After five years of international sanctions, Iran can once again open its doors to the world. During this period, thousands of budding startups have laid the groundwork for a Persian Silicon Valley.

Tehran by night

Its developers are young, with shaved or well-maintained beards, wearing jeans, sneakers, plaid shirts, or T-shirts. Negin Amiri wears a hijab, but she puts on makeup and dresses like an American. With computers everywhere, air conditioning running 24/7, and a relaxed atmosphere, AKO Smart Technologies feels very Silicon Valley. The Iranian startup, founded in 2016, designs integrated bracelets that measure blood glucose levels in their wearers – thanks to AI and infrared spectroscopy.

Outside the windows, you can see the jammed up, animated city streets of Tehran. It’s hard to imagine that inside the modest gray and yellow sun-battered buildings, there is a multitude of dynamic and open tech startups – a long way from the world’s image of the Iranian capital ever since the fall of democracy and the rise of the Islamic Republic.

At 31 years of age, Negin Amiri already has a master’s in electrical engineering, and an education in AI and in Deep Learning. She’s part of a new generation of Iranian engineers that is attracting the attention of Europe and the United States, and for good reason: while in France, the STEM fields struggle to attract women, in Iran, women represent 50% of students, and the former Persia has more female engineers than anywhere in the world.

Everything started in 2016, when a friend, Hamed Ghodsi, a nano-photonics researcher at Amirkabir University of Technology in Tehran, had the idea to “create a device to monitor people’s health with a bracelet,” focusing on blood glucose levels. In the beginning, it was tough for the duo to launch a startup because of “critical financial problems,” but the project was chosen for the Hello Tomorrow Global Challenge, a European competition for innovative projects that that takes place each year in Paris. “The fact that we were among 500 startups from the entire world at that event opened the doors of Iranian accelerators and incubators, who suddenly believed in us,” Negin says.

In April 2017, AKO Smart Technologies was officially created, and joined the startup accelerator Trig-Up. The device to measure blood glucose, simply called AKO, should soon be operational. “Now we’re looking for investors, new recruits, and new premises,” the young engineer says.

5,000 startups

AKO is part of a booming ecosystem of startups in Iran. In 2018, there were more than 5,000 – while eight years ago, “you could count them all on your hand,” remembers Mohammadreza Azali, cofounder and CEO of Techrasa, the only English-language media covering entrepreneur and tech news in Iran. According to him, “university students today all want to build their own companies. It’s a new horizon for this generation.”

There are Iranian startups in all fields, from biotechnologies to e-commerce, using information technologies, fintechs, and collaborative economy. Without a doubt, the most famous young Persian company is Snapp – an Iranian version of Uber. With its 200 employees, its 500,000 users, its $200 million and its 80% growth per year, the app is all the rage in Tehran. And for good reason: it has no competitors. Because of international sanctions that resulted from Iran’s nuclear program in 2012, Uber has long been banned in the country, as well as Facebook, Apple, Google, and the other web giants.

The number of Iranian startups exploded between 2012 and 2017. Paradoxically, somewhat like China, Western sanctions (particularly the prohibition of international bank transfers), which initially choked the country’s economy, eventually stimulated it, giving Iranians the chance to launch their own projects and startups in a protected space with no foreign competition.

With Google’s and Apple’s app stores blocked, young and inventive entrepreneurs have been able to design their own versions of Uber, Amazon, Fitbit, and Facebook. They’re replicas of these tech giants, yes, but adapted to the needs of Iranian consumers on the local market. “What we’ve developed thanks to the embargo are often copies, but better suited to Iranian society, customs, culture, ways of consuming and use,” says Moojan Asghari, who spoke to us on Skype from her hotel room in Tehran.

Moojan, 28, left Iran and its capital in 2012 to study in France, earning her master’s in Finance / Management Control at EDHEC Business School. “I stayed there, I started working there, and right now I’m a tech entrepreneur,” she said. In 2015, she cofounded Startup Sesame, an accelerator program that “helps European startups grow and develop with tech conferences and meetings.”

Now at Sigfox, a French telecom operator of IoT (Internet of Things), Moojan manages Hacking House, an “innovation space for disruption” that gathers students from around the world to familiarize them with the Internet of objects. But if she’s returning to Iran today, it’s because she’s just organized the first international event dedicated to Iranian startups: the Silk Road Startups Summit. “In 2016, coming back to Iran for a ‘Startup Weekend‘ [an event that unites aspiring entrepreneurs, designers, developers and marketing pros], everything was unrecognizable: I found an ecosystem of young, dynamic businesses, nothing like what existed in 2012. Between Startup Sesame, entrepreneurs, and Techrasa, we decided it would be good to organize an event to unite Iran’s tech community, the crème de la crème, in order to show the world what was happening here,” she remembers.

Inspired by the French tour of social entrepreneurs Ticket for Change, for which she volunteered, Moojan Asghari organized a road trip in October 2017, meeting Iranian startups and their “young talents” across the country, from Isfahan to Shiraz. “Way too many things are centered solely in Tehran, which leaves no place for other cities to innovate,” she explains. Out of 400 startups she met on the trip, 16 moved on to the “final” (which included AKO Smart Technologies) to be rewarded at the Silk Road Startup Summit, which took place April 18-19, 2018 on the small island of Kish, a “Free Trade Zone where anyone can go, visa or no visa.”

With her event, Moojan is ecstatic that “entrepreneurs and investors from around the world came to find out what’s happening in Iran,” but also that the founders of Iranian startups were able to network with foreigners. A year after the international sanctions were lifted, the young entrepreneurs hope to attract foreign investments to their businesses. But how do you attract someone without travelling to see them? “Today, it’s really hard to get a visa and leave the country, and the ban on international bank transfers literally blocks our entrepreneurs: with a summit like this, the whole world comes to us.”

Despite the lifting of sanctions, access to Facebook and rest of the Big Four companies remains blocked, thanks to Iranian government censure. “But we’re all using VPNs (virtual private networks) to connect to the Internet and especially to go on Telegram, where we can read the news, do online marketing and electronic commerce, and above all, figure out what’s going on in other countries,” Moojan says. Thanks to these VPNs, young Iranians, in addition to being educated and decked out in diplomas, are ultra-connected: as well as a vacuum of foreign competition for the past five years, startups have also benefited from an interior market of 80 million people, of whom 60-70% are technophiles under 35. According to the minister of Telecoms, the rate of Internet use is currently at 83%, and 47 million Iranians have smartphones – and therefore new needs.

Riding the new Iranian generation’s growing interest in e-commerce and digital, dynamic startups, united in the Iran Internet Group, have made European and American models pale with envy. Among them is the emblematic Digikala, the Persian equivalent to Amazon. A leader of online commerce in the Middle East, the site, launched in 2007, is so popular and integral to Iran that “if Amazon ever landed here, it wouldn’t win many people over. Consumer habits in Iran are too different than those in the West, and Amazon would never be able to adapt in time against Digikala,” Moojan Asghari says with conviction.

Silicon Pardis

Just 20 kilometers from Tehran, the tech park Pardis, with its 1,000 hectares, welcomes more than 400 businesses – ISPs, banks, call centers, science labs, but also startups specializing in AI, biotechnology, and nanotechnology. Built in 2002, Pardis Technology Park is, according to director Mehdi Safarinia, “the technology pole of Iran, where the best companies in the country come.” So much so that the media likes to call it the “Iranian Silicon Valley.”

But are we really witnessing the birth of a new Silicon Valley in Iran? The question makes Iran Seyed Raeisy smile. After studying in Canada and Great Britain, the young Iranian returned to Tehran in 2016. Until last March, she worked at Avatech, a startup accelerator, as a “program developer for tech startups.” While adjusting her hijab, she explains that she’s been to the Californian Silicon Valley, and “that It’s not really the same thing. It’ll take us a little while to get there, maybe another 15 years: our startups are still young, and we need more accelerators, investors and technological solutions.”

Although it’s easy today to launch a startup, especially with its lack of regulations, “it’s still tough to find funding afterward to keep it going,” Negin Amiri says. And yet, incubators and accelerators are growing rapidly in Iran (there are around 100), thanks to financial aid from president Hassan Rohani and from the “vice-president of science and technology” Sorena Sattari, who wants to bring back the “brains” who have left the country and, with their help, to boost vital areas like health, agriculture, and education.

“Sorena Sattari is a young, very open and communicative man who is aware of the challenges that startups face, and also of the interest that that represents to create jobs for the youth, faced with a high unemployment rate,” Iran Seyed Raeisy says. But the vice-president can’t work as fast as he wants: in a report by Arte, the Swiss documentarian Marc Wolfensberger notes that Iranian startups are “under pressure,” the targets of intimidations by the conservative party of the Supreme Leader Ali Khamenei. “Conservatives regularly publish anti-startup articles. They think that the money is coming from foreign countries, that it’s an imported culture… for example, they accuse taxi companies like Snapp of being responsible for traffic problems… it’s completely idiotic, since it’s actually a way of reducing traffic jams, but they have plenty of means to attack them,” says the report of an Iranian blogger nicknamed “Jadi.”

Before changing things at a political level, Iranian entrepreneurs are already trying to develop their projects, while seeking investors – Iranians, but also foreigners, which in reality is far from obvious. At AKO Smart Technologies, Negin Amiri explains that her startup (which hopes to bring its sensor-clad bracelet to global markets by 2020) now needs foreign investors, but that “it’s really difficult because of ever-tense international relations and banking transactions getting disrupted, despite the partial lift of sanctions.” In other words, as notes, “any company trading with Iran that has interests in the US risks heavy American sanctions.”

Despite that, Iran Seyed Raeisy notices that Iranian startups are already starting to attract Chinese and European investors – like the German startup company Rocket Internet (originally from Zalando), which finances the e-commerce site Bamilo, or the Swedish Pomegranate Investment, which participates in the Iranian incubator Sarava (whose venture capital funds financed Digikala). “Some foreign investors are interested in Iran for its economic potential, but many are still allergic… the challenge is also to change our country’s image,” she says. For the former member of Avatech, “we must not forget either that we also need more Iranian investors. Because it’s still an immature ecosystem, and many here simply don’t know how to support startups to help them break through.” She adds that “what we’re missing most of all are business and commercial talents. We have a lot of engineers, but very few business schools.”