Iran Startup Ecosystem at the Crossroads of Immigration

EghtesadOnline: With the Iranian economy in shambles and the shadow of war looming on the horizon, a large segment of the young workforce employed in the Iranian startup ecosystem is mulling immigration.

News ID: ۷۴۷۶۶۰

24 June 2019

The lifeblood of the Iranian startup ecosystem has been ebbing away, as many have already left the country and those remaining are exploring all channels to find a way out.

Harsh US sanctions against Tehran have heightened economic upheavals while tensions between Tehran and Washington have surged. These have contributed to a climate of uncertainty, which have dashed the hopes of young Iranians active in the startup ecosystem for an economic turnaround, at least in the near future.

After President Hassan Rouhani was elected for his first term in 2013 and later when the nuclear deal was signed, hope was rekindled in the country, according to Financial Tribune.

With the establishment of new ties between Iran and the global economy, international firms started investing in the country, especially in the startup ecosystem. The combination of these elements put the sector on the road to exponential growth.

However, the US unilaterally reneged on the nuclear deal and reimposed sanctions against Tehran, which threw cold water on people’s aspirations of better prospects and the Iranian startup ecosystem’s boom began to deflate.

Pulling Up Stakes

Well-known Iranian user-experience designer Asma Karoobi and founder of Tiara Studio, a local UX agency, tells Financial Tribune that a myriad of elements, including the deteriorating economic climate and uncertainty about the future, have convinced many to pull up stakes.

According to Karoobi, as the inflow of foreign investment ebbed, business prospects darkened in Iran and many skilled employees faced retrenchment.

“With the national economy going downhill and the rial depreciating, people’s purchasing power has also been slashed and their quality of life has suffered,” she said.

Karoobi notes that while wages in the startup ecosystem are higher than the national average, the amount of work and effort made by the people in the sector is disproportionate to their income and standard of living.

Stuttering Spark of Hope

A keyword that surfaced more than once during the interview with Karoobi was “hope”. She is of the opinion that the only thing that the government can do to curb the brain drain is to rekindle the stuttering spark of hope among people.

“We also need to observe that people's value systems differ. For someone, the social complexities and the always present political calamities in Iran might be unbearable. For another, better professional prospects might be more appealing than staying in their homeland while someone else would not trade off living next to their family and loved ones with anything,” she said.

The user-experience designer stressed that there is no value in immigration itself, as it totally depends on personal preferences.

Currently, Karoobi herself is on the cusp of moving to Portugal, where she plans to set up an online marketplace with an agile team.

“At its core, immigration is an adventure for me. I want to experience life in new forms,” she said.

She also notes that over the past four decades, considering political frictions between Iran and European and North American countries, experiencing life in these places have been hard for many Iranians.

“This has made immigration appealing for many. Some also think: Why should I stay here where my lifestyle is not accepted? The answer for many has been easy at hand: migration,” she said.

Karoobi concludes by saying that the immigration tide will impact the sector hardest when experienced senior managers and developers decide to leave the country.

“Then who will manage the future startups of Iran?” she asks.

Immigration Tide

Commenting on the surging immigration tide, Secretary of Tehran Guild Association of Online Businesses Shayan Shalileh says, “In the past year, over two dozens of my colleagues and close friends, who were employed in major startups, have left the country. Most of them were developers and designers.”

Shalileh believes that mature businesses would survive even when their senior specialists leave.

“The firms will hire new people. Yes, the recruits will be less experienced and yes, it will take a toll on their business in the short term, but they will survive,” he said.

However, he noted that the migration of high-end programmers will severely impact the startup ecosystem in the near future.

Asked about his personal plans, he says, “To be honest, I was planning to leave last year. But I didn’t and I regret that decision every day.”

He continues, “Maybe there’s more of a fighter in me. I have started a few new projects and I hate leaving things unfinished.”

While Shalileh tries to stay upbeat, the economic headwinds have taken a toll on his morale, too.

“I used to believe that immigration is an outright wrong decision. I even detested those who immigrated … I used to believe that people should stay in Iran and build the country. Over the past year, my opinion has changed.”

Shalileh, however, says wistfully, “Why am I still here? I still have faith that I can do some good for this country.”

Currently, Shalileh is working on a project to launch a startup center named Dayhim Innovation Factory in western Tehran.

No Room for Growth

In response to a question posted on Twitter about the rising tide of immigration among people employed in Iran’s startup ecosystem, the founder of a local crowdfunding platform Rungo, Hamideh Habibi wrote, “In short, the answer is: There is no room for growth here. Two factors have impeded the sector: official policies that mostly boil down to publicity stunts and an inherent lack of infrastructure for technological development.”

Hossein Golhosseini, founder of digital advertising agency Ad Finder, has strong ties with the startup ecosystem and says, “Even people working in major Iranian startups, including Snapp, Alopeyk, Sheypoor and others, are quitting their jobs to immigrate.”

In his opinion, with senior developers and businesspeople leaving the country, the experience-sharing process will be disrupted.

According to Golhosseini, the only hurdle that stops some people from immigration is that they have not completed the mandatory military service.

As per the law, all males upon reaching the age of 18 must serve in the armed forces for 21 months to be eligible for employment or traveling abroad.

Ehsan Mousavi, business development manager at UpLaw that offers legal consultancy services to startups, says that the immigration tide has created a noticeable vacuum.

“Businesses are facing a shortage of experienced and trained workforce. Efforts have been made for addressing the issue by setting up training courses, but we need to wait and see the results,” he said.

With all said and done, if the economic climate and public morale do not take a turn for the better, harsh days are expected for Iran’s startup ecosystem, which was expected to provide younger generations with a chance to build their dreams.