The stock exchange has always been a crossroads where tradition meets innovation—a place where established, legacy industries coexist with emerging sectors, ultimately shaping a marketplace that reflects both the history and the future of economies. The Tehran Stock Exchange is no exception. Recent developments in policy suggest a gradual opening of a new path: enabling digital businesses to access financing, transparency, and modern governance through the stock market.
Globally, this path has already been well-trodden. The listing of technology companies has produced some remarkable cases. In 2020, Snowflake raised over $3.4 billion in its IPO, the largest software IPO in history. On its first day of trading, Snowflake’s share price more than doubled, pushing its market cap past $70 billion—a clear sign of investors’ enthusiasm for innovative business models in data and cloud computing.
Similarly, Okta, a company focused on identity management and security, went public on NASDAQ in 2017. Its stock rose 40% on day one, with an initial market cap of around $2 billion. In the years that followed, Okta at times reached a valuation above $40 billion. These examples illustrate how public markets, despite their challenges, can serve as launchpads for raising capital, building public trust, and cementing the role of innovative firms in the broader economy.
The Case for Digital Firms in Iran’s Market
As I noted in a recent interview, Iran’s digital economy has grown significantly over the past decade. Online platforms now play a vital role in people’s daily lives. Yet, their entry into the stock exchange has long faced hurdles: from valuation challenges to the absence of tailored rules for financial transparency.
Signs of change are now emerging. In advanced economies, the presence of startups and digital firms in public markets is not only common but essential for sustainable growth. Public markets allow these companies to move beyond venture capital into broader financing channels. At the same time, the transparency and regulatory oversight of the exchange support the maturation of the innovation ecosystem—a missing link in Iran until now.
In recent days, one of the country’s major online platforms has resolved obstacles to its IPO, a symbolic and important step. When a prominent player successfully navigates entry to the stock market, it paves the way for others. More significant than the name of any one company is the shift in policy: a recognition that startups are not temporary phenomena but enduring economic institutions.
Still, the key challenge lies in designing financial tools and governance structures suited to digital business models. For many platforms, intangible assets—such as data, brand, and user communities—constitute real value. If valuation is based solely on physical assets or short-term profits, these companies risk being undervalued. The exchange must therefore develop mechanisms to account for intangible assets fairly.
Impacts on Investment and Innovation
The entry of digital firms into the stock market could transform two critical areas:
Diversifying the market and making it more attractive to both retail and institutional investors.
Strengthening the innovation ecosystem by enabling early investors to exit while attracting new capital.
This, in turn, can complete the venture capital cycle. When investors know that a transparent secondary market exists for eventual exits, they are more motivated to inject capital in early stages.
From a governance standpoint, stock market listing also compels digital businesses to adopt higher standards of corporate governance. Transparency, auditing, and accountability to shareholders may initially feel demanding but ultimately benefit the companies themselves, shifting them from growth-obsessed ventures into stable, responsible organizations.
However, success depends on structural reforms. Simply listing a few digital companies will not suffice. Changes in regulation, valuation methods, and even investor education are essential. Investors must understand that risks and opportunities in digital firms differ significantly from those in traditional industries.
Lessons from Global Markets
Hassan Hosseinnia, a senior capital markets analyst, highlights that in advanced exchanges worldwide, startups and IT-related industries play a pivotal role. A large portion of investment is directed toward these sectors, producing impressive returns.
While a few IT companies are already listed in Tehran, the market needs deeper integration of technology firms to keep pace with global trends. As artificial intelligence and digital platforms rapidly penetrate production and services, easing IPO processes and financing for these firms becomes crucial. Such steps not only diversify investment portfolios but also help Iran recover from years of lag in this domain.
Beyond economics, Hosseinnia notes, this is also a social transformation—one that elevates service quality, improves living standards, and aligns Iran’s economy with global currents.
The Need for Structural Renewal
Maryam Mohbi, another senior analyst, underscores a fundamental paradox: Iran’s capital market has a modern core but an outdated shell. Young analysts with cutting-edge knowledge are forced to operate within old frameworks. Traditional tools—such as basic chart reading and index watching—still dominate, while advanced valuation models and balanced scorecards remain marginal.
This reliance on outdated approaches extends beyond analysis. Even reporting and regulatory frameworks reflect traditional mindsets. For instance, crowdfunding platforms, though promising, suffer from legal and regulatory gaps that hinder investor confidence. Analytical platforms are also largely built on outdated financial ratios, offering little room for valuing pre-revenue ideas.
According to Mohbi, the Tehran Stock Exchange urgently needs a structural overhaul. The rapid pace of technological change and information infrastructure advances have rendered traditional methods less effective. To stay relevant globally, Iran’s capital market must embrace agility, flexibility, and reformed strategies.
Conclusion
The entrance of digital businesses into Iran’s stock market is more than a financial milestone—it is a structural and cultural shift. It signals recognition of startups as durable institutions, not temporary experiments. But to succeed, this process must be accompanied by reforms in valuation, regulation, and investor education.
The challenge is significant: balancing tradition with innovation, and ensuring that the stock exchange can both reflect the nation’s economic history and prepare for its digital future.
The real question remains: will Iran’s capital market adapt quickly enough to harness this opportunity, or will it remain confined to its traditional shell while the digital economy surges ahead?
This article was originally published in Donya-e-Eqtesad, featuring my perspectives on the entry of digital businesses into Iran’s stock market and the broader implications for our innovation ecosystem. I’m sharing the full English version here for my LinkedIn community. Read the original Persian article.
