Challenges Facing Startups in Iran

It doesn't matter where you live in the world these days, sooner or later you will encounter the phenomenon related to knowledge-based companies, startups, or tech firms. These companies, which rely heavily on modern technologies such as the web, mobile, and the internet, have gained attention in Iran over the past few years, with examples like Digikala and Avatech gaining significant fame. The government of Hassan Rouhani has also attempted to support this sector. Sorena Satari, the Vice President for Science and Technology of Iran, reported at a technology exhibition last winter that there are two thousand knowledge-based companies with approximately 7,700 billion tomans in sales. He also added that a budget of $200 million for an innovation fund was approved for the year 1395 (2016). In a conversation with the Information and Communications Technology News Organization (CITNA) last February, Mr. Satari explained the government's support by stating, "We must end the era of oil dominance and oil-based thinking and prioritize the knowledge-based economy with all its requirements." Knowledge-based companies in Iran are supported by the Vice Presidency for Science and Technology. Activists in this field can benefit from customs and tax exemptions, domestic manufacturing facilities, and obtain establishment licenses and operating permits. Hassan Rouhani, the President of Iran, also mentioned that these companies generate high revenues. However, not all activists in this field agree with government support, and some find it problematic. Analysts like Amin Sabati in Britain believe that the size of the government in Iran does not leave another path for knowledge-based company activists. Mr. Sabati states, "Whether the Iranian government provides tax exemptions or loans, ultimately all these companies will have to deal with the government due to its vastness. Additionally, you need a permit for everything. Iran is trying to follow China's path, which did the same and supported its domestic services more while attempting to push back Western services like Google, Facebook, and Twitter, all of which are filtered in China. And through this, it aims to maintain control over information. However, it should not be forgotten that China has a population of 1 billion, while Iran has about 80 million people." Alongside these challenges, Mr. Sabati points to issues such as copyright or authorship rights, the not-so-strong internet infrastructure, and internet filtering, while also assessing the long return on investment of these knowledge-based companies as one of their most significant challenges. Suppose after eight years of Mr. Rouhani's government, the reformists or moderates cannot maintain power; we will witness a severe shift in the approach towards the West, talking to the West, and getting closer to the West. Many elites returned, got involved, and are working, but many others returned and ended up in prison. Amin Sabati, an internet expert, adds, "Generally, startups worldwide typically incur losses in the early years. However, the difference between Iran and countries like the U.S. or even China is that there are certain investors who find it acceptable to incur losses. But the question is whether there are such people in Iran who are willing to invest for five or ten years without seeing any profit from this investment?" Since the start of the final two-year round of nuclear negotiations and the year that has passed since reaching the nuclear agreement, many activists in this field have traveled to Iran, written articles on this subject, and held conferences and meetings in various cities, which some websites close to security institutions indicate are under close scrutiny by these entities. Sorena Satari stated last February that the government's and authorities' perspective on this issue is not "security-oriented," but he emphasized that there are dangers, and foreign investment should not attract internal forces and human capital. In this regard, Hassan Rouhani also mentioned on Tuesday that in the past three years, 250 of what he calls active scientific figures from Iran abroad have returned to Iran and are mainly working in knowledge-based companies. Although the return of this number of elites was among Hassan Rouhani's statements in a press conference on Tuesday that received attention, Amin Sabati, an internet researcher in Britain, says the unpredictability of the environment has made the decision to return difficult for many other elites to Iran. According to Amin Sabati, "Suppose after eight years of Mr. Rouhani's government, the reformists or moderates cannot maintain power; we will witness a severe shift in the approach towards the West, talking to the West, and getting closer to the West. Many elites returned, got involved, and are working, but many others returned and ended up in prison, which may have been reported, or we may not have heard about many others. Therefore, the risk of this work remains high." Mr. Sabati also refers to the case of Arash Zade, the founder and editor of Blogina, one of the most famous group blogs in the field of information technology in Iran. According to the organization "Reporters Without Borders," Mr. Zade, who had been living in Turkey for two years before his arrest, was detained by the Revolutionary Guards' intelligence forces at Imam Khomeini Airport in Tehran while trying to leave Iran a year ago. Mr. Zade is also one of the founders of an association called "Kafshdoozak" aimed at "increasing women's participation in technology and internet business."