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Iran's innovation space collapsing under pressure, tech leaders warn

Aug 7, 2025, 08:52 GMT+1Updated: 05:21 GMT+0
The office of Iran's leading tech company, Divar, in Tehran
The office of Iran's leading tech company, Divar, in Tehran

A group of leading Iranian tech entrepreneurs has warned President Masoud Pezeshkian that mounting state interference has left emigration the only remaining option for technology firms trying to survive.

“Some security agencies, through official letters, have prohibited government institutions from cooperating with the country’s major startups. This trend has continued with the sealing of central offices of certain companies, revocation of licenses, arrest of investors and executives, forced exit of shareholders and investors, and prevention of platforms from entering the stock market,” the letter said.

In the letter signed by the founders of Iran's largest e-commerce platform Digikala, travel agency Alibaba, streaming service Filimo, Android App Store Cafe Bazaar, and classifieds platform Divar, the group accused security bodies of executing a systematic effort to subdue and dominate the startup ecosystem and warned of the sector's imminent collapse.

They wrote that increasing political pressure has extinguished motivation among young professionals and forced a shift toward mass organizational migration.

“Now, today, we witness an unprecedented move: the same forces have issued an order to halt the operations and remove the founder of one of the major local platforms. The result of this process is the shutdown of one of the most exceptional innovation ecosystems in Iran’s history…. We are losing our human capital, financial investments, and the motivation of the new generation.”

The letter was referring to the removal of Divar’s founder, which the authors called an “extraordinary sign of security institutions asserting full control over the private sector.” They said the process had moved from interference to outright takeover.

IRGC officials informed regulators that the company’s IPO could proceed only if founder and CEO Hessam Mir Armandehi was removed—an instruction Armandehi later published in full.

The Washington Post on Wednesday reported that the Islamic Revolutionary Guards’ Corp (IRGC) intelligence wing intervened this spring to block Divar’s stock market listing.

The move came after the company’s refusal to hand over user data or sell shares to firms tied to Supreme Leader Ali Khamenei’s economic network, according to the report.

“This leads to lower investment, of course, and it leads to capital flight not only from investors in Divar but also in many other digital companies,” Mahdi Ghodsi, an economist at the Vienna Institute for International Economic Studies, told The Washington Post.

“If they continue these kinds of policies, they are helping the collapse of the Islamic Republic.”

In their letter, the tech founders warned that countries such as the UAE and Saudi Arabia are actively recruiting Iran’s skilled workers and positioning themselves as regional centers of innovation. Iran, they wrote, is forfeiting its greatest asset: its people.

They urged Pezeshkian to end the securitization of the sector and restore trust before the remaining foundations of Iran’s innovation economy fall away.

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