There are sectors in the Iranian startup ecosystem that are seized by specific companies. What’s the reason? Are they really better and more experienced in doing business? Or there is a more serious problem such as lack of a fair competition?

We can search this problem in the following aspects.

Connections: Some startups, consciously or unconsciously, meet some connections which can help them develop their startup much faster than the other players. Eventually, they would find a more powerful place in the startup ecosystem and get more popular among users. The monopoly over some sectors in Iran is stopping other smaller companies to flourish.

Being Chosen: In some categories, we have two or three market leaders who each try to take some part of the market. But after a while, a government body might choose one over another and show more support for a specific company.

Large investments which can crush smaller startups:  Just like Walmart which crushed many small businesses, some of the players in Iran’s startup ecosystem are receiving investments that can help them with their growth, but at the same time can crush the smaller teams working on the same ideas. Currently, some cities in Iran have their own local ride-hailing apps, but they are usually crushed or being acquired by bigger players operating in Tehran.

An example of the unfair competition and the monopoly in Iran’s startup ecosystem is the competition between Phonepay and Resid, which are two Iranian startups giving the users the ability to pay their taxi fares by using a QR Code.

Last week the Taxi Organization ordered the taxi drivers to replace any non-Phonepay QR codes and use the Phonepay application instead.

Ibrahim Savadi Nejad, CEO of Phonepay had previously said that the reason for their wide coverage of taxi routes has been their interaction with the taxi organization.

Iman Mohammadi, director of business development for Phonepay’s rival, Resid, has also said that more than a year and a half has passed since they asked for help from the Tehran Taxi Organization, while there has not been a definite answer to their potential collaboration.

Sometimes governmental organizations in Iran prefer to only trust the established companies and look at their past projects and portfolio. We can see this trait in the payment apps and platforms supported by the government.

Other examples are search engines and messaging apps supported by the government.

Recently Telegram and Instagram, the two most popular social media apps in Iran got blocked in the country. That’s when Iranian social media took the chance and started advertising themselves. The government also tried to replace Telegram instantly with the Iranian clones however it did not succeed.

Related:

Telegram Booming in Iran After the Temporary Ban

Another example is the monopoly over selling Cinema tickets in Iran. Currently, Only Cinematicket.org, an Iranian event ticket selling platform, has the permission to sell movie tickets online when there is no permission for other startups to do so.

What could possibly happen to Iran’s startup ecosystem if only specific companies have the right to work with an organization? Even though there are market leaders in every category of startups around the world, there are still many rivals which can spark the competition and result in a better product for the end user.

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