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Iran’s Startups In Panic Mode As Shares Go To State-Tied Firms

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The sale of the majority of the shares of Iran’s most prominent startups to quasi-governmental companies has raised concerns regarding the state’s growing influence in the sector.

Unconfirmed reports are circulating on social media that the shares of two leading Iranians startups, Digikala and Snapp, were sold to government-affiliated communication operators, Hamrah-e Aval and Irancell. Digikala is Iran’s biggest online retailer and Snapp is the country’s main ridesharing app. Likewise, half of the shares of Tapsi, another ridesharing app, was sold to Golrang Industrial Group, a government-backed holding.

In an interview with Jahan-e-Sanat daily, Mohsen Mirsadri, the chairman of the commission for new businesses and knowledge enterprises of Iran’s Chamber of Commerce, warned against the government’s rising influence in the startup sector.

“Competition is one of the main drivers of exploration and creativity, and when governments play a large role in the economy, it becomes uncompetitive. As governmental and quasi-governmental enterprises increasingly intervene in the economy, it impacts all other rival companies,” he stated amid the country’s economic crisis.

In recent years, Iranian startups have been facing numerous obstacles, including long-term inflation, international sanctions against the country and the resultant problems with currency transfers, depreciation of Iran’s national currency and migration of skilled workforce, he stated, further adding that the unpredictability of Iran’s economic conditions has caused a recession in investment and the withdrawal of productive capital from the startup sector.

Under such circumstances, companies like Digikala, Snapp, and Tapsi might find no other way for survival than resorting to governmental and quasi-governmental companies.

Meanwhile, the owner of an Iran-based tourism startup who spoke to Iran International on the condition of anonymity, stressed that the government’s security and intelligence agencies have recently ramped up their efforts to control startups and digital companies.

“Intelligence agencies will initially ask digital companies to cooperate on security issues, particularly to provide users’ private data. If they refuse do so, the government will begin to exercise pressure on them in different ways,” he remarked, further adding that the government of President Ebrahim Raisi has employed a tougher stance towards independent startups after the 2022 Woman, Life, Freedom movement, triggered by the death in morality-police custody of Mahsa Amini.

“Once controlled by the government, these startups can also be a safe haven for money-laundering and thus serve the interests of people and organizations affiliated with the Islamic Republic,” he pointed out.

This is while Vice President for Science and Technology Rouhollah Dehghani Firouzabadi rejected as “rumors” recent reports regarding the government’s pressure on startups to sell their shares. Digikala and Tapsi both sought the government’s help to revamp their activities and we agreed to help them, he claimed.

In February, Hossein Shariatmadari, the editor of the hardline newspaper Kayhan and a figure close to Supreme Leader Ali Khamenei, said that the management of several digital companies, such as Digikala and Snapp, will “fortunately” be transferred to those “who serve the state.”

In August, several online shopping platforms, including Digikala, were shut down by the government over their staff’s defiance against compulsory hijab. Digikala was also accused of blasphemy in February over designing mugs, cups, and shoes with names and humorous short texts, some of which reference holy Shia figures like Fatemeh Zahra, the daughter of Islam’s prophet. Following the allegations, pro-government vigilantes wrote threatening messages on the walls of the company’s building in Tehran.