Economy, Business And Markets

Vibrancy of Iran’s Startups

Vibrancy of Iran’s Startups
Vibrancy of Iran’s Startups

The startup environment in Iran is improving, thanks to the active players in the industry working towards developing a culture that aims at encouraging the investors and owners of capital to support young talents, and a growing number of young enthusiastic entrepreneurs working tirelessly to expand their boundaries and achieve their goals.

An example of this vibrant startup culture was the Demo Day event held in Avatech startup accelerator’s headquarters in Tehran University on Friday, where the top ten selected teams of Avatech program presented their internet and mobile-based startups to an audience of more than 140 people, nearly half of which were comprised of Iranian and foreign investors; in a bid to receive funding to grow their businesses.

Avatech is a startup accelerator program that provides aspiring entrepreneurs with mentorship, entrepreneurial training, seed funding and a creative workspace for a period of 6 months. Avatech’s first cycle which started in October last year enrolled 20 teams in its pre-acceleration phase, of which 10 were selected to receive seed fund and comprehensive services for a period of 4 months in exchange for up to 15% of their share. The program’s first cycle concludes by the end of this month as the teams ‘graduate’ by raising financing for their projects.

The Demo Day event started with Mohsen Malayeri, co-founder of Avatech, giving a brief review of the ten teams in the program to the audience. The teams, comprising 85 people and 36 co-founders, were offered between 250 million rials ($7,500 at market exchange rate) to 1.25 billion rials ($37,800) as seed fund to develop their ideas, according to Malayeri. The startup teams, 70% of which were focused on mobile-based businesses, 15% on web-based and the remaining having businesses based on both web and mobile, jointly acquired more than 50,000 users during the six-month period.

 Ahead of Preparations

Samer Karam, founder of Seeqnce— Lebanon’s first startup accelerator— was a speaker at the event. Karam shared with the audience the challenges he faced since launching Lebanon’s first startup accelerator in 2010 to inspire the Central Bank of Lebanon to create Lebanon’s first sovereign startup fund in 2013, worth about $500 million. According to Karam, the fund was more than enough to invest only on Lebanese startups, which is why he has headed to Iran, among other countries, in search of promising startups to invest on.  

“Iran is not only ready, but even ahead of preparations when it comes to having a successful startup environment. The only thing missing is a link to the outside world,” was Karam’s view regarding Iran’s current startup scenario.

 Not Affected by Sanctions

Sarava Pars is a venture capital (VC) financing company established in 2011 which has invested in many successful Iranian startups including Digikala, Iran’s dominant brand in online retail and Cafe Bazaar, the largest Persian Android application store. Sarava is also the investor in Avatech accelerator program.

Sarava CEO, Saeed Rahmani pointed that what Iran currently needs to improve its startup scene is foreign expertise and experience rather than funding, since the country enjoys having a large pool of investors, mainly from the private sector. His opinion was supported by Majid Zamani, founder and CEO of Kardan investment bank who noted that: “Spending only a fraction of the investor’s money in early-stage businesses could go a long way in giving exposure to young entrepreneurs and reducing the country’s high level of brain drain.”

According to Zamani, who is also an investor in Sarava VC, the startup sector is among very few industries in the country not affected by sanctions and the economic downturn in recent years. According to his rough estimate, the sector has received nearly 2 trillion rials ($60 million) in actual investment by both foreigners and Iranians over the past couple of years despite the sanctions [imposed against Iran by the West over its nuclear program], with another $100 million committed by foreign investors so far.  

 Ten Aspiring Startups

The teams took turns to introduce their startups to investors in 15 minute-long presentations – a process termed in the startup dialect as ‘pitching’. The pitches were presented in English as nearly 30 foreign investors were attending the event. The teams explained the ideas behind their startups and how they differ from similar businesses existing either in Iran or the world. They also gave an estimate of the predicted market size for their businesses and the seed money required for achieving their first year targets, plus an overview of their business in the next couple of years. The funds requested by the teams from investors were in the range of $120,000 to $300,000.

The ten startups include Reyhoon, a user-friendly online and mobile food ordering platform. Webyad is a learning network that connects learners and teachers through an interactive web platform. Lendem is a mobile based social network that helps people share their belongings with each other. Akhbar Rasmi is a news release service for private companies that already has 260 companies registered in their websites during the six months since launch. CafeTunes is a web and mobile application that lets users take control of music around them. Navar is a mobile-based audio book store which has already signed contracts with some major Iranian publications to produce audio contents. KSNA is an online tutorial marketplace in Persian language, while is an online platform to teach how to make handicrafts while giving professionals the opportunity to buy their raw materials. Taskulu is a role-based project management platform and 2nate is a crowd-funding platform where everybody can easily create a campaign and start raising funds for its project or cause.

Investors were requested to fill out forms, listing the startups they are most interested to invest in and schedule appointments for future meetings. Avatech will start its second cycle next month, the selection process for which has already been carried out.