Online businesses and startups are bubbling up in Iran, with the young tech-savvy generation discovering and creating new platforms to get together and share ideas for profitable internet-based businesses and online shopping becoming a part of everyday life for Iranians.
With nearly two-thirds of the population below 35 years and an exponential increase in the number of mobile and internet users in recent years, Iran’s market is getting more and more attractive for the young and ambitious generation to start their own technology-based startups.
The term startup is used to describe the early stage in the life cycle of an enterprise where the entrepreneur moves from the idea stage to securing financing, laying down the basic structure of the business, and initiating operations or trading. In recent years, popular lexicon has begun equating startups with tech companies. Though it often is, a startup does not, by definition, have to be tech-oriented.
While some definitions categorize startups as companies with fewer than 80 employees and generating revenues below $20 million, many founders disagree saying a startup is a culture not delineated by metrics, and that a startup can remain so at all ages and sizes.
One common attribute of all startups is that they are designed to grow very quickly and generate high revenues. “It is this focus on growth unconstrained by geography which differentiates startups from small businesses,” suggests an article by Forbes magazine.
With so many young graduates—many of them software engineers—struggling to find employment in Iran, it is no wonder that the startup culture is picking up quickly among the youth. And now not only do they have successful role models to look up to, they can also attend the numerous events and activities designed to give them mentorship and inspiration.
Promising Online Businesses
In July last year, World Startup Report (WSR), a non-profit organization founded by startup enthusiast Bowei Gai, published a list of the three largest internet companies in each of the 50 listed countries selected for the research. Data was collected from online sources, stock market data, company information, and people working within startups.
The report, which was also published by the Economist weekly, evaluated Iran’s leading online shopping website, DigiKala to be worth $150 million. The other two Iranian companies on the list included Aparat group, a substitute for the blocked Youtube ($30m) and CafeBazaar, Iran’s leading android application store ($20m). America’s Google and China’s Alibaba Group topped the list, valued at $410 billion and $200 billion respectively.
The high estimated value of DigiKala left many awe-struck as they couldn’t believe such high revenues were possible through online businesses in Iran. The data was confirmed by the founders who announced revenues more than $100 million on their website.
The success story of DigiKala, founded by twin brothers Hamid and Saeed Mohammadi nearly eight years ago, has inspired many younger startups to take their businesses more seriously. “The brothers started with only $10,000 of their own savings, and turned a profit after just two months. Digikala has seen more than 200 percent growth year on year in terms of visits, orders and revenues, since launch. Staff has grown to over five hundred,” says author Amy Guttman in her article published by Forbes magazine in January this year.
But DigiKala is not the only successful online startup in Iran. Many websites and online shopping services have found their way into the Iranians day to day lives, particularly in the capital Tehran. Most Tehranis now recognize websites such as Twall, Takhfifan, NetBarg and ZarinPal, to name only a few.
Some experts even believe Western sanctions imposed over Iran’s nuclear energy program to hinder the economy, might have in fact worked to the benefit of Iranian entrepreneurs who don’t have to compete with international companies that are barred from operating in the country, which has enabled them to establish the Iranian equivalent of popular international websites.
With the internet in Iran getting cheaper and faster, and the banks facilitating online transactions, online businesses are growing rapidly. Heavy traffic and long distances in Tehran are other reasons for online shopping gaining popularity, in addition to the infinite choices and multiple user reviews provided by most online shopping websites.
Since he assumed office in 2013, President Hassan Rouhani has been promising cheaper and faster internet. Last year, the two major mobile operators in the country, MTN Irancell and Hamrah-e-Avval were licensed to provide 3G and 4G internet services to users after Rightel’s exclusive 3G contract expired.
Acceleration, Inspiration, Motivation
Meanwhile, a number of events and programs have focused on providing the required mentorship and motivation to the young startups. Startup weekends, startup accelerators and regular events organized by Iran Entrepreneurship Association and Startup Grind are some prominent events regularly held in different cities in Iran.
Startup accelerators are programs designed to help new startup companies to develop by providing services such as management training or office space during a set duration of time at the end of which the startups ‘graduate’. Accelerators often offer their services in exchange for a certain share in the startup companies’ future benefits.
More than one hundred people recently competed for a place at the country’s first private accelerator, Avatech. Founded by startup enthusiast, Mohsen Malayeri – also the founder of Anetwork, the leading online advertising platform in Farsi—the accelerator accepted its first class in October last year.
Headquartered in Tehran University, Avatech provides entrepreneurs with mentorship, entrepreneurial training, seed funding and a creative workspace for a period of 6 months, at the end of which, selected teams showcase their products before more than a hundred accredited investors and receive funding to grow their businesses. The current batch of Avatech accelerator program consists of 11 teams, selected out of the 20 initially accepted teams.
Startup Grind is a global startup community designed to educate, inspire, and connect entrepreneurs. Local chapters in more than 150 cities and 65 countries host monthly events featuring successful local founders, innovators, educators and investors who share lessons learned on the road to building great companies.
Iran currently has three local Startup Grind chapters in Tehran, Isfahan and Zanjan. Startup Grind Tehran, represented by entrepreneur Milad Saberi, the CEO and founder of Karbank.ir, has organized six events over the past seven months and invited successful Iranian entrepreneurs to speak about the challenges and opportunities in their businesses.
The seventh Startup Grind event is scheduled to be held on March 15 and will host Nazanin Daneshvar, the founder of Takhfifan website as the special guest. Takhfifan is Iran’s first group buying website, similar to Groupon and Yelp, founded in 2010. Previous guests in the Startup Grind include the founders of Avatech, Zoragh, Fidilio, NetBarg, ZarinPal and tiwall, all successful and recognized internet businesses in Iran.
Startup weekends are 54-hour events where developers, designers, marketers, product managers and startup enthusiasts come together and share ideas, form teams, build products and launch startups. Startup weekends are currently held in various cities across Iran, including Urumieh, Mashhad, Isfahan, Yazd, Bushehr, Bandar-Abbas and Gorgan, in addition to Tehran.
Internet startups are currently one of the most promising among the tech sector in Iran. With the internet and banking services improving slowly but steadily and more people realizing the economic value of online businesses, the market is getting bigger and more attractive for tech startups by the day. There are still huge opportunities in Iran’s tech market for both entrepreneurs and investors; so when it comes to how much the sector could grow in the future when the Iranian market eventually opens up to the world, the answer is: sky is the limit.