneurship among Iranians.
This is the eighth in a series of posts about our investment criteria and ecosystem resources 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.
Thanks to Dr. Fardad Zand, Mahyar Khattak and Dr. Golnaz Borghei for their contributions.
