From Digikala to Hamijoo: the Iranian startup revolution

Tehran may be thousands of miles away from Silicon Valley, home to the world’s largest hi-tech corporations and most innovative startups, but technologically, Iran’s online entrepreneurs are getting closer – despite mutual political hostility and international sanctions. This Thursday in Germany hundreds of Iranian startups will catch up with investors from around the globe in the biggest gathering of its kind, in a bid to bridge the gap.

The iBridges conference in Berlin, which aims to explore the challenges and opportunities of entrepreneurship in Iran, will be closely watched, especially at a time when diplomatic efforts to resolve Tehran’s nuclear dispute are increasing hopes for an ease in the sanctions that would enable foreigners to invest in the tech sector.

Participants from Iran include Digikala, an online e-commerce platform, which has become the biggest in the Middle East with around 750,000 unique visitors per day and is estimated to be worth $150m. Also participating is Aparat, an Iranian version of YouTube, Takhfifan (a Groupon-type website) and smaller startups such as Mamanpaz, which offers real home cooking to its online customers.

Prominent Silicon Valley investor Dave McClure, who is the founder of 500 Startups and a former investment director of the Facebook’s fbFund, will be attending. He is impressed by the list of startups that iBridges has put together. “Like many emerging economies, Iran has a large population, one which is substantially educated and has a large entrepreneurship potential,” he says. “If the country opens up and relations are restored with the US and other parts of the world, I think there is going to be a lot of economic growth. Definitely there are many interesting possibilities for tech startups, too.”

The problem, says McClure, is that current regulations do not allow investment in the Iranian tech sector. “Based on how US investment laws are structured right now it’s not possible for investors like me to invest directly in startups in Iran but we are optimistic that may change in the near future if relations are normalised.”

Internet and smartphone penetration is extremely high in Iran, where 70% of the 80m population is under 35. At least half of Iranians have access to a smartphone, according to officials. There are conflicting reports about the number of internet users but according to Internet World Stats, Iran has more than 46 million internet users (57.2% penetration), which is almost half the total number of internet users in the whole of the Middle East, although not all have regular access.

Even the government of the moderate president, Hassan Rouhani, has acknowledged the importance of the iBridges conference. “It will be a bridge between Iranian entrepreneurs across the world,” says Parviz Karami, a senior official, on the government’s official news website. “It will strengthen their scientific bases and enhance the confidence of those based in Iran.

“This is particularly significant for the country because of the sharp decline in our oil revenues, which may continue falling in the coming years. It will also help to slow down the brain drain from Iran and may even encourage some Iranians to come back.”

That’s a sentiment echoed by many Iranian entrepreneurs, including Takhfifan’s founder, Nazanin Daneshvar, herself a returnee. She is among the conference’s Iranian steering team, and describes iBridges as “a turning point” for Iran’s tech community.

The wave of Iranian startups in the past couple of years has seen the number of new companies and websites mushroom and regular startup weekends are taking place in various cities across the country. Isolation and sanctions have not stopped Iranian entrepreneurs from having ambitious plans. Farhad Hedayati, the founder of Taskulu, a task management platform, said his startup was primarily developed for use in English. The project which was developed with help from Avatech accelerator, has now over 8000 users from 120 different countries. Taskulu, however, will not be represented in iBridges as the request for a visa to the German embassy in Tehran was denied. Sanctions remain the big obstacle: Iran’s banking system is cut off from the outside world and there is no normal way of transferring money to and from Iran.

Hence, Taskulu has been forced to give services for free as there is no way for its foreign users to pay the firm. “Iran is a good place to work right now, it is opening up but the trade-off is sanctions,” he said. “Internally we can’t use many services because they are filtered from within Iran but also there are many international services which foreign companies have not made available for Iranian users because of sanctions.”

Despite these issues, Mohammad Noresi, 28-year-old founder of Iranian crowdfunding platform Hamijoo, is optimistic. “iBridges will be the first time I’m going abroad and I hope it helps us to find funds.”

But the lifting of sanctions will pose both a threat as well as an opportunity to Iranian startups, says Nima Akbarpour, presenter of the BBC Persian’s technology programme Click.

“Some big companies such as [leading mobile app store] Cafe Bazaar, which is an Android market, will probably face serious problems if Google were to directly enter the Iranian market,” he says, “whereas a company like Digikala will benefit from sanctions relief because it will have access to foreign investors.” Cafe Bazaar, which is run by 28-year-old Hessam Armandehi, is estimated to be worth $20m and offer more than 25,000 Iranian and international apps.

The other big threat to Iranian startups is Iran’s brain drain, says Mohammad-Javad Shakoori Moghaddam, founder of Aparat. “In our company, at least two people with key senior jobs have left for Canada and the US. The phenomenon is like a trap for startups like us.”

However, Hamid Mohammadi, Digikala’s co-founder, hopes that Iran’s burgeoning tech scene will prompt more Iranians to return to their homeland. “The situation in Iran is quite exceptional, there is a huge market for startups, something you can’t easily find in other countries, and maybe that’s why many of the Iranian diaspora are returning to Iran.”

Sanctions have not stopped foreign investment entirely – companies unconcerned with doing business in the US are willing to take risks. For example, a joint venture between South African telecom company MTN and the Germany-based company Rocket Internet has been launching startups in Iran, setting up Iranian versions of eBay (Mozando), Amazon (Bamilo), and even Uber (Taxi Yaab).

Rouhani has repeatedly spoken out against pervasive online censorship in the country (Facebook, Twitter and YouTube are all blocked) and has advocated free access to information – but he is not the sole decision-maker in Iran. All decisions about the internet are taken by the Supreme Council of Virtual Space, which is controlled by the hardline supreme leader, Ayatollah Ali Khamenei, who has the ultimate power in all state matters. In the words of Noresi, “filtering is like having a thorn in your leg, a thorn you have forgotten is there”.

Rouhani supports tech entrepreneurs and has also called for faster internet speeds and greater bandwidth in the country. “The era of the one-sided pulpit is over,” he said at a conference in 2014. “We should see cyberspace as opportunity. Why do we have so much fear? We should trust our youth.”

Millions of Iranians work round blocked addresses with help from proxy websites or virtual private network services (VPNs) but the authorities have responded by introducing more subtle filtering algorithms to hide content they don’t approve of. Not that this always works, after particular Instagram accounts and types of photos were blocked the company retaliated by using an encryption method which enabled all content to be viewed, including the decadent Rich Kids of Tehran account. The communications minister, Mahmoud Vaezi, has distanced the government from the establishment’s filtering policy, saying that his department has nothing to do with it. He prefers to emphasise the fact that internet bandwidth in Iran has significantly improved after a five-year gap, increasing by about four times. Users with 3G and 4G connections report better connections online, when they use Skype, for example, but “internet speed in Iran is still not in a good place”, the minister said earlier this year. Vaezi’s ministry also plans to increase the number of public buildings with free wifi by the beginning of next year.

The communications minister, Mahmoud Vaezi, has distanced the government from the establishment’s filtering policy, saying that his department has nothing to do with it. He prefers to emphasise that internet bandwidth in Iran has significantly improved after a five-year gap, increasing by about four times. Users with 3G and 4G connections report better connections online, when they use Skype, for example, but “internet speed in Iran is still not in a good place”, the minister said earlier this year. Vaezi’s ministry also plans to increase the number of public buildings with free wifi by the beginning of next year.

Iranian hardliners are nervous about iBridges. Vaezi has been summoned to parliament to explain the bandwidth increase. The Vatan-e-Emrooz newspaper, which has a conspiratorial mindset, published a front-page article in April warning that the event is aimed at orchestrating a “soft overthrow” in Iran and urged the country’s intelligence apparatus to be vigilant. It alleged iBridges founders Kamran Elahian and Hamid Biglari were closely associated with “the Zionist regime”, a reference to Iran’s arch enemy, Israel.

The conference aims to build bridges between Iranians inside Iran and the Iranian diaspora as well as with the tech industry in the west, says Kamran Elahian. He says the idea for the Berlin gathering took shape after a smaller group of Iranian entrepreneurs visited Silicon Valley in 2014. “It was a community effort. iBridges is not a place for politics or religious issues.”

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Continue Reading: http://www.theguardian.com/technology/2015/may/31/amazon-iranian-style-digikala-other-startups-aparat-hamijoo-takhfifan