Today Iran, tomorrow the world? Nuclear deal fires up entrepreneurs.
Foreign investors and Iranian business leaders and entrepreneurs are flush with optimism as they line up to cash in on the relaxation of economic sanctions under the nuclear deal.
Tehran, Iran — The Iranian video begins low-key, the camera panning silently as dozens of aspiring entrepreneurs click away at their computers, lost in thought.
The video, produced by Avatech, a technology incubator company in Tehran, portrays a world of ideas, of white boards and post-it notes, of coffee cups and creativity.
Then the music starts: the distinctive rock-n-roll anthem, “We will rock you,” by Queen. Tables are pounded to the beat, a singer belts out lyrics in Persian, and the energy release shows how much ambition and hope these young Iranians have in their tech start-up future – and how much greater it can be, now that a landmark nuclear deal is opening up Iran for business.
“There will come a day when everybody knows your name,” cries the singer in the video, giving encouragement to the budding entrepreneurs as a poster shows a drawing of the world. “You will see that day, when there’s no one left who can tell you that you can’t [succeed].”
While critics of the Iran nuclear deal hold forth in Washington and Tehran, at least one group is engaging with renewed aspirations: the business leaders, start-up entrepreneurs, and venture capitalists who want to cash in on Iran’s post-sanctions prospects.
Choked by years of sanctions that cut Iran off from financial markets, trade, and much of its primary source of income – oil exports – businesses are looking forward to eased restrictions that will bring 80 million Iranians back into the global economic fold.
From aircraft builders, automakers, and energy giants to telecoms and tech companies, Western firms and investors are jockeying to be ready for when sanctions ease under the July 14 nuclear deal. On Thursday, top Iranian officials in Vienna outlined plans for $185 billion in new projects by 2020, most in oil and gas, and said already $2 billion in deals have been approved with European companies.
But even more optimism is found among the sophisticated, Western-world-aware crop of Iranian graduates engaged in start-ups, high-tech, nano- and bio-technology, and other high-end scientific pursuits.
“The [Queen] video came out of the whole vibe here; we wanted to visualize the start-up culture in Iran,” says Mohsen Malayeri, a founder of Avatech, which arranges finance and professional mentoring for start-ups.
“Iran is a very young country. You see they want to take their own destiny, take their dreams in their hands,” Mr. Malayari says at an event to bring angel investors together with start-up teams. The psychological impact of the deal can’t be ignored, he says, because sanctions were “even limiting the amount of vision you have. Now it is: ‘Why can’t I think regionally? Why can’t I think globally?’ ”
The race to invest is on: Germany’s vice chancellor and economic minister, Sigmar Gabriel, led a business delegation to Iran last weekend – the highest ranking German visit in 12 years – just days after the nuclear deal concluded in Vienna.
French Foreign Minister Laurent Fabius – who has trade ties in his portfolio – is visiting Iran next week, hoping that France’s hard line at the nuclear talks does not prevent a restoration of Franco-Iranian business ties that dropped from 1.66 billion euros in 2011 to just 62 million euros in 2013.
Sanctions promoted self-sufficiency
By one count, more than 100 European business delegations – and some American ones – have arrived in Iran since late 2013, when an interim nuclear deal provided the first crack in the sanctions regime.
“I’ve been waiting really for 12 years for this moment … because the synergies are simply unbelievably big,” says Cyrus Razzaghi, president of Ara Enterprises in Tehran, which does market research and business matchmaking.
“What people don’t know about Iran is this human capital,” says Mr. Razzaghi, noting that Iranian students’ score high globally in subjects like electrical engineering, which means Iran can be a natural hub for research and development.
Another little known factor is a consequence of years of sanctions: Self-sufficiency and a diverse industrial base that forced the creation of entire supply chains at home.
“Now we can produce many things from scratch, from A to Z, not the highest quality with the most modern technology, but the value chain is there, the know-how is there,” says Razzaghi.
Support from Rouhani
Iran could therefore also become a manufacturing hub, he says, and the scene of industrial-scale projects estimated to be worth $500 billion to $1 trillion in sectors ranging from oil, gas and petrochemicals to luxury hotel construction.
“These two things make Iranian potential huge; the unlocked potential is just tremendous,” says Razzaghi. “We are under no illusion. It will take time, and will take big support of the government.”
That support has come since the June 2013 election of centrist President Hassan Rouhani. His economy minister last week created a new working group to speed the influx of foreign capital, and to expand Iran’s $100 billion stock market.
“Rouhani has quietly caused some revolutionary changes,” says Shahrzad Saderi, a Dubai-based Iranian consultant, noting reduced bureaucracy and more support for start-ups. “What they have done is recognize that if you are going to develop the country, you need investment in these ideas.”
“That’s the change: How we work with companies,” says Ms. Saderi. “We are not corporate America, but now we say: ‘Oh wow, maybe we can do this.’ This is new energy.”
Investing in tech
That impressed an American delegation of CEOs that visited Iran in the spring. Among them was Christopher Schroeder, a venture capitalist on his second trip to the Islamic Republic and author of “Startup Rising: The Entrepreneurial Remaking of the Middle East.”
The budding entrepreneurs he found “aren’t just replicating the tech start-up successes they see elsewhere; they’re improvising on them and making them their very own,” Mr. Schroeder wrote in Politico. “What may have began as workarounds until sanctions were lifted is laying groundwork – tech infrastructure, tolerance for failure, start-ups as a ‘real’ job – for the next generation of companies and entrepreneurs.”
Even while expectations grow, as Iran becomes the biggest economy to rejoin global trade and financial networks since the breakup of the Soviet Union in the early 1990s, the most enthusiastic pockets of hope are found in places like the Pardis Technology Park, 15 miles east of Tehran through barren desert hills.
A government project first built more than a decade ago, the carefully laid out avenues – “1st Innovation Street” and so on, and even a “Scientists’ Garden” – have surged with new enterprise from dozens of bio-tech, medical, and IT companies.
Bulldozers are now expanding the site. Officials told the American delegation that Iran spent $4 billion on tech infrastructure last year alone, and plans to spend $25 billion more in the next three years.
It is at places like Sarava, a local venture capital firm with a mission to invest in start-ups, where Iran’s young tech elite – some of them returned to Iran after getting their educations despite lucrative prospects in the US or Canada – are applying the Midas touch.
In well-lit, color-coordinated rooms with leather seats and open floor plans – in just one of scores of corporate headquarters here – they absorb presentations on personal branding; study American how-to guides on their smart phones; and follow on-line courses at US universities – when they are not brainstorming or playing foosball in the basement cafeteria.
One of the most successful companies Sarava works with is Digikala, Iran’s version of Amazon. It has grown from a staff of 25 to more than 800 in three years and become a $300 million company that daily ships thousands of orders across Iran.
Sarava began “start-up weekends” nearly three years ago, and in the last year – with official support – conducted 39 such weekends in 16 cities, engaging thousands of aspiring entrepreneurs.
The nuclear deal “opens up and strengthens the tie between Iran and the rest of the world … and it creates an environment of bigger hopes, where dreams can materialize,” says Said Rahmani, the founder of Sarava.
“What I have difficulty imagining is how it could go even faster.… We are working day and night,” says Mr. Rahmani. “With this rate of change, it is going to be mind-boggling what will happen after sanctions.”