The City Of Ambitious Entrepreneurs: Istanbul

It is the only city in the world which is located both on the European and Asian continent. It is connected by the architectural wonder Bosphorus Bridge that stretches at 1,560 m long over the beautiful Bosphorus. This unique geolocation always gave the city a vibrant and mixed international culture, which breeds innovation and inspiration and is home to a dynamic start-up scene.

City Of Two Continents: Istanbul

Why You Should Consider Starting Up In Istanbul:

• A fast-growing economy with untapped market opportunities and a sizeable market.
• It is strategically located between key markets in Europe, the Middle East, Russia and Central Asia. Thus the city serves as an access point to the EMEA region.
• A young, entrepreneurial and internet savvy population (half of the Turkish population is under the age of 30). High social media usage and high mobile penetration.
• The cost of living and doing business is lower than in most major tech hubs in Europe, USA or Asia.
• A strong engineering talent provided by several universities in Istanbul, including Yildiz Technical University and Istanbul Technical University.
• A corporate tax rate of 20%.
• Foreigners are allowed to start a private limited company.
• Technoparks and accelerators by universities that offer support, reduced tax rates and office space.
• Business incubators, accelerators and coworking spaces are mushrooming around the city.
• The development of technoparks attached to major universities in Turkey was rolled out as an initiative by the Ministry of Industry and Trade in 2001. Since then the aim of technoparks has been to develop technology and software and carry out R&D by utilizing the facilities of a university or a high-tech institute or R&D center/institute.
• Legal framework is welcoming to different nationalities: As a foreigner wishing to establish a business within the Turkish city, the simple residence permit allows entrepreneurs to live in Turkey as well as establish a business.
• As the country that offers the highest tax incentives to business angels, Turkey has 282 accredited business angels recognized by the government. It is one of the few countries in the world with a ‘Business Angel Investment Law’ and is the only country in the world which has a Private Market on its stock exchange, where angel investors and start-ups come together.

What Startup Founders Have To Consider:

• Turkish regulatory framework and bureaucracy are notorious for being slow and inefficient.
• According to Turkish legislation for every foreigner hired, five Turkish nationals must be employed.
• Some recent political instability has resulted in temporarily blocked access to Twitter and other social media sites.
• The access to capital might be difficult as VC scene is still immature. Some startup founders complain that local VCs do not have technological background or understanding of innovative technology, so it is difficult to raise capital being a tech startup.
• Not enough is done in terms of tax breaks. Sean Yu, the CEO of the financial startup Parasute, expresses that taxation breaks and government support could be better: “I don’t think that start-ups and small businesses get a real tax break, and current regulations are not as helpful as they should. It is hard to do small business in Turkey” (The World’s Best Startup Hubs: Istanbul).
• Some people in the ecosystem note the lack of original and innovative ideas, which can be considered as a downside for some and an opportunity for others. Some players are saying that Turkish entrepreneurs are choosing the safe route of picking an existing ideas and business models from the US and Europe and implementing the Turkish version of them in the local market.

Enis Hulli, the partner at 500 Startups Turkey, adds about the advantages and disadvantages of the market: “Apart from regional growth possibility there’s a huge chunk of SMEs to sell to for B2B product startups. As for disadvantages, there hasn’t been any Turkish to Turkey exits, and it’s hard to access funding. And since it’s a big market, it can be both a blessing and a curse – companies try to capture the local market, which takes 5-6 years, and by then, your competitor has already reached out globally.”

“There’s no system to support Turkish entrepreneurs’ journey to move to Silicon Valley. The norm is to establish a company in Turkey, focused on the Turkish market, and then to exit to an international company who wants to enter Turkey. Yemeksepeti, Pozitron, Gittigidiyor are examples of that.”

Familiarize Yourself With Istanbul’s Startup Environment

The best way to discover what is happening in the local startup community is to visit local startup events. You can start with following a calendar of Istanbul Startup Events on Eventbrite to overview all events in one place.

Organizations And Co-working Spaces Which Host Startup Events:

• UP Istanbul is a part of global organisation, that organizes programs for Istanbul Startup community, the most famous are Startup Weekend events. UP Istanbul have created a newsletter and an event calendar where you can find most of the relevant upcoming startup events in Istanbul: Istanbul Startup Digest.
• Etohum is an accelerator and seed investor that aims to bring entrepreneurs well versed in the new economy, who want to establish their own internet company with companies, investors and professionals.

Regular Events & Meetups:

• For regular events, it’s always good to check startup meetups organised in Istanbul via Meetup.
• StartupBlink Istanbul Meetup Group  is an interactive global startup ecosystem map with thousands of entities listed including Startups, Coworking spaces and Accelerators. StartupBlink’s meetups are focused on helping startups grow their business by supplying them with insightful information from startup leaders in the local community as well as facilitating connection with other entrepreneurs to create and discover potential synergies.
• Startup Grind Istanbul Meetup Group  is an event series and website designed to help educate, inspire and connect local entrepreneurs. Each month an amazing speaker shares his success story with community. It’s a great opportunity to learn from the best, network with other members of the startup community and improve your chances of entrepreneurial success.
• Fuck Up Nights is a monthly event where entrepreneurs come together to tell stories of their failures and to share startup lessons.
• Istanbul Entrepreneur & Startup Networking (Start-Ist) Meetup Group is a meetup for networking and exchanging ideas with entrepreneurs, startup owners and many other great people.
• Garaj.co is a hacker/co-working space founded by students of software engineering and other disciplines from Bosphorus University. It is a non-profit organization created for the purpose of giving space for hackers, makers and tinkerers to build software and hardware and to create links between startups and students. It hosts regular events Garaj Talks and can be approached as a free event space for startup events.

Other Relevant Meetups:

• Groups for technical and business people in the local ecosystem to follow for learning, sharing knowledge, finding inspiration and collaborating are: Turkey OpenStack Meetup, Istanbul Coders, Istanbul Lean Startup Meetup Group, Find Your Co-founder, Mobil Istanbul, HackerNest Istanbul Tech Socials, Startup Istanbul, Stage-Co Meetups, Istanbul E-Commerce Meetup, Startup Founder 101, Istanbul Spark Meetup. As you can see, there’s no shortage of great communities and groups to meet the right partners, co-founders, mentors and friends in Istanbul!

Additionally, if you want to stay “in the know” about the local events and startup news, it is highly recommended to join the following Facebook groups:

• Istanbul Startup Meetup is the largest community of startup-enthusiast in Turkey, with over 7000 members and a thriving and welcoming community, where you can validate your ideas, meet relevant people, promote your startup in a non-promoting way ;).
• Startup Istanbul is a Facebook group with over 7000 members for posting Istanbul startup news, events, and to start interesting discussions.
• Startup Weekend Organizers is a Facebook group that brings together all the members, mentors and participants of the global movement Startup Weekend. You should also sign up to the regional group Startup Weekend Istanbul MENA.
• Make Sense Istanbul is a Facebook group for social entrepreneurs, non-profit startups and anyone who wants to make the world a better place. MakeSense is a worldwide movement that challenge people to create sustainable social businesses.

Yearly Or Major Events, Festivals, Conferences:

• Startup Istanbul is a leading annual startup event in Eurasia, that takes place in Istanbul every October and brings together leading startups, business angels, VCs and executives from Asia and Europe. It’s a unique event that gives you exposure to the EMEA, Russia, Ukraine, Turkey, Central and West Asia markets. It is organized by Etohum.
• Startup Turkey is an annual event that is also organized by Etohum. 3 days 700 people stay in the same marvelous hotel in sunny Antalya, Turkey. This event is made for networking of startups, internet companies, business angels and venture capitalists from Middle East, Europe and the US. You can also follow Startup Turkey Facebook group.
• Webrazzi is the most central online source of tech startup news from the region. Every year Webrazzi holds Webrazzi Summit, Turkey’s most influential internet conference, and Webrazzi Arena, an entrepreneurship contest that happens during the summit. Webrazzi events page is a go-to source of what is happening in Turkey and the region in terms of large events, conferences and all sorts of important happenings.

Find An Inspirational Co-working Space In Istanbul

Why start with a coworking space in Istanbul? Last few years Istanbul saw a number of various coworking spaces mushrooming around the city, offering a range of prices and functionalities. Renting a space at a coworking space in Istanbul can be a great way to get affordable office space, meet creative and startup people and be in the center of events.

Co-working Spaces In Istanbul:

• Starters Hub is a coworking space which also owns the Turkey chapter of the leading European accelerator Startupbootcamp. Starters Hub acts as as a catalyst in the region’s entrepreneurial ecosystem, offering co-working spaces, events and a base for startups who enrol in Startupbootcamp Istanbul annual acceleration program.
• Kolektif House is a network of coworking spaces, offering creative, efficient and social work environment to freelancers, entrepreneurs and companies all under one roof. It has offices in two locations, and is running excellent events, which you can follow on Kolektif House Facebook page.
• Atölye Istanbul is the new creative community space, housing coworking, fabrication and peer-to-peer education facilities under one roof. Located in the historical beer factory building, it runs a series of workshops and provides a space for bigger events and concerts.
• Yazane is a coworking space in Istanbul which brings together freelancers, digital nomads and startups in a working environment with a beautiful view on Bosphorus. You should check it out if you’re sure you are not going to be distracted by the stunning view 🙂 You can follow their Facebook page for events and news.
• Check the international chain of coworking spaces Urban Station, which has opened a number of locations around Istanbul. If you have noticed a new brand of co-working spaces popping up around the town, do not be confused- starting from 2016, all Urban Station branches are being transformed into Workinton branches.

Reach Out For Financing Options In Istanbul

So you have networked, met the right people, built a team and an MVP, settled in a coworking space and ready to seek an investment in Istanbul? Do not be nervous, we’ve got you covered! Here you can find out about major incubator and accelerator programs, grants and subventions, crowd-investing platforms, venture capital investors and angel investors in Istanbul.

There are various funding methods available to an entrepreneurs, including the F&F round, or friend and family fund, crowdfunding which is a method of raising funds from the general public through a platform, a loan from a bank, financing from business angels, or funding provided by incubators, which is often called “seed funding”. Furthermore, there’s opportunities to get funding from the government in a form of grants and subventions. The entrepreneur should always consider the pros and cons of each method of funding, and select the most “winning” combination of benefits that come from each source of funding. In other way, an entrepreneur should be thinking not “how to get money” but “how to get smart money”, which means funding complemented by know-how, entrepreneurial expertise, experience, guidance and network in a particular industry.

Incubators & Accelerators:

Being a startup hub in the region, Istanbul has inevitably attracted global accelerator networks, including the Silicon Valley accelerator the Founder Institute, New York NGO Endeavor and the European Startup Bootcamp. These accelerators, along with many programs started by universities after the government’s initiative to support innovation, are supporting startups with resources and expertise in exchange of equity or on other terms.

Well-Established Acceleration And Incubation Programs:

• Startupbootcamp Istanbul is the Turkey chapter of the pan-European acceleration program. For 3 months, 10 selected startups are provided with funding and incubation space along with mentoring on all stages of product and business development. At the end of the program, there’s a Demo Day that allows startups to pitch to over 250 investors and partners.
• Etohum is one of the first Istanbul based seed funds and accelerators, founded in 2008. Etohum provides mentorship, seed funding, pitch preparation, investor networking and expertise meetings.
• Endeavor Turkey is a part of an international NGO which brings together leading mentors with talented entrepreneurs. Started in Argentina and Chile in 1997, it works to identify promising innovators in emerging markets that are leading companies with the potential to go to scale and attract venture capital. The Istanbul office was launched in 2006.

University-Run Acceleration And Incubation Programs:

• The Koç University Incubation Center runs incubation and pre-incubation programs for entrepreneurs who are just starting and those who already have some traction and are ready to explore the market. It also offers an office in the center of Istanbul on the Koç University Şişli campus.
• Start-Up Factory or Girişim Fabrikası is an accelerator housed at the privately run Ozyegin University on Istanbul’s Asian side. Backed by mobile giant Turkcell, its goal is to support startups in the product launch stage and help them survive the “Death Valley”.
• ITU Cekirdek is a pre-incubator/accelerator by Istanbul Technical University, naturally a hub for talented software entrepreneurs. It offers one of the most comprehensive support programs, including services like seed investment, co-working space, mentorship, competitions, networking events and opportunities and a host of other services and trainings that might just be what local talents need to launch their ideas.

Other Support Programs To Consider:

• Sucool is a pre-incubation center run by Sabanci University, that supports early-stage technology and R&D projects.
• Inovent is one of the pioneering accelerators in Turkey, subsidiary of Sabanci University. Today it distinguishes itself as the only accelerator in the country that focuses on faculty entrepreneurship and provides funding for university entrepreneurs.
• InnoCampus is a collaborative non-profit project providing an innovation and entrepreneurship experience for university students. It is a prefabricated portable platform, which consists of coworking, co-learning and co-creation (FabLab) spaces as well as a digital platform.
• Avea Incubation Center, run by mobile telecommunication giant Avea, offers office spaces, technical infrastructure and knowledge to entrepreneurs.
• FirstSeed is a boutique pre-seed investors network, formed of investors who are offering a lot of experience and know-how.

To get information on the rest of accelerators in Turkey, you can go here.

Grants And Subventions:

• Scientific and Technological Research Council of Turkey (TUBITAK) is a government body extending grants, subsidies and other incentives for entrepreneurs. It encourages research and development.
• The Economic Policy Research Foundation of Turkey (TEPAV) is a think tank looking at economic issues. It has partnered with the U.S. State Department’s Global Entrepreneurship Program to provide a platform for Turkish entrepreneurs to network with American entrepreneurs and funders.
• Turkish Ministry of Science, Industry and Technology supports technology parks and provides up to $55,000 in seed capital for entrepreneurs through the “Techno-Entrepreneurship Grant Program”.
• Turkish Technology Development Foundation (TTGV) was established in 1991. Though headquartered in the Turkish capital, Ankara, TTGV’s mission has been to support “technological innovation activities in Turkey.”
• Is Girisim and Turkven, both of which launched in 2000. Though largely focused on private equity for established companies in need of later stage growth capital, Is Girisim and Turkven have made combined investments over $3.5 billion, in predominately larger buyouts of brick-and-mortar companies.
• Turkish Ministry of Science, Industry and Technology. It supports technology parks and provides up to $55,000 in seed capital for entrepreneurs through the “Techno-Entrepreneurship Grant Program”. Next year this ministry plans to establish “science and technology counselor offices in various developed countries” such as the United States, Germany and Japan.

Angel Investors:

Funding is not the only thing that entrepreneurs need to be successful. They also need mentorship, expertise, skills-sets and a network, which angel investors can provide.

Interestingly, Turkey offers the highest tax incentives to business angels. Perhaps that is the reasons why Turkey  has now 282 accredited business angels and the number is growing.
Turkey is the only country in the world, which has a Private Market on its stock exchange Private Market by Borsa Istanbul is an innovative digital platform where business angels and startups come together.

• BIC Angel Investments invests in a range from e-commerce projects to mobile applications and social or location based services. BIC targets projects in early and seed stage and investments range from $50,000 to $150,000.
• Galata Business Angels is a meeting point for startups and business angels, and includes network of over 50 investors and 500 entrepreneurs. It holds regular meetups for investors and angels and provides investor training programs.
• Business Angels Association of Turkey or TBAA (The Turkish Trade Association for Business Angels and Early Stage Market Players) mission is to ease the way for entrepreneurs planning start-ups to access both domestic and international financial sources.
• Istanbul Startup Angels is offering a network of 45 registered investors and Angel Academy.
• Intel Capital Ventures opened its Istanbul office in 2002, offering technology, network of partners and customers, and global reach to selected startups.

Venture Capital Investors:

• Hummingbird Ventures is a venture capital fund for high-growth digital media and software companies. With a presence in London, Ghent and Istanbul, Hummingbird provides swift access to the operational resources and advice needed to build the successful tech companies.
• String Ventures is a seed and early-stage venture capital fund, offering “founder-friendly” terms and great experience of mentors who are founders themselves! Having offices in Istanbul and San Francisco, this VC has the ability to provide regional getaway to Silicon Valley for the right projects!
• Revo Capital is a venture capital fund investing in seed and early stage B2B and B2C technology, focusing on these business areas: B2B Cloud, Internet of Things and disruptive e-commerce.
• 500 Startups recently launched a Turkey fund, looking to raise $15 million that it can spread across 100 Turkish startups over the next several years.
• Global venture capital firm EarlyBird Ventures has set up a Turkish fund in 2014. Its $110 million Digital East Fund highlights the growing international investor interest in the region.
• 212 Capital is committed to invest its $30 million fund into smart finance solutions.
• Aslanoba Capital is responsible for the early stage technology investments of Hasan Aslanoba, the leading angel investor in Turkey. They invest in ambitious teams pursuing disruptive ideas in areas such as marketplaces, e-commerce, mobile, classifieds, content, and SaaS.
• The Istanbul Venture Capital Initiative (iVCi), founded in 2007, is Turkey’s first ever dedicated fund of funds and co-investment programme.
• iLabs Ventures, founded in April 2000 as part of AccessTurkey Capital Group, is investing in early stage and growth stage companies, focusing on classifieds and marketplace business models.
• TRPE Venture Partners is a venture capital firm investing in ideas, seed and early-stage companies with high growth potential in the ICT sector with a greater focus on B2B solutions.
• SAP Innovation Labs Turkey are offering expertise and infrastructure for big data and predictive analysis projects via their Startup Focus Program.
• İnventram invests equity in technology and innovation based start-ups and provides sales support via revenue sharing schemes.
• Female founder? Consider reaching Arya WIP, it is a platform that creates acceleration and investment opportunities with strategic partnerships for women led entrepreneurship, focusing on financing women-ed entrepreneurship projects.

Look For More Advice In Istanbul

To get information about establishing a business in Turkey, you can consult the official Invest in Turkey page. For free advice in English on doing business in Turkey, most of the resources and contact are gathered in Doing Business Guide.

To find out about the cost of doing business in Turkey, consult this page in the section “Invest in Turkey” by The Republic of Turkey Prime Ministry Investment Support and Promotion Agency.

For the legal needs of your startup B+B Legal law firm in Istanbul is experienced in serving Internet and e-commerce businesses, protection of intellectual property, payment services and litigation.

Are you ready to kick-start your venture in the city that has been included in “Top 5 Startup Hubs of The Future” by Inc.’s?

While there are some issues in the local ecosystem that need to be improved, such as access to growth capital funds, bureaucratic legal infrastructure, shortage of experienced mentors and investors, there are many upsides if you are prepared to tackle these challenges head on and ride the waves of the emerging market.

“Istanbul offers unique opportunities in the B2B sphere to help businesses, and Istanbul is not small, it’s as big as European country with 14 million, so there’s an opportunity to test your product and make it global.”- says Tarkan Anlar, the CEO at Vidpanel, a startup that lets you set up your own online TV channel.

Kutlu Kazanci, the director at Sabanci University SUCOOL Pre-Incubation Center, adds: “Turkish startup ecosystem is at a very exciting stage, we have our first unicorn exit Yemeksepeti, we will soon have over 10 VC funds with money earmarked for Turkey and region. What do we need for the next stage? We need our youngsters to explore and discover, and tack bigger and deeper problems that seem hard to solve at first.”

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Last updated: August 2nd, 2016

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