Iran's Tech Landscape: Innovation Amid Sanctions

Despite $100B+ in Sanctions, Iran’s Startup Ecosystem Grows 40% Annually

International sanctions have cost Iran over $100 billion in lost oil revenue and trade since 2018, yet its startup ecosystem is growing at roughly 40% per year. Local platforms like Digikala and Snapp have filled the void left by international services, with Digikala reaching a valuation of over $1.5 billion by 2025. The recent US strikes near the Strait of Hormuz, reported by the BBC on June 9, 2026, underscore the volatile environment these startups must navigate — a reality that has forced them to build resilient, self-sufficient operations.

“Sanctions have ironically spurred a wave of homegrown innovation in fintech, e-commerce, and logistics,” notes a Tehran-based venture capitalist. “Without access to global payment systems, companies have developed their own digital payment rails.”

This self-reliance extends to supply chains. Startups now source components through parallel markets and rely on cloud services hosted domestically. According to a 2025 report, over 3,000 tech startups are active in Iran, employing more than 200,000 people. The sector’s growth is also reflected in the stock market, where tech listings have outperformed traditional sectors despite broader economic pressures.

• Digikala, Iran’s answer to Amazon, processes over 1 million orders daily.
• Snapp, the ride-hailing giant, operates in 20+ cities and recently launched a food delivery service.
• Local fintech platforms like ZarinPal and Pay.ir handle billions of dollars in transactions annually.

Internet Censorship Drives Development of Homegrown Alternatives and VPNs

Iran’s government maintains one of the world’s most extensive internet censorship regimes, blocking major platforms such as Twitter, Facebook, YouTube, and Instagram. This has paradoxically created a booming market for domestic alternatives. Messaging apps like Rubika and Eitaa each boast over 40 million monthly active users, while Aparat has become the go-to video-sharing platform. Users also heavily rely on VPNs, many of which are offered by state-controlled telecom companies to monitor traffic.

The censorship has forged a tech-savvy population skilled in bypassing restrictions. A 2025 study found that 70% of Iranian internet users use VPNs daily, and local proxy services have become lucrative businesses. This cat-and-mouse dynamic with government filters has also spawned a cybersecurity industry focused on circumvention tools.

• Over 50% of Iranians use at least one circumvention tool regularly.
• The government’s “National Information Network” aims to create a domestic internet, but adoption remains slow.
• Startups like WiCash (micro-lending) and Takhfifan (coupons) thrive by operating entirely within the domestic network.

Censorship has inadvertently accelerated digital transformation. Without access to global platforms, Iranian entrepreneurs were forced to invent their own — and many have succeeded beyond initial expectations.

Iranian AI Research Outpaces Regional Peers Despite Tech Embargoes

Despite severe restrictions on importing advanced semiconductors and GPUs, Iran has carved a niche in artificial intelligence. The country ranks 45th globally in AI research publications, with strong output in Persian natural language processing and computer vision. Iranian researchers have developed translation models, speech recognition systems, and medical imaging tools that rival those from wealthier neighbors like Saudi Arabia and the UAE.

Hardware limitations have pushed innovators toward cloud-based AI services hosted regionally or through open-source models. Custom silicon design is virtually impossible, but local startups optimize algorithms for consumer-grade hardware. The IRGC’s recent retaliation strikes after US attacks, as reported by the BBC, highlight the dual-use nature of AI — used for everything from drone guidance to surveillance analytics.

• The University of Tehran’s AI lab has produced over 1,200 papers in top conferences since 2020.
• Startup Fanap develops AI-driven customer service bots used by banks and telecoms.
• Iran’s National AI Strategy, launched in 2023, aims to train 10,000 AI specialists by 2030.

“Our advantage is talent and data — 80 million Persian speakers provide a rich training ground,” says an AI researcher at Sharif University. “Hardware we can rent; algorithms we can build.”

Key Takeaways

• Iran’s tech sector has adapted to sanctions by fostering local innovation and self-sufficiency, with startups like Digikala and Snapp achieving decacorn-level valuations.
• Internet censorship has inadvertently fueled a domestic startup boom and a vibrant VPN industry, creating a digitally resourceful population.
• AI development continues despite hardware restrictions, leveraging open-source tools and regional cloud partnerships to maintain competitive research output.
• Geopolitical tension — such as the recent US-Iran strikes near the Strait of Hormuz — directly affects tech supply chains, investment risks, and operational planning for startups.
• International companies eyeing Iran must navigate complex sanctions and regulatory hurdles, but the market remains tempting for those willing to take the long view.
• Iran’s young, educated population — over 60% under 30 — remains the key driver of its digital transformation, with a strong emphasis on engineering and STEM education.