Entrepreneurs from across Turkey and neighboring countries descended upon the Mediterranean resort town Antalya this late last month to pitch their ideas at Startup Turkey.
In its eighth year, Startup Turkey, a gathering of 600, is one of the country’s premier startup events. Its companion Startup Istanbul, which takes place in October, which brings together over 1,000 participants, is bigger.
Burak Buyukdemir, Startup Turkey’s founder, chose Antalya in 2008 in order to “get people out of Istanbul” and focused on entrepreneurship.
Back then, when only a handful of Turks dived into the startup world, the focus was very much on e-commerce – largely clones of ventures that succeeded in the West. Nearly a decade later entrepreneurs in Turkey and the surrounding Middle Eastern region are working on a wide-range of businesses that fill gaps.
Among the businesses that pitched included a number that focused on improving human resources and human resources management; Fidelo, a loyalty and marketing solution for small and medium retailers; commercial drone developer Maxwell Innovations; Invidyo, a smart video surveillance system; Iklim.co, a cloud service that collects and measures hyper local weather information and process for various business needs.
There was also Agrotics, a digital platform for agriculture; EyeTrack, a Fitbit like solution for Alzheimer patients, and my personal favorite, Beyond, a dating app that uses numerology to determine whether your date or partner is the right match. The winners were: Alo Tech, a cloud based call center and management platform and Urbanstat, a risk assessment platform.
“First, in the early years, startups (in Turkey) were mostly about e-commerce, now it’s technology, fintech (financial technology), SaaS (software as a service), and hardware,” said Dilek Dayinlari, a venture capital partner at the Istanbul-based firm 212. “Since then we (Turkey) have more startups and, as a result, more competition.”
“Some of the pitches were very promising this year,” said Nevzat Aydin, a judge for Startup Turkey pitches. Aydin founded online food delivery service Yemeksepti.com, which sold to the German-based Delivery Hero in 2015 for $589 million. “When I choose an idea to invest in, I look for specific features – like the business model – it has to be scalable and tangible in terms of growth. There were some exciting examples of those here at Startup Turkey.”
Aydin noted that events like Startup Turkey are key to moving Turkey’s startup ecosystem forward. So too, he said, are investors.
“I know many promisingstartup examples which had to throw in the towel in the first steps of the journey because of the difficulty of reaching financial resources,” Aydin said. “I think that the business world should be more enthusiastic about supporting entrepreneurs. From intrapreneurship to mentorship and angel investment, people who managed to come to a certain level should share their experience, know-how and resources with young entrepreneurial minds.”
According to the Turkish based Startup Watch, a monitoring and tracking service, in 2015 there were $17.8 million seed investments in Turkey and $18.2 million Series A investment. Venture capital investment dollars in Silicon Valley for 2015 amounted to $15.2 billion.
In May, Diffusion Capital Partners (DCP), an early stage technology accelerator fund based in Istanbul, launched a €30 million technology transfer fund dedicated to Turkey. 212 has a $30 million Istanbul-based fund and is raising a second one; Revo Capital has a $38 million Istanbul-based fund. 500 Startups, a Silicon Valley seed fund & accelerator, announced 500 Istanbul, a $15 million micro-fund for Turkish startups on October 5.
Still, Cem Soysal, the general manager of Inventram, an early stage tech and IP investment firm, noted, Turkey still needs a “deeper funding competence on the “money” side for continuity.”
As Turkey faces serious challenges both internally and externally – particularly on its border with Syria, deeper funding will be harder to come by. While nearly all investors already divested in the country all say that they are confident in Turkey’s future and in the country for the “long term,” there are concerns that funds and funding into Turkey will start to dissipate.
Certainly one of the topics of concern at Startup Turkey was the sudden closure of Fresh Direct-like service TazeDirekt.com two weeks ago. Hasan Aslanoba, one of Turkey’s leading angel investors and founder of Aslanoba Capital, poured several millions into the service.
“Tazedirekt was burning too much money,” Aslanoba told Techcrunch. “Much more than I had budgeted, that’s why I decided to close it down on February 18… Our operations were too costly,” he noted. Aslanoba noted that Tazedirekt required “complicated end-to-end operations” management – something he noted that the company had failed to master. In addition to that, Aslanoba noted, Tazedirekt’s “highly integrated business model did not allow us to pivot easily. Aslanoba noted that if the company could have pivoted it would have moved towards becoming a data company. “We could not innovate fast or learn quickly from our mistakes.” To that, Aslanoba added, “Tazedirekt’s biggest challenge was my management. I should really take the biggest responsibility for this failure.”
On failures, however, he noted that they “are inevitable everywhere – Turkey is not an exception.” In fact, Aslanoba pointed out, Turkey (as a startup hub) has been “under invested since 2014 –so I think it cannot be tougher than this. Moving forward he said “we should expect better for Turkey in the future.”