This document proposes establishing a venture capital fund to invest in Iran's growing e-commerce sector. It highlights political stability in Iran, investment protections, and tax exemptions available to technology companies to argue that Iran presents attractive investment opportunities. The proposed business model involves forming a joint venture with foreign investors to inject $5 million initially and select 5 high potential e-commerce ventures for funding. The goal is to capitalize on Iran's increasing internet and mobile penetration rates and the low current contribution of e-commerce to GDP.

1. Iran
Venture
Capital
Proposi1on
vina

2. Table
of
Content
• Execu1ve
Summary
• Why
Iran?
• Why
the
E-­‐commerce
Sector?
• Proposed
Business
Model
• Venture
Selec1on
Process
• Purpose
of
Presenta1on

3. Purpose
of
Presenta1on
This
presenta,on
has
been
prepared
for
poten,al
investors
with
the
purpose
of:
• demonstra,ng
the
a8rac,veness
of
Iran
as
an
investment
des,na,on
• showing
Iran’s
fast
growing
informa,on
technology
sector
• highligh,ng
recent
successes
in
the
field
of
E-­‐commerce
• proposing
a
collabora,ve
venture
capital
business
model
to
capitalize
on
Iran’s
E-­‐commerce
opportuni,es

4. Execu1ve
Summary
(1)
• Iran
is
poli,cally
stable
with
a
moderate
government
in
place.
• Investment
protec,on
is
available
to
foreign
companies.
• A
15
year
tax
exemp,on
is
available
to
knowledge
and
technology-­‐
based
companies.
• There
is
a
strong
likelihood
of
Iran
reaching
a
nuclear
deal
with
the
west
by
mid
2015
and
sanc,ons
being
liIed
gradually.
• The
Iranian
economy
has
already
shown
signs
of
improvement
in
an,cipa,on
of
a
nuclear
deal.
• Iran
has
a
large
domes,c
market,
a
young
and
educated
popula,on
as
well
as
a
compe,,ve
workforce.
• Iran
has
significant
internet
and
mobile
penetra,on
and
growth
rates.
• The
share
of
E-­‐commerce
sector
from
the
na,onal
GDP
is
extremely
low
and
the
government
has
taken
a
number
of
measures
to
rec,fy
this.
• A
number
of
players
have
managed
to
enter
this
sector
and
succeed
in
rela,vely
short
periods
of
,me.

5. Execu1ve
Summary
(2)
• There
is
significant
ac,vity
in
the
E-­‐commerce
sector
with
record
number
of
start-­‐up
events
being
organized
across
the
country.
• There
is
a
serious
shortage
of
private
venture
capital
firms
with
the
exis,ng
one
being
somewhat
risk
averse
and
concentra,ng
on
late-­‐stage
funding.
• Our
proposed
business
model
entails
the
forma,on
of
a
joint
venture
with
the
foreign
investor
and
our
company
having
the
op,on
of
taking
stock
op,ons
in
the
joint
venture
as
well
as
selected
ventures
in
lieu
of
the
management
fee
and
carry
percentages.
• Our
business
model
is
based
on
the
injec,on
of
“smart
money”.
• Having
used
numerous
sources
of
accessing
exis,ng
players
in
the
E-­‐
commerce
market,
a
large
number
of
them
were
assessed
and
scored
using
pre-­‐defined
criteria
leading
to
the
selec,on
of
5
high
poten,al
ventures
ready
for
receiving
funding.
• Based
on
exis,ng
and
projected
opportuni,es,
it
is
es,mated
that
a
fund
in
the
magnitude
of
$5m
with
a
commitment
of
$20m
will
be
needed.
• The
next
step
requires
our
company
to
enter
into
an
agreement
with
the
foreign
investor
followed
by
the
seVng
up
of
the
joint
venture
so
that
the
selected
ventures
can
receive
their
required
funding
as
soon
as
possible.

6. Why
Iran?
–
Poli1cal
Stability
H i s
r e f o r m i s t / t e c h n o c r a , c
government
is
likely
to
stay
in
power
un,l
2021.
There
is
growing
op,mism
about
a
nuclear
deal
with
the
West
by
mid-­‐
2015
leading
to
the
eventual
ending
of
the
country’s
isola,on.
Moderate
cleric
Hassan
Rouhani
was
elected
as
President
in
June
2013.

7. Why
Iran?
-­‐
Investment
Protec1on
Foreign
investors
are
protected
by
the
Foreign
Investment
Protec,on
and
Promo,on
Act
2002.
(FIPPA)
Allows
foreign
investment
in
all
sectors
open
to
the
Iranian
private
sector.
Allows
repatria,on
of
capital
and
profits
in
hard
currency
at
the
prevailing
official
exchange
rate.
Allows
fair
compensa,on
in
case
of
na,onaliza,on.
Allows
interna,onal
arbitra,on
in
case
of
legal
disputes.
The
applica,on
Process
is
carried
out
by
The
Organiza,on
for
Investment
and
Technical
Assistance
of
Iran.
(OIETAI
)

8. Why
Iran?
–
Tax
Privileges
The
Iranian
Tax
Authority
in
line
with
the
Vice
Presidency
for
Science
&
Technology’s
strategy
to
promote
domes,c
tech-­‐related
investment
have
exempted
technology
and
knowledge-­‐based
companies
and
ins,tu,ons
from
taxa,ons
for
a
period
of
15
years.
The
applica,on
Process
is
carried
out
by
the
Task
Force
on
Assessment
of
Knowledge-­‐based
Companies
and
Ins,tu,ons
&
Implementa,on
Monitoring

9. Why
Iran?
–
Informa1on
Technology
Investment
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2008
2009
2010
2011
2012
2013
2014
2015
ICT
Budget
As
a
%
of
Na1onal
Budget
The
2015
Iranian
Informa,on
&
Communica,on
Technology
(ICT)
amoun,ng
to
$1.36
billion
represents
a
95%
increase
compared
to
2014.
The
2015
ICT
budget
equates
to
1.55%
of
the
na,onal
budget,
a
record
propor,on
since
2008.
Source:
Iranian
internet
Infrastructure
&
Policy
Report

10. Why
Iran?
–
Large
Domes1c
Market
Total
Popula1on
Steady
Annual
Growth
Rate
80,841,000"
69%! 31%!
Urban
Rural
1.2%!
50.3%! 49.7%!
Male
Female

11. Why
Iran?
–
Young
Popula1on
0
1
2
3
4
5
6
7
8
9
0-­‐4
10-­‐14
20-­‐24
30-­‐34
40-­‐44
50-­‐54
60-­‐64
70-­‐74
80
≤
64%
under
35!
Source:
Iran
Internet
Ecosystem,
Startup
Istanbul,
Iran
Sta,s,cal
Center
0
1
2
3
4
5
6
7
8
9
0-­‐4
10-­‐14
20-­‐24
30-­‐34
40-­‐44
50-­‐54
60-­‐64
70-­‐74
80
≤
32
Million
20-­‐35
years
old"

12. Why
Iran?
–
Educated
Popula1on
750,000
annual
University
graduates.
Highest
share
of
Engineering
graduates
in
the
world.
4.5
million
students
enrolled
in
Universi,es.
4
of
Iran’s
Universi,es
ranked
amongst
Best
500
Global
Universi,es
in
2014.
31%
23%
14%
10%
22%
Enrollment
by
Field
of
Study
Construc,on
&
Engineering
Social
Sciences,
Business
&
Law
Humani,es
&
the
Arts
Science
Other
Source:
Wikepedia

13. Why
Iran?
–
Compe11ve
Labor
Force
Overwhelming
youthful
popula,on
has
created
a
compe,,ve
labor
market.
There
is
a
slowdown
in
the
annual
brain
drain,
es,mated
to
have
been
around
150,000
ter,ary
educated
Iranians.
The
star,ng
average
monthly
salary
of
a
graduate
is
around
$500.
Some
skilled
foreign-­‐educated
expats
have
returned
due
to
Iran’s
favorable
economic
outlook.

14. Why
Iran?
–
Recovering
Economy
Latest
official
figures
show
a
GDP
growth
of
4.6%
aIer
8
nega,ve
contrac,on
periods.
Drop
in
per
capita
GDP
is
mainly
a8ributable
to
the
intensifica,on
of
sanc,ons.

15. Why
Iran?
–
High
Internet
User
Growth
Source:
AgenceTesla،
Rock
My
Iran
Tech
Tour،
Iran
Innova,on
Ecosystem

16. Why
Iran?
–
High
Internet
Penetra1on
Source:
wearesocial
-­‐
social-­‐digital-­‐mobile-­‐in-­‐the-­‐middle-­‐east-­‐north-­‐africa-­‐turkey,
US
Census
Bureau,
InternetLiveStats,
InternetWorldStats

17. Why
Iran?
–
High
Traffic
Share
by
Device
Source: wearesocial - social-digital-mobile-in-the-middle-east-north-africa-turkey, US Census Bureau, InternetLiveStats, InternetWorldStats. "
NB: numbers represent share of page views, not share of users. "
"

18. Why
Iran?
–
Impressive
Internet
Posi1on
#
TOTAL
NUMBER
OF
ACTIVE
INTERNET
USERS!
INTERNET
USERS
AS
A
PERCENTAGE
OF
TOTAL
POPULATION!
SHARE
OF
WEB
TRAFFIC
(PAGE
VIEWS):
DESKTOP
and
LAPTOP
COMPUTERS
!
SHARE
OF
WEB
TRAFFIC
(PAGE
VIEWS):
MOBILE
PHONES
AND
TABLETS!
22.2 M" 27%" 93%" 7%"
Source:
wearesocial
-­‐
social-­‐digital-­‐mobile-­‐in-­‐the-­‐middle-­‐east-­‐north-­‐africa-­‐turkey,
US
Census
Bureau,
UN,
InternetLiveStats,
InternetWorldStats,
StatCounter.
NB:
Share
based
on
page
views,
not
internet
users

19. Why
Iran?
–
Largest
Mobile
Market
in
the
ME

20. Why
Iran?
–
High
Number
of
Mobile
Subscribers
TOTAL
NUMBER
OF
ACTIVE
MOBILE
SUBSCRIPTIONS!
PERCENTAGE
OF
TOTAL
MOBILE
SUBSCRIPTIONS
THAT
ARE
PRE-­‐PAID!
PERCENTAGE
OF
TOTAL
MOBILE
SUBSCRIPTIONS
THAT
ARE
POST-­‐PAID!
102.9
M" 73%" 27%"
Source:
wearesocial
-­‐
social-­‐digital-­‐mobile-­‐in-­‐the-­‐middle-­‐east-­‐north-­‐africa-­‐turke,
US
Census
Bureau,
United
Na,ons,
GSMA
Intelligence
"

21. Why
Iran?
–
Impressive
Mobile
Posi1on
Ac1ve
Mobile
Social
Users!
102,900,000" 127%!
MOBILE
subscrip1on
Penetra1on!
8,000,000"
Ac1ve
Smartphone
Users
142%!
2017
Predicted
Mobile
Subscrip1on
Penetra1on!
Source:
wearesocial
-­‐
social-­‐digital-­‐mobile-­‐in-­‐the-­‐middle-­‐east-­‐north-­‐africa-­‐turkey,
US
Census
Bureau,
United
Na,ons,
InternetLiveStats,
InternetWorldStats,
Facebook,
GSMA
Intelligence,
AgenceTesla,
Rock
My
Iran
Tech
Tour,
Iran
Innova,on
Ecosystem

22. Our
Focus
within
the
Internet
Value
Chain
Content
Rights
Online
Services
Enabling
Technology
Services
Connec1vity
User
Interface
Media
Right
Owners
• Video
• Audio
• Books
• Gaming
• Editorial
e.g.
BBC,
EMI
User
Generated
Content
• Text
• Images
• Voice
• Video
Communica1ons
e.g.
Skype,
Facebook
General/Ver1cal
Content
e.g.
Wikipedia,
FT
Search
Engines
e.g.
Google,
Bing
Entertainment
e.g.
YouTube,
iTunes
E-­‐commerce
e.g.
Amazon,
eBay
Support
Technology
• Web
Hos,ng
• Web
Design
• Content
Management
e.g.
NTT,
Rackspace
Billing
&
Payments
• Online
Billing
&
Payment
System
Providers
e.g.
PayPal
Core
Network
e.g.
BT,
AT&T
Interchange
e.g.
XO
Communica,ons
Retail
Internet
Access
e.g.
Vodafone,
Roadrunner
Applica1ons
• SoIware
• Media
Players
• Internet
Browsers
e.g.
Firefox,
McAfee
Devices
• PCs
• Smartphones
•
Game
Consoles
• Opera,ng
Systems
e.g.
Dell,
Apple,
Sony
Adver1sing
• Online
Agencies
• Online
Exchanges
• 3rd
party
Servers
• Ra,ngs
Services
e.g.
WPP,
Nielsen
User

23. Why
E-­‐commerce?
Low
Share
of
GDP
The
share
of
E-­‐commerce
from
the
Iranian
GDP
stands
at
between
0.6
and
0.7%.
This
figure
is
extremely
low
compared
to
both
developing
and
developed
countries.
0
1
2
3
4
5
6
7
8
9
USA
UK
China
Japan
India
Turkey
Iran
E-­‐Commerce
%
share
of
GDP
The
Iranian
government
has
set
itself
an
objec,ve
of
tripling
the
current
figure
but
no
,meframe
has
been
specified.
Source:
A.
T.
Kearney

24. Why
E-­‐commerce?
Government
Support
The
Central
Bank
of
Iran
has
instructed
Iranian
banks
to
make
it
easy
for
E-­‐commerce
applicants
to
get
merchant
accounts
and
not
to
charge
any
commission
fee
on
online
transac,ons
to
minimize
risks
to
businesses.
In
order
to
increase
consumer
confidence
in
online
transac,ons,
the
country’s
Centre
for
E-­‐commerce
Development
has
put
in
place
strict
procedures
in
rela,on
to
the
gran,ng
of
permits
and
authen,ca,on
symbols
to
online
businesses.
The
Ministry
of
Informa,on
&
Communica,on
Technology
has
commi8ed
itself
to
increasing
bandwidth
tenfold
by
end
of
March
2015.
It
has
also
granted
3
and
4
licenses
to
the
two
domes,c
operators
allowing
them
to
provide
high
speed
internet
connec,ons
to
subscribers.

25. Why
E-­‐commerce?
Real
Domes1c
Drivers
Major
ci,es
in
Iran
suffer
from
huge
traffic
problems
as
well
as
a
serious
lack
of
public
parking
space
availability.
Transac,ng
online
delivers
significant
,me
savings
and
stress
reduc,on.
Iran
is
home
to
some
of
the
most
polluted
ci,es
in
the
world.
Transac,ng
online
protects
individuals
from
exposure
to
pollu,on-­‐related
health
risks.
The
lack
of
concentrated
shopping
centers
and
big
brand
department
stores
across
Iran
has
had
a
limi,ng
effect
on
customer
choice
and
their
ability
to
compare
prices.
Transac,ng
online
eliminates
such
limita,ons.
A
large
propor,on
of
Iranian
business
is
carried
out
through
intermediaries
who
charge
high
introduc,on
or
success
fees.
Transac,ng
online
delivers
significant
,me
and
cost
savings
by
elimina,ng
middle
people.

26. Why
E-­‐commerce?
Local
Success
Stories
$150
M
!
$30
M!
$20
M!
Es1mated
Valua1on!
Source:
Iran
Internet
Ecosystem,
Startup
Istanbul
A
number
of
E-­‐commerce
startups
have
succeeded
and
are
con,nuing
to
grow
very
strongly.
These
successes
have
demonstrated
the
willingness
of
Iranian
customers
to
trust
technology
and
opt
for
online
proposi,ons
that
address
their
day
to
day
challenges.

27. Why
E-­‐commerce?
Other
Local
Success
Stories

28. Who
is
Ac1ve
in
the
Venture
Capital
Space?
Only
a
handful
of
VCs
operate
in
Iran.
Simorgh
Investment
Group
was
established
in
2013
by
the
Maadiran
Group
with
the
objec,ve
of
inves,ng
in
small
to
mid-­‐scale
entrepreneurial
projects.
S h e n a s a
w a s
established
in
2012
by
the
Passargad
Financial
G r o u p
w i t h
t h e
objec,ve
of
funding
e n t r e p r e n e u r i a l
businesses
ac,vi,es.
Sharif
Research
and
Technology
Fund
was
established
by
Sharif
University
with
the
objec,ve
of
funding
and
suppor,ng
inven,ons
and
innova,ons.
There
is
a
shortage
of
privately
owned
VCs
.
Most
VCs
concentrate
on
late
stage
start
ups.
Most
VCs
do
not
provide
“Smart
Money”.
S a r a v a
P a r s
w a s
established
in
2011
by
a
number
of
individuals
and
organiza,ons
with
the
objec,ve
of
funding
late
stage
IT
start
up
ventures.

29. Partnership
Business
Model
2. Industry
Monitoring
• E-­‐commerce
5.
Smart
Money
Injec1on
• Funding
• Know
how
6.
Exit
Mechanism
• IPO
• M&A
• Management
Buyout
3.
Venture
Selec1on
• Predefined
Criteria
• Due
Diligence
Avina
• Management
Fee
• Profit
Sharing
3rd
Party
Investor
• Funding
• Profit
Sharing
7.
Distribu1on
• Cash
• Stock
• Combina,on
4.
Term
Sheet
Agreement
• Type
of
Investment
• Share
pricing
• Management
Control
1.
Registra1on
of
Iranian
Joint
Venture
Company

30. 1.
Registra1on
of
Iranian
Joint
Venture
(JV)
Avina
and
Investor
firm
formally
register
a
joint
venture
in
Iran.
Investor
firm
registers
the
agreed
investment
capital
for
FIPPA
protec,on.
Avina
and
Investor
firm
agree
on
a
co-­‐
opera,on
framework.
Key
Areas
of
Co-­‐opera,on
Agreement:
• Shareholding
structure
of
JV
(Avina
would
like
the
op,on
of
holding
stock
op,ons
in
the
JV)
• Size
of
fund
• Governance
of
the
fund
• Return
period
&
percentages
• Management
fee
percentage
• Carry
percentage

31. 2.
E-­‐commerce
Sector
Monitoring
Events
Incubator/Accelerators
NGO/Media/Government
Iranian
Entrepreneurship
Associa,on
Center
for
E-­‐commerce
Development
2012
-­‐2014:
25
Startup
Weekend
Events
-­‐
9
Ci,es
-­‐
2,500
Entrepreneurs
-­‐
250
Teams
2013:
Highest
number
of
Startup
Weekend
events
in
the
region
"
Sharif
Advanced
Technologies
Incubator

32. 3.
Venture
Selec1on
Development
Stage
Ventures
at
mid
stage
of
their
development.
Profile
Ventures
with
fast
growth
prospects
within
large
markets.
Ventures
are
analyzed
by
applying
a
pre-­‐
defined
weigh,ng
and
scoring
system
to
a
comprehensive
set
of
criteria.
Business
Model
Ventures
with
financially
sustainable
and
scalable
business
models.
Management
Team
Ventures
with
realis,c,
honest
and
determined
management
team
members.
Valua1on
Ventures
with
a8rac,ve
valua,on
poten,al
in
terms
of
investment
and
equity.
Risk
Exposure
Ventures
with
higher
risk
exposure
with
a
5
year
outlook
for
exit.

33. 4.
Term
Sheet
Agreement
Investment
Type
This
will
be
through
a
regular
stock
purchase
or
stock
op,on
alloca,on.
Liquida1on
Preferences
JV
will
get
paid
first
in
any
exit
scenario.
Selected
businesses
will
be
asked
to
enter
into
a
Term
Sheet
agreement
prior
to
financial
injec,on.
Share
Pricing
This
will
have
been
iden,fied
as
part
of
the
valua,on
exercise.
Control
JV
will
have
vo,ng
rights
and
sit
on
the
Board
to
have
a
major
impact
on
decision
making.
Preferred
Returns
Magnitude
and
,me
frame
will
be
quan,fied
based
on
agreement
with
Investor.

34. 5.
Smart
Money
Injec1on
Marke1ng
Finance
Opera1ons
Management
Skill
Set
&
Experience
Brought
on
Board
Timely
Injec1on
of
Money
$

35. 6.
Exit
Mechanisms

36. 7.
Distribu1on
Cash
Stock
Distribu1on
can
be
made
in
cash,
stock
or
a
combina1on
of
the
two.

37. Venture
Shortlis1ng
Process
More
than
500
E-­‐commerce
ventures
were
iden,fied
using
exis,ng
sources.
All
were
assessed
and
scored
using
pre-­‐defined
criteria.
10
ventures
were
shortlisted
as
poten,al
recipients
of
VC
funding.
Contacts
were
made
with
the
shortlisted
ventures
to
validate
coopera,on
poten,al.
Based
on
discussions,
5
of
the
ventures
were
selected
to
be
taken
to
the
next
stage.
Due
diligence
and
valua,on
exercises
were
carried
out
on
all
5
ventures.