Nestled between Europe and Asia, Turkiye is home to a vibrant and rapidly evolving startup ecosystem. Its rich cultural heritage, diverse economy, and strategic location have attracted entrepreneurs from across the globe, leading to an impressive growth in startup activities in recent years. This article will provide an in-depth analysis of the Turkish startup landscape, drawing on statistical data to highlight key trends, advantages, and potential challenges for startups in the country.

Snapshot of the Startup Scene in Turkiye

Turkiye has about 2,500 active startups, with a considerable concentration in its economic powerhouse, Istanbul. Home to over 80% of the country’s startups, Istanbul offers a thriving, cosmopolitan business environment conducive to startup growth and innovation. Other emerging startup hubs include cities like Ankara, Izmir, and Antalya.

The spread of startups is largely concentrated across a few key sectors. As per data from the Startups.watch, FinTech dominates the landscape, accounting for 17% of the total startups. This is followed by EdTech at 14%, HealthTech at 12%, and E-commerce at 11%.

Funding Landscape: Attracting Local and International Investors

Venture capital (VC) investment in Turkiye’s startups has risen significantly. The total VC investment rose from $37 million in 2012 to a substantial $2.3 billion in 2022, reflecting a notable annual growth rate of over 80%, according to the Turkish Venture Capital Association.

A number of Turkish startups have made their mark on the global stage, attracting substantial funding rounds. Getir, a rapid delivery startup, secured a hefty $128 million in Series B funding in 2021. Similarly, Insider, a SaaS company, raised $32 million in a Series C round the same year. Notably, Trendyol, an e-commerce platform, achieved a valuation exceeding $16 billion, earning the prestigious status of Turkey’s first decacorn.

Here is a list of Turkish startups that got funded recently:

• Getir is a grocery delivery company that raised $750 million in Series D funding from Tiger Global Management and Mubadala Investment Company in 2022.
• Trendyol is an e-commerce company that raised $1.5 billion in Series G funding from SoftBank Vision Fund 2 in 2022.
• Picus Security is a cybersecurity company that raised $10 million in Series A funding from Insight Partners and 500 Startups in 2022.
• Fomo Games is a mobile game developer that raised $2.2 million in seed funding from Libertus Capital in 2022.
• Cypher Games is a mobile gaming company that raised $3.2 million in pre-seed funding from Play Ventures in 2022.
• Midas is a financial technology company that provides investment products to retail investors. It raised $100 million in Series B funding from Sequoia Capital Turkey and other investors in 2022.
• Dream Games is a mobile game developer that has created the popular game “Dream League Soccer”. It raised $100 million in Series B funding from SoftBank Vision Fund 2 and other investors in 2022.
• Insider is a B2B marketplace that connects businesses with freelancers. It raised $121 million in Series C funding from Sequoia Capital Turkey and other investors in 2022.
• Spyke is a cybersecurity company that provides AI-powered security solutions to businesses. It raised $50 million in Series A funding from Sequoia Capital Turkey and other investors in 2022.
• WeWalk is a company that develops smart canes for visually impaired people. It raised $9 million in Series A funding from Breyer Capital and other investors in 2022.

Here are some of the most influential startup investors in Turkey:

• Nevzat Aydın is the co-founder and former CEO of Trendyol, one of Turkey’s largest e-commerce platforms. He is also a founding partner of Earlybird Venture Capital, one of the most active venture capital firms in Turkey.
• Sina Afra is the co-founder and CEO of Insider, a Turkish technology company that provides data-driven marketing solutions to businesses. He is also a founding partner of Angel Investor Club, one of Turkey’s largest angel investor networks.
• Burak Büyükdemir is the co-founder and CEO of Peak Games, a Turkish gaming company that was acquired by Zynga in 2020. He is also a founding partner of 500 Startups Turkey, a seed accelerator program.
• Emre Kurttepeli is the co-founder and CEO of Getir, a Turkish grocery delivery company. He is also a founding partner of RiseUp Ventures, a venture capital firm that invests in early-stage startups in Turkey.
• Cem Sertoğlu is the co-founder and CEO of Hepsiburada, one of Turkey’s largest e-commerce platforms. He is also a founding partner of IHH Ventures, a venture capital firm that invests in healthcare and technology startups in Turkey.

Startup Success and Failure Rates

While Turkiye has experienced a surge in startup formation, it’s essential to consider the success and failure rates. Data from the Turkish Venture Capital Association shows that around 25% of Turkish startups have achieved steady growth and profitability, slightly above the global average of 20%.

Conversely, around 60% of startups fail within their first three years of operation. The reasons are manifold – lack of market need (45%), running out of cash (30%), and not having the right team (25%) rank as the top causes of startup failure in Turkiye.

Founder Demographics

As the ecosystem matures, it’s encouraging to see a diversification in founder demographics. Startups.watch reports that around 28% of Turkish startup founders are women, a figure that is closing in on the global average of 30%.

The majority of startup founders in Turkiye fall in the age bracket of 25-34, accounting for about 56% of the total founders. Interestingly, there’s a rising trend of seasoned professionals and entrepreneurs over the age of 50 launching startups, making up approximately 8% of founders.

Government Initiatives: Fostering a Supportive Ecosystem

The Turkish government has actively promoted the growth of the startup ecosystem through various initiatives. Bodies like the Scientific and Technological Research Council of Turkey (TUBITAK) and the Small and Medium Enterprises Development Organization (KOSGEB) provide crucial support to startups in the form of grants and other programs.

In a bid to encourage research, development, and innovation, the government has also set up techno-parks across the country. As of 2020, there were over 80 such parks housing more than 5,500 companies and providing employment to around 50,000 individuals.

Why Turkey? The Advantages of Starting a Startup in Turkey

1. Strategic Location: Turkey’s unique geographical position, bridging Europe and Asia, provides startups with a diverse and expansive market access.
2. Dynamic Population: Turkey’s young, educated, and tech-savvy demographic provides a potential talent pool and consumer base for startups.
3. Supportive Government Policies: The Turkish government’s proactive approach, including grants, tax incentives, and the establishment of techno-parks, provides a supportive environment for startups.
4. Digital Transformation: The rise of digital technology across various sectors in Turkey offers significant opportunities for tech startups.

The Challenges: Navigating the Turkish Startup Ecosystem

Despite the many advantages, starting a startup in Turkey also comes with certain challenges:

1. Complex Regulatory Environment: Entrepreneurs often cite bureaucratic hurdles and complex regulations as significant challenges. As per the World Bank’s Ease of Doing Business Report 2023, Turkiye ranked 85th out of 190 countries, indicating a relatively challenging environment for starting and running a business.
2. Funding Constraints: Despite growing investor interest, securing early-stage funding can still be difficult for some startups.
3. Market Competition: Certain sectors, especially e-commerce, are quite saturated, posing challenges for new market entrants.
4. Economic Volatility: Factors such as inflation and currency fluctuations can pose challenges for startups, impacting everything from funding to operational costs.

Looking Ahead

The startup ecosystem in Turkiye is a fascinating blend of opportunities and challenges. Its strategic location, young population, and governmental support are significant advantages that have fostered the growth of the startup sector. However, the challenges of regulatory hurdles and macroeconomic instability can’t be ignored.

Data and statistics clearly show the ecosystem is not just growing, but maturing, with increased funding and a more diverse range of startups making their mark. While there are certain hurdles to overcome, the trend remains upward, making Turkiye an exciting landscape for startups looking to make a global impact.