The first generation of startup companies emerged almost 10 years ago under conditions where there was neither news of harsh international sanctions nor a foreign exchange market that rapidly devalued the country’s currency. Traditional risk-tolerant investors had entered the game of investing in these companies more than ever before, and although foreign investors, albeit few, had managed to help the explosive growth of the country’s startup market by injecting significant funds. However, in the financing cycle of first-generation startup companies, the country’s stock market played the least significant role. This story even holds true for large information technology companies in the country. These companies, despite over two decades of activity and building the IT industry in the country, have still not been able to play a prominent role in the country’s stock market, in stark contrast to technology giants worldwide that proudly rank among the top 10 companies in the US or China stock markets.

Inhibitor or Factor for Growth

According to IDEA, In recent years, technology and innovation companies have become the main reason for their absence in the stock market. Stringent regulatory measures, a lack of expertise, and insufficient knowledge of the capital market from the IT industry, coupled with a lack of financial transparency, have been cited by exchange managers as the main reasons for technology-focused companies shying away from this financial market. However, since the discussion of startup companies entering the capital market during the days of the COVID-19 pandemic and due to the staggering growth of stock market indices, these companies have attempted to organize their financial statements with the help of specialized financial consultants. On the other hand, exchange managers have been striving to assist these companies in entering the capital market by considering specific and up-to-date regulations and guidelines. Finally, in the spring of 1401 (2022), a set of seventeen regulations was drafted for the entry of startups into the stock market. However, these regulations were never publicly announced. At that time, Meysam Fadaei, the CEO of Over-the-counter, had stated that this organization was in the process of reviewing these seventeen regulations and that they had been sent for approval by the Stock Exchange Organization. He had suggested that the lack of clarity surrounding these guidelines had led some companies that had volunteered to enter the stock market to hold off for now. Eventually, these seventeen regulations were reduced to nine articles and were approved in the month of Khordad (June) last year (2022).

However, these nine clauses, from the perspective of startups at the time when they had declared their highest readiness for the stock market, were more of an obstacle than a solution. In fact, many companies active in the digital economy sector, which had been discussing entry into the stock market before these guidelines were clarified, displayed a negative attitude toward these regulations, albeit indirectly rather than directly. Some aspects of these guidelines were so unfamiliar or perplexing to startups that they were unsure whether entering the stock market could lead to their development and growth. Issues related to shareholding and the qualifications of shareholders, the validation of shares, commitments to data protection, guarantees for retaining key personnel, and other assurances were among the criticisms that startup companies raised regarding these guidelines. They questioned whether receiving such assurances was a common practice among other companies active in various sectors. Could a steel or petrochemical company guarantee that its CEO or technical manager would work for a certain period in another company? Or could the CEO of that company guarantee that they would not engage in similar activities for three years if they left that company? In essence, these clauses in these guidelines had raised suspicions among startup companies about whether the Stock Exchange Organization had a serious plan at all for the entry of startup companies into the capital market.

Finally, after these criticisms and negative feedback were raised, Mohammad Ali Shirazi, the CEO of over-the-counter, announced at the beginning of the year 1402 (2023) that, in coordination with the Stock Exchange Organization, guidelines had been drafted to facilitate the entry of knowledge-based and digital economy companies into the capital market, and these guidelines would be officially communicated soon. Last week, these guidelines were approved by the Stock Exchange Organization under the title “Exclusive Regulations for the Acceptance of Shares of Knowledge-Based, Digital Economy, Technological, and Creative Companies,” As a result, these new regulations replaced the previous ones titled “Exclusive Regulations and Conditions for the Acceptance of Shares of New and Digital Economy Companies.”