Sente Advisory has been involved in Turkish entrepreneurial ecosystem since 2010. My observation has been that it is quite a vibrant and diverse, yet emerging ecosystem. It is growing at a fast pace and is also spreading across the country rather than just a small number of dominant locations. It has several world class educational institutions, surrounded with large scale economic activity, export driven macroeconomic policies, and significant projects funded by the Government and the private sector that drives entrepreneurial activities, particularly in defense, healthcare, and ICT industries. This is an exciting pattern, if you are an investor, as it presents great investment prospects with high return potentials.
Increase growth funding
The first challenge is lack of adequate amount of growth funding. Turkish Government through various agencies provides a significant number of incentives to drive R&D work. There is also a significant number of angel investors. Even though their activity level is really small for an ecosystem this big, with proper training and experience, angel investors overtime will be more confident and become instrumental for early stage investment. What seems to be really lacking is the growth funding that typically VCs are best equipped to provide. VC pool in the ecosystem must grow fast and catch up with the growth pace that the ecosystem is demonstrating, as soon as possible. This is forcing most of the start-ups, if not all of them, to take on side work to stay float. This hinders their success significantly.
Find the right markets
Another important issue is, and as it would be in any emerging ecosystem, the misperception about what it means to become a global company. Going global does not mean going to Silicon Valley. It is important that each start-up evaluates how they would need to expand globally with a sound and analytical logic, not hype. You need to go where your customers are, not where you need to be seen. Customer development and the pace of it is the most critical success factor for a start-up.
Streamline government resources
Finally, the role of the Government is crucial. It is not just money, as I have seen several examples of start-ups where they are not utilizing all the resources available to them locally and internationally. But to be fair, it is not always easy to access government resources due to the level of bureaucracy involved; actually at times it can be quite complicated and time consuming. Streamlining funding sources based on a long term transparent national plan and simplifying the process to allocate such funds may benefit the ecosystem significantly. Before increasing the funding amount, it would be very important to increase the productivity of the funding that is available.
I personally think that Turkish ecosystem is one of the most exciting ecosystems in the world that I have seen so far and this shows given the increasing level of activity all around the country, year after year. It is certainly on the right track, so kudos to everyone making it happen.