How can Iran grow its startup ecosystem and its economy? Working with our Iran-based correspondent Natalie Corpuroglu, we have envisioned potential endeavors and proposals that could help build global startups with minimal resources.
Tap into the diaspora’s wealth and networks to scale globally
“There is a growing recognition that transnational communities facilitate increased trade, investment and cultural linkages between the different countries that they are connected to, and that they are important development actors” (Diaspora & Development)
It may not be necessary for diasporans to be physically present in Iran itself to promote growth. After all, as a non-English country, having diaspora communities around the world may serve as a useful tool for business facilitation for foreign investors and entrepreneurs. Many studies have already been carried out showing the great importance Chinese, Filipino and Afghanistan diasporas have played in growing the economy of their home countries, developing sustainable industries.
One possible way to encourage such links could be the use of official “citizen ambassador” programs. Prominent diaspora members in various business industries could act as facilitators to help foreign investors carry out business exchanges and business development opportunities in Iran. In this way, acting as largely private “citizen ambassadors”, possibly sponsored by the National Development Fund of Iran, the complication of doing business in Iran can be greatly lessened.
Alternatively, grassroots startup organizations currently emerging in Iran, such as Startup Weekend and Tedx Tehran, can form ties with diaspora communities so as to create an avenue for diaspora members to get involved in the Iranian startup scene.
It is clear that the tech expertise and experience of established global Iranian entrepreneurs is necessary for a thriving local ecosystem.
Mobile Payments in Iran
“It is hard not to see how Bitcoin will disrupt a banking and money industry characterized by gatekeepers, exclusivity and multiple checks.” (Martin Pasquier)
One interesting avenue of growth is the use of new technologies and currencies that can be used to help overcome political obstacles. With a growing range and sophistication of virtual currencies, from the established (Bitcoin), to the old fashioned, (airtime minutes), to the alternative (Dogecoin), there are clearly many choices for companies seeking alternatives to the traditional banking system. Given the problems Iran currently face in terms of remittance payments, the Western sanctions may have ironically given the virtual currency industry a significant boost.
Support startups hiring engineers with tax cuts/grants for each engineer hired
“Price of talent is unequal. Engineers can earn up to $10k/month in government industry, vs. only $2k in tech startups” (Mohsen Malayeri)
Mohsen Malayeri is one of the most prominent creators in the Iranian market right now, (We covered him earlier in this article). Talking to him at Startup Weekend Shiraz, he related one of the key obstacles for startups in Iran.
Given the unequal salaries that one may can expect in the different industries, it is harder for young startups to compete with establish government sectors. In order for a truly competitive private sector to gain strength, more should be done by way of tax cuts and grants to allow tech startups to gain access to the kind of talent they need to boost their growth opportunities. With a recent increase in calls for the government to better allocate the resources available in their National Development Fund, a fund generated to help boost private industries, the above proposal should certainly be paid close attention to.
Train engineers in business & management
“Students choose their orientation very early. Future engineers don’t learn humanities, and lack a global vision that helps to be a leader on top of a specialist. They need business skills” (Natalie Copuroglu)
One common criticism of the Iranian education system is their emphasis on tech-heavy disciplines, with little enthusiasm towards the humanities. That the Supreme cleric in Iran has warned against moderate president Hasan Rouhani’s attempts to reform the humanities is perhaps not very encouraging.
The lack of this holistic educational background can be troubling. A humanities education is more than just an understanding of complex arguments; it is an appreciation of a wider scope of life phenomena. Through a broader understanding of society, one may begin to identify greater opportunities. Steve Jobs himself, arguably the world’s greatest salesman, confessed that without his understanding of calligraphy, the Macbook would probably not have been so successful. The idea that humanities can be essential for the growth of startups is well recognized, as this US humanities-based startup event shows.
Without this broad understanding, it is easy to get caught up in the technical details. One commentator has gone so far to point out that many Iranian innovators have overlooked the importance on implementing their idea, focusing instead on the idea itself.
Entrepreneurs in Iran would do well to heed the lessons of a humanities education, to grasp aspects of business, society and culture that would help propel the merits of their tech idea forward.
Support grassroots initiatives which help grow an entrepreneurial mindset
“During the Startup Weekend in Shiraz, there were an astonishing 64 pitches, when a usual hackathon have about 15-30 pitches. People here have ideas and a will to realize them” (Natalie Copuroglu)
If there is one thing the Iranian government does recognize, it is the importance of startups and other enterprises to the national economy. 31 government funded tech incubators dot the nation, churning out innovative ideas daily. Unfortunately, the government has thus placed a greater priority on startups focusing on petroleum technology and agriculture, the key industries under its control. As a result, many other forms of startups, tech or otherwise, find themselves with few avenues for funding and support.
Perhaps then the above incident that Natalie relates is not so surprising. After all, with little other avenues, many entrepreneurs crowd private accelerators such as Startup Weekend in order to gain access to funds and mentors. The potential that exists here is something investors and VCs would do well to take note.
Yet many of them do well. DigiKala.com is one such example, an e-commerce platform that has generated $100 million in revenue in this year alone. Evidently, there exists a wealth of untapped potential that exists within the Iranian startup ecosystem. Whether it will be the Iranian government or grassroot investors that will quickly recognize such a potential and be quick enough to take advantage of this resource gap is as yet unclear.
Identify and support startups addressing local needs and market specificities
“Finding a doctor in Iran is a very complicated process, as people usually rely on research and word of mouth and the Pareto’s Law prevails, where 20% of the doctors see 80% of the patients. There is a need for structured information about health related professionals and providers in Iran and Shafajoo is trying to address this pain point” (Natalie Copuroglu)
A unique blend of political situations and economic realities make Iran a particularly interesting market for many emerging startups.
We have in Iran an extremely tech savvy population that is well aware of the plethora of services available for Western markets. Yet, many of these services are scant to not available in Iran. With no large corporations raising the barriers of competition, a whole host of startups have been rushing to fill in similar gaps in the market. Esam (Ebay), Albasco (Amazon) and Aparat (Youtube) are just some of the Iranian counterparts of popular web services.
DigiKala.com, the e-commerce platform mentioned earlier, came about as a result of a mixture of a lack of large shopping complexes and the prevalence of traffic congestion in Tehran. Without Ebay or Amazon, these simple problems have resulted in a $400 thousand daily income for the founders of DigiKala.com.
All of these are examples of needed services that have a potentially vast area of growth. To be involved in the Iranian market, one must be aware of a broader sense of the needs of the Iranian people.
Connect successful local startups to like-minded market abroad for scaling
“A platform such as Shafajoo would solve a similar problem in China or the Middle East, as diploma mills is a rampant problem. Recently, a list of 100 fake universities in China was revealed in the press and in the Middle East, it has been reported that about 620 Saudi govt employees found using fake degrees.” (Natalie Copuroglu)
With China and the UAE currently the largest trading partners of Iran, the potential for Iran-developed startups to expand overseas is not such a farfetched one after all.
Consider Iran’s large Farsi-speaking market (80m people) that can cheaply test and refine any Iranian product. Grant that the opportunities for expansion will be aided by Iran’s favorable geographical location to Turkey, the Middle East, Central Asia and China. From there, with the assistance of well-established diaspora communities in India, Canada, US and Europe, this product will now set itself up on the global stage.
As Mohsen Malayeri declares, “I have no doubt we will soon, then, build globally competitive software, globally top selling apps, that Americans will use without knowing it is from Iran.”