The headlines about Iran’s economy have faded, but the momentum hasn’t. The $400 billion economy, the second largest in the Middle East after Saudi Arabia, is expected to grow by almost 7% next year, according to the World Bank.
Consider what happens if you match that kind of economic growth with a university system that produces 233,000 scientists and engineers a year, in an environment newly connected to most of the world’s economy. The product could be thousands of startups and small businesses — if nothing gets in the way.
A couple of months ago I spoke to Nasser Ghanemzadeh, founder of Opatan, an Iranian cloud startup. He was in San Franciso attending a workshop organized in part by the venture capital firm 500 Startups.
“The most important thing we want is the expertise is the mentorship and the knowledge, ” he said. “ Most of the experiences are here in Silicon Valley.
“In the last three years, more than 200 startups have formed in Iran. A movement has begun. It’s accelerating.”
The business environment there still faces big hurdles. Whether the businesses thrive or not will depend in part on how much government policies support them, and whether geopolitical turmoil interferes with growth. Economic freedom and personal freedom usually go hand-in-hand.
But here are seven reasons to look to Iran to produce a generation of fast-growth companies.
The size of the economy and the lifting of world sanctions: The country has a population of nearly 80 million; and manufacturing capacity unrivaled in the Middle East. Oil and gas account for only 10% of the GDP, meaning the country has a diversified base to grow from.
Most American sanctions remain in place, so we won’t see big American deals – but meanwhile, investments from companies in Europe and Asia are pouring in.
The population is highly educated: Some 9.4% has a tertiary education — that’s about 7.5 million people with a university education. “This is as large as the country of Jordan or Israel,” said Nadereh Chamlou, former senior advisor to the World Bank, at a recent event at the Washington, D.C.-based Atlantic Council’s Future Of Iran Initiative. (I listened to it, linked here online).
Iran has particular strength in tech fields: The country is home to a university known as the MIT of Iran. In Cairo a few months ago, the Iranian businessman Kamran Eliahian highlighted nanotechnology as nascent area of growth.
Despite the American sanctions, ties are forming between entrepreneurial communities in Iran and the United States. At the Atlantic Council event, Lily Sarafan, an Iranian American who is co-founder of Home Care Assistance, talked about iBridges conferences and TedxKish, a tech community gathering held on an island off Iran. Americans aren’t legally permitted to mentor Iranians, Sarafan said, but they can communicate.
The fight over visa restrictions that make it more difficult for Iranian Americans to travel to Europe is also coalescing the Iranian American community, which could become a force advocating for more ties between the new countries. “Where you have an organized group of companies advocating,” she said “the next step might be advocating for sanctions relief.
”The country’s infrastructure is undergoing a renewal. At the same Atlantic Council event, Chamlou said that on a trip to the country in January, “some people in the telecom sector told us some of the plans that are in the books,” she said. “The sector will be radically restructured.
”Change is happening faster than people expect.Christopher Schroeder, a U.S. based venture investor and author of Startup Rising: the Entrepreneurial Revolution Remaking the Middle East, told the story of two visits to Iran. “My first trip to Iran, there was very little access to 3G and 4g. It’s coming, people told me. But the oligarchs told me, ‘No way, it won’t happen,’” he said. “A year later, I came back and there were 20 million subscribers.
”One of the hallmarks of an entrepreneurial economy is the pace of change and that the rate of change increases over time.The startup scene is just entering what could be a heyday. In the United States, many industries have already been disrupted by technology: entrepreneurs come up with ideas, and hope they find a market or a problem. Sarafan said that in Iran, the young entrepreneurs are facing real issues, whether it’s pollution or climate change or the sociopolitical change.
At TedxKish, she said, “we had startup workshops where entrepreneurs were bringing their ideas … it wasn’t a matter of the transactional value of my company. It was how do I play a role in the progress of my country?”
Special Feature Article - Iran: the 'Land of Possibilities’
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