While a number of leading tech companies in Iran have applied to be listed on the Fara Bourse (an over-the-counter market), the head of Iran’s Stock Exchange has expressed his concerns by saying the current startup valuations are not accepted. 

“It’s not clear on what framework these valuations are based on, and Iran’s Stock Exchange does not approve any of the stated numbers,” said Shapour Mohammadi, Head of Iran’s Securities and Exchange Organization (SEO) as reported by ISNA. It seems that Mohammadi is referring to the recent valuations announced by Digikala and Snapp, two of the leading tech companies in Iran. 

In May 2018, Snapp, an Iranian ride-hailing app announced that its valuation is somewhere between $1.4 to $1.7 billion. Meanwhile, Digikala had also announced that this year the company is expected to enter Iran’s unicorns club, a term given to startups valued at over $1 billion. 

Since then, many experts in the market have shown their concerns about the announced valuations, saying that they could eventually hurt the market. Also, with the country’s economic situation and the Iranian Rial losing its value, the only practical form of exit for the foreign investors of these tech companies would be M&A or a public offering with an inflated valuation. 

In November 2017, the government published a report detailing the activities and achievements of President Rouhani’s second term during its first 100 days. In a section dedicated to foreign investments, it was mentioned that Digikala has received a new $100 million investment from a Dutch company called International Internet Investment Coöperatief UA (IIIC). While there were limited footprints of this company’s activities, some rumors claimed that this company is a fictitious business to raise the valuations.   

Later, Saeid Rahmani, CEO of Sarava, the leading Iranian venture capital firm investing on Digikala told Shanbe magazine that these allegations are not true and that International Internet Investment Coöperatief UA (IIIC) has been established in 2015 by a number of tech companies in Europe. He added that this company was established with a cooperative structure in order to simultaneously receive capital from a number of sources and ease the process of receiving the FIPPA (Foreign Investment Promotion and Protection Act) license for all of the investors at once. 

With the new wave of economic troubles in Iran, startups in the country are facing difficulties to raise capital from either local or international investors. This raises the question that whether IPOs could actually help these startup companies to pass this economic turmoil in the following year or not?  

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