In recent years, Iran’s technology ecosystem has faced multiple challenges, including changes in startup ownership, the exit of private investors, widespread migration of skilled professionals, and increased government oversight and control over the digital space. These trends will have significant consequences for the future of technology and innovation in Iran, potentially leading to reduced competitiveness and stagnation in the digital sector.
Recent developments indicate that Iran’s startup ecosystem is experiencing unprecedented challenges, including capital flight, increased government surveillance, brain drain, and weak internet infrastructure. Strict policies on cryptocurrencies, heightened censorship and filtering, and tighter control over the digital sphere have all contributed to slowing down innovation and investment in this sector.
Three Possible Scenarios for the Future:
- Continued Capital and Talent Exodus
- This scenario would lead to a sharp decline in innovation and economic development.
- Increased Government Control & Replacement of Independent Startups with State-Affiliated Firms
- This shift could reduce competitiveness and further limit the private sector’s role in the digital economy.
- Growing Use of Decentralized Technologies and Alternative Methods to Bypass Restrictions
This approach could foster alternative pathways for the growth of the digital ecosystem.
Given the current situation, the outlook for digital innovation and entrepreneurship in Iran is at risk. Without fundamental changes in macroeconomic policies, the country is likely to witness further decline in this sector.
Regulations and Oversight of the Digital Ecosystem
- Changes in Startup Ownership & Exit of Private Investors: In recent years, state-owned and semi-state entities have increasingly taken over Iranian startups. Sarava Holding, one of the largest investors in the startup sector, exited the Iranian market due to security pressures. Sarava, which had stakes in major companies like Digikala, AloPeyk, CafeBazaar, and Divar, sold its shares to “Harakat Aval” (affiliated with MCI – Mobile Telecommunication Company of Iran) in August 2024. This departure of private investors reflects declining investment motivation in Iran’s domestic market and the growing influence of government-affiliated entities in the technology sector.
- Regulatory Framework for Cryptocurrencies and Digital Asset Oversight: In February 2025, Iran’s Supreme Council for Cyberspace approved a regulatory framework that includes:
- Creation of a national cryptocurrency by Iran’s central bank while restricting the use of global cryptocurrencies in domestic transactions.
- Increased supervision and control over cryptocurrency transactions to combat money laundering and capital flight.
- Development of domestic financial platforms to reduce dependence on international tools.
These policies have increased surveillance over digital assets and limited user freedom, likely negatively impacting innovation and investment in Iran’s cryptocurrency market.
- Censorship & Greater Oversight on Digital Platforms: While WhatsApp and Google Play were unblocked without clear explanations, Clubhouse was banned due to discussions about Ali Khamenei’s regional policies and negotiations with the U.S. This event demonstrated the government’s continued effort to control online discourse and suppress freedom of speech.
Network Issues & Infrastructure Challenges
- Mass Migration of Skilled Technology Professionals: According to a survey by Quera (with 5,120 Iranian programmers participating):
- 40% of programmers plan to emigrate.
- 32% are undecided but may consider leaving in the future.
- 69% cited “higher quality of life,” 61% cited “better economic conditions,” and 42% cited “greater social freedoms” as their main reasons for emigrating.
These figures indicate a crisis in the outflow of skilled human resources and a decline in Iran’s technology innovation capacity. Digikala’s CEO, Masoud Tabatabaei, compared the talent migration crisis to “death.”
- Impact of Migration on Major Tech Companies:
- 46% of Digikala’s employee departures this year were due to migration, up from 37% last year.
Divar’s CEO, Ashkan Armandehi, described the brain drain as “frightening” and expressed concern about the industry’s uncertain future.
- Frequent Internet Outages & Weak Infrastructure: Beyond regulatory challenges, infrastructure problems have added further pressure on digital businesses:
- Data Center Power Outages: On December 16, 2024, SnappFood services were down for at least three hours due to a power outage at the Afranet data center.
- International Internet Disruptions: On February 8, 2025, a fiber optic failure caused a nationwide internet blackout lasting at least three hours.
Additionally, low internet speed and domestic filtering policies remain major challenges for technology firms and startups.
