From Digikala To Hamijoo: The Iranian Startup Revolution, Phase Two

Courtesy of The Guardian, an interesting article on Iranian tech start ups:

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.” 
Founded by Tabassom Latifi

Mamanpaz is a Tehran-based online food delivery service which offers dishes cooked by actual mums to customers who prefer home cooking to canteen food or takeaways. Around 200 customers a day enjoy its old favourites such as “Lubia-polo cooked by Maman Maryam”, a combination of rice, green beans, minced meat, tomato and saffron, priced at around £2.

Tabassom Latifi, 29-year-old founder of Mamanpaz, was working for a corporate bank before she left to pursue this project. The idea took shape while she was participating in a startup weekend in the Iranian capital and was officially launched just over a year ago. Latifi did everything herself to start with but now has four office staff and five motorbike delivery people. Mamanpaz has various ways of testing the quality of the mothers’ cooking including snap inspections of their kitchens and seeking customer’s feedback via text message.

When Latifi first advertised for chef mums she was overwhelmed by the numbers who applied, from well-off housewives who wanted to be active in the societyto “single mums who take care of a whole family – I’m happy our project is helping them in a way as well.”
Founded by Mohammad Noresi

Hamijoo is an online crowdfunding site that aims to help Iranian artistic and film projects – much like Indiegogo. In an economy struggling with international sanctions, Hamijoo tries to find an alternative way to support art and culture.

Its founder, Mohammad Noresi, is a 28-year-old graduate of biomedical engineering. He has previously worked on a number of failed tech startups but this latest project has quickly proved itself. Within two months of its launch, Noresi has had to taken on three new workers and is seeking to employ more staff.

Noresi says that more than 160 people have used Hamijoo to fund artistic projects so far. The five projects the site is currently collecting money for include a documentary by award-winning independent Iranian film-maker Mehrdad Oskouei. The film, called Daybreak Dreams, is the third instalment of a trilogy about children held in an Iranian juvenile rehabilitation centre. It took Oskouei seven years to obtain official permission to make the documentary, which is currently in post-production and has so far attracted 96m rials (around £2,000) from 23 different donors, 38% of the target.

Another project, a music album by Meysam Azad, has so far attracted 111 donations, a total of 20m rials (£400), 10% of its target. The big challenge, says Noresi, is that the Iranian diaspora who might like to participate have no means to transfer money to Iran because of the sanctions. “So many people have contacted us from outside Iran because they want to donate too but currently there is no way for them to transfer their money to us.”

Noresi will be travelling to Germany in June to participate in the iBridges conference, which is the biggest gathering of Iranian tech startups. It will be his first trip abroad ever and he hopes to meet big investors there. 
Founded by Nazanin Daneshvar

Takhfifan is a popular Iranian version of the deal-of-the-day website Groupon, the deal-of-the-day website, offering discounts in nine categories on from restaurants and coffee shops to theatre and concert tickets. It has more than a million email subscribers and offers 20 to 25 deals a day.

Its founder, Nazanin Daneshvar, is one of a growing number of women running tech startups in Iran. She left her lucrative investment job in Germany four years ago to return to Iran and become an entrepreneur in her home country. With the help of her sister, she launched the website, which at first offered just one deal a day on food and entertainment but soon grew to its present size. A deal advertised earlier this week offered 70% off a concert ticket at Tehran’s prestigious Vahdat hall. As the founder of a successful Iranian startup with 60 employees, Daneshvar was among a small number of Iranian entrepreneurs invited to a Silicon Valley conference last year to speak about Iranian tech startups. She is among Iran’s steering team of the forthcoming iBridges conference in Berlin.

Daneshvar says that when she started her project people in Iran were sceptical. “Four years ago, people in Iran didn’t know what startups were or they associated them with fraud,” she says today, “but now they are taken seriously and people show trust.”
Founded by Mohammad-Javad Shakouri Moghaddam

Aparat is an Iranian online video-sharing site which has become a household name in Iran. Like YouTube it shows everything from music clips to films to videos of cats. Its founder, Mohammad-Javad Shakouri Moghaddam, is also the CEO of Aparat’s parent company Sabaldea, which is behind a number of other successful startup projects in Iran, including, a Persian-language social-networking site with more than 3 million users, and, a free blog hosting service. Shakouri Moghaddam’s company started with three people 10 years ago and now has a staff of 65. Five million videos a day are watched on Aparat, and the site gets about 150 million hits a month. Recently Aparat has introduced a new service called Filimo, an Iranian version of Netflix, which is currently available free of charge. The authorites’ blocking of YouTube has inevitably contributed to the success of Aparat in Iran, says Shakouri Moghaddam, but he hopes to keep many of its users even if the Youtube ban is lifted.

“Of course the absence of YouTube here has helped us to grow,” he says, “but even if the filtering were lifted our emphasis on original content means we will be less affected.”
Founded by Hamid and Saeed Mohammadi

Digikala is an online Iranian e-commerce site similar to Amazon. It has been hugely successful, ranked by Alexa as the sixth most visited website in Iran, and is the biggest of its kind in the Middle East. With around 750,000 visitors per day and more than 2.3 million subscribers, 85-90% of Iran’s e-commerce takes place on Digikala.

Digikala was founded by two brothers, Hamid and Saeed Mohammadi in 2007. The idea first came to them, says Hamid, when they were looking to buy a digital camera online but could not find an Iranian website that gave the right specifications for various models and good reviews. They launched Digikala in a small rented office in Tehran with a group of seven people, offering only two products – mobiles and digital cameras.

Today, Digikala is reportedly worth $150m, has 760 employees and is operating in more than 20 Iranian cities, shipping more than 4,000 orders per day. It has same-delivery services in Tehran and the adjacent city of Karaj, and offers next-day deliveries to 20 other cities.

According to Mohammadi, the company has seen a 200% growth year-on-year since it was established. Although Iranians are cut off from the outside world financially and do not have access to international credit cards they have debit cards issued by Iranian banks, which work online internally. Digikala now sells everything from smartphones, to books, household items and cosmetics.

If sanctions were lifted, would Mohammadi fear Amazon would start delivering in Iran? “I don’t think Amazon is a threat to us. Even if they do see Iran as so big a market, they would have to establish a Persian-language Amazon. I think lifting sanctions would be more of an opportunity for people like us than a threat.”

This entry was posted on Thursday, June 4th, 2015 at 8:03 am and is filed under Iran.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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