A Legal Study of Crowdfunding for Startups in Iran

Crowdfunding as an innovative method of financing startups presents several legal challenges. This article, focusing on the legal dimensions of crowdfunding in Iran, analyzes the legal nature of crowdfunding agreements and examines whether they can be classified under existing nominate contracts or should be treated as innominate contracts. It also delineates the duties and liabilities of the crowdfunding platform (acting as an intermediary) toward investors and fundraisers. Mechanisms for protecting the rights of small (retail) investors under Iran’s current regulatory framework are evaluated and compared with regulatory approaches in the European Union and the United States. Furthermore, key legal challenges in the crowdfunding sphere, including personal data privacy concerns, the risk of fraud, potential misuse for money laundering, and the demands of financial regulation and oversight, are discussed. Conducted through a descriptive -analytical approach, this study ultimately emphasizes the necessity of establishing transparent and flexible legal frameworks that facilitate the growth of crowdfunding while safeguarding stakeholder rights and the integrity of financial markets.