Start-ups Are Changing Iran’s Economy

Earlier this week, Financial Times writer Najmeh Bozorgmehr reported that, “It carries at least 1m passengers every day, has an 85 per cent share of its local market and people speculate about its billion-dollar unicorn potential. Yet most people outside of its home market will not have heard of Snapp. It does not operate out of Silicon Valley or a European capital, but Iran.

“The ride-hailing app — a version of Uber — is one of thousands of start-ups that have flourished in the Islamic republic in recent years. Initially under the radar, they are beginning to shake up an economy dominated by state institutions, wracked for years by sanctions and which is struggling to tackle youth unemployment officially running at more than 25 per cent.

“In January 2016, Snapp handled just 100 rides a day in Tehran. It now has 600,000 registered drivers across the country. A joint venture of the country’s semi-state-run Irancell Telecommunications Company and South Africa’s MTN, it operates under the umbrella of the Iran Internet Group, a private holding company.”

The FT article explained, “For tech-savvy young Iranians the arrival of the gig economy represents a further loosening of the state’s control over their lives. About half of the 80m-strong population is under 30 and mobile phone usage is universal.

“‘Which company in the world built so many jobs in two to three years?’ says one Snapp manager who asks not to be named. ‘Start-ups are changing Iran’s economy. We have made Iran’s traditional riding [taxi] system more efficient, reduced transportation costs by 40 per cent and created hundreds of thousands of jobs.’

The story is echoed across the ecommerce sector. Digikala, Iran’s version of Amazon, was founded by twin brothers Hamid and Saeed Mohammadi in 2007 with just $20,000. It raised additional funds via Sarava, the country’s top venture capital fund, and controls more than 85 per cent of Iran’s online retail market.”

This week’s article added that, “Start-ups account for less than 1 per cent of the country’s gross domestic product, according to unofficial estimates. They are, however, attracting overseas investment and graduates of Iran’s top universities. ‘Start-ups are making a revolution in Iran’s economy,’ says Saeed Laylaz, a reform-minded economic analyst. ‘Thanks to them, the future of Iran’s economy may not be as black as it looks today.'”

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