[Editor’s note: This story was scheduled for publication before we had news of the bombings in Turkey today. Our condolences go out to those in mourning.]

I started working at Aslanoba Capital, Turkey’s most active internet investor, more than two years ago, and we’ve invested over $60 million in over 40 companies in Turkey. Our investments include the world’s largest hijab online fashion site, Modanisa, Turkey’s leading taxi hailing app, Bitaksi, and Turkey’s largest prepaid debit card, Ininal. This gives us a bird’s eye view of the Turkish startup scene, and I want to share that perspective with you.

State of entrepreneurship

Turkey’s largest Internet exits to date have been food ordering marketplace Yemeksepeti, which was acquired by Delivery Hero for $589 million in May 2015Gittigidiyor, which was acquired by its global counterpart eBay for $217 million in April 2011, and mobile enterprise development house Pozitron, which was acquired by Monetise for $100 million in February 2014. In addition to these successful exits, local players like the country’s largest classifieds site, Sahibinden, its largest e-commerce site, Hepsiburada, and its largest recruitment marketplace, Kariyer.net, show that entrepreneurship is alive and kicking in the country.

The fact that local winners have emerged in each of these verticals is a testament to the strength of Turkish entrepreneurs and the significant advantage they have in building operational businesses tailored to the realities of Turkey. Each of these companies was founded between 1998 and 2001, and together they’re part of the first wave of Internet entrepreneurship in the country.

The trend of local entrepreneurs succeeding over international competitors is continuing during Turkey’s second wave of Internet entrepreneurship. Trenydol and Markafoni, two of the country’s largest online fashion sites, were founded in 2009 and 2008 respectively. More recently, companies like meal delivery service Meal Box, online bus ticketing marketplace oBilet, and wedding marketplace Dugun.com continue to prove that local entrepreneurs have an edge when it comes to building local business. Each of these companies was founded between 2011 and 2014.

The reason local entrepreneurs succeed isn’t because of a lack of international competition. German incubator Rocket Internet built an e-commerce operation of 400 people in Turkey in 2011. The operation included Zidaya in the fashion and shoes space, Evimister in the home furniture space, Sporena in the sporting goods space, and the local operations of many of its international companies. However, it met with little success and closed the operation in 2012. Rocket’s online bus ticketing marketplace ClickBus currently operates in Turkey but has yet to perform at the level of local leader oBilet. Car hailing app Uber entered Turkey in June 2014. Although it continues to operate in the country, it has yet to achieve meaningful scale at the level of local leader Bitaksi. It’s much easier to attract talent, find the right suppliers, interact with regulators, and build a product tailored to Turkish customers when you understand Turkish culture and have experience doing business in the country.

State of venture capital

Where successful local entrepreneurs lead, venture capital follows. After companies from Turkey’s first wave of Internet entrepreneurship began to show their initial signs of success, investors started to fund Turkish startups. International investors like Abraaj from the Middle East (investor in Hepsiburada), General Atlantic from the UK (investor in Yemeksepeti), Naspers from South Africa (investor in Markafoni), Kleiner Perkins and Tiger Global from the US (investors in Trendyol), and STC Ventures from Saudi Arabia (investor in Modanisa) have all backed Turkish Internet entrepreneurs.

In addition, several investors with local teams are on the lookout for the next breakout success stories. These include Earlybird (where we’re investors), which has a $150 million fund of which over half is dedicated to Turkey, Revo Capital (where we’re investors), which is investing from its current $38 million-and-growing fund, 212, which has a $30 million fund dedicated to Turkey, and 3TS and Hummingbird. Together with the over $60 million that we’ve invested to date, that’s over $200 million of local capital dedicated to backing Turkish Internet entrepreneurs. If we keep in mind that none of this capital was on the market as recently as 2010, we can see just how fast Turkey’s venture capital market has developed.

State of the public sector

In addition to the work done by private sector players, the public sector is also showing growing support for startups. The Scientific and Technological Research Council of Turkey (TUBITAK) subsidizes up to 75 percent of the R&D costs of technology startups through its 1507 program. More recently, TUBITAK launched an effort to support venture capital activity in the country. TUBITAK’s 1514 program contributes up to 20 percent of the capital raised by new venture capital funds with a minimum fund size of 20 million TL (~$7 million). Although the program has yet to make its first fund investment, it’s a conceptual step in the right direction. The government has also established a fund of funds program of up to 500 million TL (~$165 million) to provide existing and new venture capital funds and angel investors with additional investment capital.

Another very important contributor to Turkey’s startup ecosystem is the non-profit Endeavor. Serving as the local arm of the global Endeavor organization, Endeavor supports entrepreneurs across all sectors of the economy, including non-Internet startups. It selects startups from throughout the country and provides them with access to its wide network of local and international business leaders to accelerate their growth. Through the Endeavor Catalyst program, it also invests in startups run by Endeavor entrepreneurs that raise upwards of $5 million.

The future

Despite the tremendous leaps forward that Turkey’s entrepreneurs and investors have made over the last few years, we remain in the very early stages of our development. The opportunities ahead will make the events of the last decade and a half pale in comparison. As my partner Hasan commented at one of Turkey’s largest Internet conferences, Startup Turkey, earlier this year, “One day we will have many unicorn companies. The question is, how soon it will be.” Startup Turkey is hosted by Etohum (where we’re investors), an accelerator program offering startups capital, mentoring, and a wide network of relationships.

I’m a strong believer in Turkey’s Internet startups. Internet entrepreneurship didn’t exist in the country as recently as 1997. Now there are multiple breakout success stories. Venture capital funding didn’t exist in Turkey as recently as 2010. Now there is over $200 million in capital dedicated to funding Internet startups in Turkey. The public sector didn’t have programs specifically designed to support Turkey’s startups until recently. Now these programs are in place, backed by the capital to make sure they have an impact.

We’ve come a long way, and we have even further to go. The harder we work and the faster we learn, the sooner we’ll develop. It’s going to be a fun ride.

Cankut Durgun is founding partner of Turkish Internet investor Aslanoba Capital. He was formerly a cofounder of Romulus Capital, a seed and early stage VC in the US.


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