How Turkey became a European tech star

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these years The hottest new ideas Online retail did not start in Silicon Valley, but in Istanbul.

Tech investors have invested billions of dollars in start-ups and can deliver them to their door in just 10 minutes. Its pioneer Getir is now valued at $7.5 billion.

But as early as 2018, according to Getir co-founder Nazım Salur, no venture capitalist would respond to calls from Turkish startups.

“There was no suitable funding at the time,” Salur said, which caused his ambition to launch Getir overseas to be postponed by nearly three years. “I want to enter strongly and win [in new markets]. This requires resources, including manpower and capital. “

The transformation of Getir’s wealth over the past year is part of the huge transformation of the Turkish technology industry. Since last summer, Turkish technology companies, including e-commerce platforms Trendyol and Hepsiburada, and game developers Peak Games and Dream Games, have been valued above the $1 billion mark, which is regarded as a sign of the success of global start-ups.

“The Turkish e-commerce market is at an inflection point,” said Hanzade Dogan, the founder of Hepsiburada, who was valued at $4.4 billion after the Nasdaq IPO last month.

Hepsiburada is sometimes seen as Turkey’s response to Amazon, founded in 2000 © Lev Radin/Anadolu Agency/Getty

It is estimated that Turkey’s e-commerce penetration rate has risen from 3.5% three years ago to around 10% today, largely due to the impact of the pandemic Overloaded online retail all over the world.

“Covid has brought about a change,” said Melis Kahya Akar, managing director of General Atlantic, who led Trendyol’s $1.5 billion funding round with SoftBank this week. “Now, Turkish companies are beginning to think about all issues on a global scale.”

However, although the investment boom has made Istanbul appear on the map with other European technology clusters such as London, Paris and Berlin, its new success has been brewing for many years.

“This activity started 10 years ago, when people can see something is emerging,” Earlybird’s technology investor Hendrik Brandis (Hendrik Brandis), the company set up special funds for Central and Eastern Europe.

Trendyol is currently valued at US$16.5 billion and is majority-owned by Alibaba. It started as an online fashion retailer in 2010, and then expanded into the food delivery field and launched a digital wallet. Dogan said that Hepsiburada is sometimes seen as Turkey’s response to Amazon. It was founded in 2000 and is mainly self-funded. “Our capital efficiency is extremely high.”

The chart shows that Turkish technology companies raised more funds in 2021 than the previous four years combined

Part of the reason why local online retailers are able to flourish is that global companies such as Amazon and eBay have been working hard to enter the country. PayPal lost its Turkish payment license in 2016, when President Recep Tayyip Erdogan was also cracking down on social media sites such as Twitter and Facebook.

Kahya Akar said: “For the investor community, certain volatility is generally not that attractive.” “I expect the digital transformation to be faster.”

As a result, local companies flourished and eventually developed to a scale sufficient to attract international attention. “We didn’t let the market [go] For the usual suspects,” Dogan said.

Many technology executives in Turkey today have dug their feet in one of the two companies: Rocket Internet, a German start-up incubator, launched in Turkey in 2011 and abruptly withdrawn from the market a year later; and mobile phones founded in 2010 Game developers Peak Games and Acquired by Zynga Last year it was 1.8 billion U.S. dollars.

“A lot of these very smart, eager, super-analytics people we hired at Rocket ended up joining Trendyol or Peak,” said Rocket and Peak alumnus and now the co-founder of London Games Akin Babayigit, the company Tripledot Studios. He said that the two Turkish companies have become “universities” for technical talents.

Laptop screen showing Trendyol online shopping site
Trendyol is now worth $16.5 billion and is majority-owned by Alibaba © Dogukan Keskinkilic/Anadolu Agency/Getty

Babayigit stated that Peak’s success especially “changed” everything in Turkey’s startup ecosystem. Games developed in Turkey are being played by millions of people all over the world. Before that, many Turkish companies were “trapped by the internal market” and they did not need to worry about international expansion. “Peak Games showed people the possibility of global thinking and winning the world,” he said.

Since its first deal there in 2017, San Francisco-based Zynga has now invested more than $2.3 billion in four acquisitions and has operations in Turkey, including Rollic Games, one of them “Super casual” Game developers in the area.

Zynga executive Bernard Kim, who led these transactions, said, “I do believe that Zynga is a beachhead for any foreign company investing in Turkey.” King said he likes the country’s “very competitive vitality.” “Everyone is watching [App Store] Leaderboard, want to win. ”

A histogram showing the number of companies in venture capital and private equity-backed startups worth more than $1 billion

Another graduate from Rocket, Peak and Trendyol startup school is Soner Aydemir, who co-founded Dream Games in 2019.The maker of the puzzle app Royal match In June, it became Turkey’s newest unicorn company-a private start-up company valued at more than 1 billion U.S. dollars.

“Raising funds is really easy,” Aydemir said, mainly due to his team’s creation of Peak’s hit song Toy explosion and Toon explosion“Everyone wants to invest in us.”

Stephane Kurgan, former head of operations candy Crush Saga Developer King is now a partner of Index Ventures, a venture capital firm that supports Dream. He said: “Turkey now has a world-class game developer community.”

But Aydemir is still worried about Turkey’s restrictions on technology start-ups, ranging from lack of product development experience to a lack of role models for rapid business expansion. “This is a very young industry,” he said. “Except for Getir, we have not seen a great company in Turkey that has successfully expanded the scale of the organization.”

Other entrepreneurs complain about excessive bureaucracy, which may mean that it may take six months to establish a new company, and a complicated tax system, including a new digital service tax, which may cause Trendyol to be as severe as Amazon.

Salur of Getir said he was “surprised” that Istanbul had not achieved more technological success because it was a “true international city”, which he blamed on some “prematurely selling themselves to large technology companies.”

“Great companies were built 10 years later,” he said. “The first 10 years are your primary education. You must have a 20-year time frame.”

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