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Ecosystem Deep Dive #24: Turkey - Startup Silk Roads
A historical crossroads between east and west, Turkey's start-ups are honoring their ancestors' desire for commercial expansion.
Ecosystem Deep Dives is a weekly series in which I analyze and compare different start-up ecosystems from countries around the world. If you enjoy and gain value from my work, feel free to share and subscribe!

Crossroads
Turkey’s ambiguous geographical positioning, at the confluence of Europe and Asia, often leaves the country’s start-up ecosystem out of many tech publications mandated to cover strictly defined regions such as “MENA” or “Africa”.
However, Turkey’s population of 83 million, its 82% internet penetration, combined with one of the largest tech talent pools in Europe makes the country an auspicious playground for innovative tech start-ups.
The Turkish start-up ecosystem isn’t nascent anymore. Indeed, the late 90’s saw the first wave of Turkish tech entrepreneurs thrive which, in turn, planted the seeds for the ecosystem’s further growth.
“The first wave of internet entrepreneurs in Turkey started at the end of the 1990s and turned into the nation’s first success stories like Yemeksepeti (online food ordering startup acquired for $589M), Gittigidiyor (e-shopping marketplace acquired by eBay for $217M) and Pozitron (mobile enterprise development company acquired for $100M).” - 500 Global
The story of the Turkish start-up ecosystem can broadly be divided into 3 distinct periods:
2000-2009: Rise of first internet entrepreneurs, no ecosystem support.
2010-2017: Rise of first incubators, technoparks, investors + first big international exits.
2018-now: A resurgent, global-minded ecosystem benefitting from active ecosystem support systems and foreign investment.
Interestingly, the new generation of Turkish start-ups is more focused on creating “market-independent” businesses compared to “first wave” entrepreneurs, who focused on bringing already proven innovation such as e-commerce to the local population. Furthermore, the country’s sometimes dodgy political situation and unstable currency force Turkish entrepreneurs to think globally if they ever want to raise VC money.
Turkey also benefits from a successful diaspora, with companies such as Udemy, Billion to One and Firefly being founded by Turks abroad.
Local successes
Gaming
One of the Turkish start-up ecosystem’s main domain of expertise is undoubtedly gaming. Some of the ecosystem’s most impactful companies include Peak Games (acquired in 2020 by Zynga for $1.8 billion), Dream Games (valued at $2.5B) and Gram Games (also acquired by Zynga in 2018 for $250M). Recently, the newest Turkish gaming champion comes in the form of Spyke Games, led by Peak co-founder Rina Onur, who just raised $55M.
For all its success, some warn that Istanbul’s mobile gaming scene is at risk of overheating. Indeed, some small and underfunded studios are known to issue predatory contracts to young developers, pushing them to develop so-called “casual”, f2p (free-to-play) games powered by ads and thus reliant on user volume. Nonetheless, the gaming sector is the Turkish start-up ecosystem’s stronghold, for now.
E-commerce
Local e-commerce companies were indirectly bolstered by the Turkish government’s reluctance to grant US-tech giants easy access to the Turkish market. Decades later, two of the largest Turkish e-commerce platforms, namely Hepsiburada and Trendyol, each made a clear mark on the ecosystem.
Indeed, Hepsiburada became the first Turkish company to list on the NASDAQ, while Trendyol is also a household name, valued at around $9.4B.
Food delivery
Turkey’s local food delivery companies, likely bolstered by the same reasons e-commerce companies were, make up the third main pillar of Turkish start-up success, through two companies in particular. The first is Yemeksepeti, founded in 2001 and acquired by German giant Delivery Hero in 2015 for $598M. The second is Getir, an ultra-fast delivery start-up operating through the concept of “dark stores”, stocked warehouses owned by the company aimed at making delivery times even faster. They just launched in the US, but a hyper-clogged market in that sector will make success difficult. At the beginning of this year, Getir closed a monster $768M Series E.

Main actors and ecosystem layout
As stated in the introduction, Turkey’s start-up ecosystem cannot be considered nascent anymore. Although it went through a relatively flat period in the mid-late 2010’s, funding levels and activity have dramatically rebounded in recent years.
Without much surprise, the ecosystem is clustered around Istanbul, with secondary cities such as Ankara and Izmir acting as two other municipal start-up hubs.
“Istanbul ranked 13th among European cities receiving the most investments and fourth in terms of the number of deals clinched in 2021. It alone accounted for $1.49 billion of the overall amount and for 218 rounds. It came in second just behind Tel Aviv in the Middle East and North Africa region and managed to surpass Dubai for the first time ever.” - Daily Sabbah
One of the particularities of the Turkish ecosystem is its abundance in the number of so-called SSO’s (Startup Support Organizations), which include incubators, accelerators, and especially in Turkey’s case, technoparks. Although the number of these SSO’s is in no way a guarantee of their quality, they indicate a certain public fervor for entrepreneurship. Some notable ones include KWORKS and Hackquarters.
On the investor side, the ecosystem has been developing a relatively strong local network, powered by some very active angel networks such as Angel Effect and Galata Business Angels. On a VC perspective, most big international names such as YC, 500 Global, Techstars and Naspers just to name a few have already invested in Turkish start-ups. 500 Global even has a Turkish subsidiary fund, 500 Istanbul, which is one of the major local VC actors in the country. Other prominent local VC’s include 212, and Revo Capital.
The Turkish government has also been active in injecting liquidity into the start-up sector, first through grant programs such as TÜBİTAK BiGG and KOSGEB, and then through “fund of funds” initiatives such as the Istanbul Venture Capital Initiative followed by the Turkish Growth and Innovation Fund.
Another interesting trend has been the dramatic increase in the number of corporate venture capital (CVC’s) firms. Big corporates in Turkey already have a significant presence in the ecosystem, notably through the launch of corporate-sponsored accelerator programs, such as Pilot, run by Türk Telekom.
Ecosystem strengths
The Turkish start-up ecosystem benefits from multiple advantages, some of them resulting from previous start-up successes.
Demographically, the country is very well positioned to receive the innovations its start-ups are offering due to a high internet (82%) and credit card penetration (84%). Combined with an educated and tech-savvy, start-ups’ digital products’ allure will only increase in the upcoming years.
Turkey’s tech talent pool is also one of its strongholds. While there is still a severe dichotomy between academic teachings and job market demands, Turkey is quickly filling that gap. Indeed, the country has seen 16.5% YoY growth in the number of developers, the fastest growth in Europe. This strong local talent has led big tech companies to set up back offices in Turkey, further bolstering the ecosystem.
“Many global tech giants, including Microsoft, Google, Amazon, Oracle, and Alibaba, are already invested in Turkey, and the thriving startup ecosystem will only drive further investment” - Source
Following the acquisition of OpsGenie (a B2B SaaS products), more and more Turkish founders have set their eyes on developing entreprise-grade, internationally scaleable products, a trend also seen in Portugal. The pandemic also made global expansion way easier, with the opening of new markets being a couple Zoom calls away. Today, most Turkish founders are global-minded from the start. The most telling example of this new paradigm would be the global success of Insider, one of the newest additions to the Turkish unicorn club, a Growth Management Platform (GMP) which helps digital marketers drive growth across the funnel.
On a societal level, Istanbul is a very livable, modern and connected city, with direct, simultaneous access to the European, Asian and MENA market.
2021 funding
VC funding in 2021 almost doubled numbers from 2020. Out of the $1.5B raised last year, 94% went to Dream and Getir. The increase in the number of overall deals is a positive. In 2022, an already notable exit would be the acquisition of Alictus, another gaming company, for $100M.
Weaknesses
Despite its attractive demographic situation, solid talent pool, and international funds’ interest, Turkey still suffers from endemic obstacles to developing its ecosystem even further.
Turkey shares two constants with almost all other ecosystems: the severe lack of women-led start-ups as well as the mismatch between academic skills and digital job market demand.
Out of the 294 investments that took place in 2021, female entrepreneurs were present in only 40 of them (although it is important to note a couple Turkish unicorns are run by women). On the academic side, the solution to the mismatch is mostly coming from private initiatives such as the Kodluyoruz program, which focuses on upskilling people, rather than universities themselves truly rethinking their curriculums.
It would be dishonest to omit the political and economic situation in Turkey, which has a non-negligible impact on the country’s attractiveness. The country has had the same president since 2002, and suffers from a continuous degradation of civil liberties. The Turkish lira’s value has been in free fall for multiple months. Political turbulence and economic uncertainty hinders the Turkish ecosystem in its capacity to retain local talent, but also forces start-ups to think globally as charging customers in lira would make revenue KPI’s way less attractive.
Lastly, Turkey’s institutional investor scene is not invested enough into the VC asset class. Indeed, there is a clear dichotomy between the large number of talents and successful start-up exits compared to the relatively meager level of local investment. Local investors such as pension funds and wealthy individuals are needed to boost local VC’s and investment numbers. To do so, better communications on the nature and functioning of the VC asset class is needed.
The issue is not demand side (startup investment demand), it’s supply-side (investment supply). In Turkey, size of deposits in the banking system is more than $430B by January 2020. Therefore, the problem is not about the lack of savings to be directed to venture investment. It’s about the lack of investors (Limited Partners in VC jargon) who know what to expect from technology investing and dare to allocate some of their wealth to technology investing. It’s about a lack of investment mediators (General Partners in VC jargon) who can pick promising startups and add value them along the way in venture capital firms. - Deniz Kayahan, founder Start-Up Intellect
Conclusion
As stated in the introduction, Turkey’s start-up ecosystem isn’t as mediatized as Nigeria’s for example for a multitude of reasons, the most prominent one being its geographic positioning which places it outside of many “tech reporting mandates”. Furthermore, some big Turkish names such as Dream Games or Insider are relatively “country-agnostic”, and their “Turkishness” isn’t their outstanding feature. In comparison, Nigeria’s Paystack gathered a lot of press as a Nigerian start-up building an African-centric product.
It does seem that Turkey’s local investor scene has some trouble catching up with the breadth of talent and energy emanating from the country’s many incubators, technoparks and universities. Convincing institutional investors to put their money in start-ups might be both an easy and a hard sell, as the uncertain economic climate can spark both a desire for stability or riskier investments in the face of weak local investment options.
Turkey is uniquely positioned to benefit from the rapidly growing start-up scenes in both Europe and in MENA. I imagine the difficulty for Turkish founders is in determining which market they’re building for.
Ecosystem Deep Dives is a weekly series in which I analyze and compare different start-up ecosystems from countries around the world. If you enjoy and gain value from my work, feel free to share and subscribe!