How Are Iran’s Entrepreneurs Succeeding Despite a Challenging Environment?

“No one would mistake Tehran for Tel Aviv”, says Amir Paivar, Business Correspondent for the BBC’s Persian Service about Iran’s hi-tech entrepreneurship scene. Yet, there’s a certain buzz right now about the country’s young entrepreneurs, and deservedly so, as Baldwin Berges and I discovered.  The country is home to a hi-tech scene in its infancy, but with very promising prospects.

In spite of the many impediments to business that the headlines too often note, or the sour economic climate as the Iranian economy is contracting for yet another year, hi-tech entrepreneurs in Iran are beginning to succeed.

Baldwin and I joined a Google Hangout alongside Amir Paivar as well as two Iranian entrepreneurs and Sara Usinger, Manager of Iran’s first private hi-tech business accelerator, Avatech, to learn more about Iranian entrepreneurs and the business climate where they operate.

Perhaps my own perspectives on Iran are so jaded by the headlines that I could never imagine that tech entrepreneurs would exist, let alone succeed in such a challenging market.

But they do.

A few surprising facts:

The country’s population is exceedingly young. Out of a population of 77 million, about 56 percent are under the age of 25.

Iran has more engineers per capita than any place in the world. Its student demographic composition – and in the hard sciences in particular – feature women-majorities. The country has world-class universities such as Sharif University of Technology.  Iran’s government extensively spends large portions of the country’s budget to support education and research, including science, at all levels.

In fact, Iran counts itself as a world leader in innovation in certain scientific fields such as nanotechnology. For the uninitiated, nanotechnology is an interdisciplinary field where scientists engineer atoms and molecules on the nanoscale, fifty thousand times thinner than a human hair.

Mobile penetration rates exceed 120 percent and 3G telecom technology is being introduced throughout the country. Rural access to the internet is still a challenge for the country, however Iran has more internet users than any other country in the Middle East or Central Asia.

Amir Paivar tells us that Iranians have a culture of entrepreneurship grounds itself in their culture. “Iranians tend to be individualistic,” he noted. “(Iranians) have a long traditional heritage of being a merchant nation, sitting right alongside the Silk Road.”

These traits that Amir describe perhaps factor into explaining why members of the Iranian Diaspora community are one of the most over-represented demographic groups in Silicon Valley, boasting such luminaries as Arash Ferdowsi – Co-Founder of Dropbox, Salar Kamangar – CEO of Youtube, and Pierre Omidyar – Founder of Ebay.

In Iran itself, the startup ecosystem in Iran emerged very organically about two years ago according to Sara Usinger. Around the country, students and young professionals working on solutions to issues facing Iranians began meeting on weekends. Over time, this community organized itself and members collaborated to bring to fruition some of the most promising business concepts.

To most Western firms, Iran remains a closed market. Yet Iranians want the same services that one would expect anywhere else. Today, many of Iran’s most successful tech companies are spin-offs of Western tech companies, but modeled to cater to the unique challenges of operating in the Iranian market. They include DigiKala, an e-commerce website modeled after Ebay that boasts revenue exceeding $120 million and a valuation of $150 million. Another, Takhfifan, is the product of a female entrepreneur associated with Avatech. Takhfifan’s concept is at the intersection Groupon and Yelp, with daily deals and customer reviews of businesses. Our Hangout featured the co-founders of Navaar, which is working to cater to the audiobook market, similar to Audible in the United States.

While present conditions hamper the prospects of growing these businesses outside the Iranian market, Iran boasts the second largest economy in the Middle East after Saudi Arabia, allowing these businesses plenty of room for growth.  According to Navaar’s two founders and Sara Usinger of Avatech, Iranian seed and venture capital is abundant for the best business ideas.

Despite the challenges, Iran’s entrepreneurs are beginning to tell inspiring tales of success. In the coming weeks, we will be featuring a few of those stories here.