The growth of startup industries in Iran, much hyped by the domestic media over the past few years, has been linked to the usual suspects, such as Takhfifan, DigiKala and Café Bazaar Android app store.
These three companies are constantly held up as success stories for others to emulate or attack. However, constantly talking about these companies misses a very important point in their development, or how they got this far in the first place.
We now understand that entrepreneurship and startup companies are one route out of the economic stagnation, but the few examples of success narrow the actual narrative behind the scenes. In addition, the media reports do not reveal the structural problems afflicting the industry.
As a community that prizes success and detests failure at all levels, Iranian startups are learning, slowly, which models work and which are failing.
Challenge #1 – Do As I Do Hardly Ever Works
There is a growing understanding now that doing a copy-paste of western models does not always work, and tweaking existing business plans for the Persian psyche sometimes can run away with itself.
Esam.ir (Ebay) did not grab attention and Divar.ir (Craigslist) has not been an online hit.
At the same time, the Iranian entrepreneurial community faces a unique set of challenges that cannot be measured against other regional startups, such as sanctions, economic nepotism and lack of liquidity.
The objective here is not to denigrate certain parties, but thoroughly analyze the market and understand the scene over the past few years.
Challenge #2 – Limited Support
As it stands, we have less than half a dozen accelerators and incubators in Iran, a majority of which are based in the seat of higher education in Tehran. Some of these incubators are backed by the government, which indicates the President Hassan Rouhani administration's drive to propel growth and retain students.
More private sector players must play a larger role in the development of small technology and e-retail companies. The government cannot always do it and the small number of accelerators cannot host everyone.
Challenge #3 – Mentoring Startups
Entrepreneurs are the core of the private sector and the bazaar has played an important role in the development of this country's economy over the centuries. Hence, mentorship has never been a strong trait passed to the qualified youth.
There should be more pushes by organizations to have their top executives help young companies develop their own business plans.
Challenge #4 – Bandwagons Need Not Apply
A bazaar state of mind, wherein if your neighbor is selling spades, you will open up shop next door and do the same, remains a major issue in Iranian business. Originality is at a premium and trial-and-error remains king.
This situation also prevails in the startup technology market, with some less than savory copies of well-known local brands appearing online in recent months.
Like in other regional countries, there are many who go to pitch their ideas without a clear business plan. Having just a vague idea and less than accurate numbers, they expect to receive funding for fuzzy projects.
If some manage to get through, their "warm body" alone is not going to help prop up their business.
Challenge #5 – Long-Term Backing Absent
There seems to be a growing trend of startup companies hitting the proverbial "Rocks" when companies finally graduate from their accelerator programs.
At this point in any developed startup ecosystem, the successful companies will move into "co-working spaces," basically a shared office with high-end coffee-making facilities and support from mentors to help companies on their next stage growth and investment.
