My previous post, with the picture of the Ferrari, evoked some funny reactions. Most funny one came from a red devil owner. He didn’t like the post as he was driving one in Istanbul. I don’t think he read and understood my post but reacted mostly because of the title and picture. Or he understood it differently.
In the discussions I had with some people after posting, it struck me that we complain so much in the startup scene. I have not a clear idea of other cities or countries but in Istanbul, Izmir and Ankara and any other city I visited, it is all negative. No good startups, investors talk but don’t put the money on the table, lack of lead investors, mentors act like Ottoman rulers and so on. Being a positive soul this makes auto-motivation mandatory. Honestly, I also complain a lot, but at the same time I push forward our Stage-Co train to connect and ignite. There are a lot of hurdles of course in a market where startups were almost non-existing a couple of years ago. Serkan Ünsal wrote a guest post for Tech.eu summarizing the Turkish startups scene. These lists are never complete of course. He didn’t even mention Stage-Co, imagine :-). It is hard to find accurate figures in terms of investments in the 1st half year of 2015, but based on what I could find in Turkiye around 50 million dollars and in Spain for example 200 million dollars are invested in startups. I can be wrong for 10 million but you get the idea.
Spain is a country that has been hit hard by the bank crisis, with unemployment at 24% in April 2015, and 47 million inhabitants. In Turkiye we claim 9,3% unemployment, 78 million habitants and the finance minister assured us that our country is doing great economically flirting with 3% growth. A part of Foreign Direct Investment (FDI) for the first 9 months in Turkiye is $3.1 billion, invested in real estate. Although this figure is less than expected, it is still a lot better than most European countries. So there is no lack of money, that is for sure and I am not taking into account local investments. It is almost only going to real estate, not startups and that for a couple of years now. The return on investment is also very high on real estate so investors don’t have to think twice. Real estate is tangible and low risk investment. With the dollar going up some profit is getting lost of course, but I don’t hear anyone complaining.
This all sums up to very small investments in startups in Turkiye today, and it is actually the government who is doing more than the private sector with less demands, less kpi’s (close to none). On the other side we have this great goal for 2023 to achieve in Turkiye. The Republic will celebrate its 100th year of existence with ambitious goals to achieve. We have the youngest population in Europe; median age in Turkey is 28.5, in contrast to 40.5 in Spain. Although expenditure in R&D has doubled in the last 10 years from 0.4% of GDP to 0.85%; it stays very weak, the average in OECD countries is 2.5%. Target for Turkiye for 2023 is 3%. This means not only more investment, but better performance from large companies and universities. A unique opportunity to collaborate with them and build better models with more results. The economic goal is to rank among the world’s 10 biggest economies, having to grow on average of 8% per year. As a result it is clear that more should be done to support SME’s and startups, the only companies that go for growth, were the big ones want to optimize their bottom-line results.
In writing this down it is clear to me that there is no easy catch here in finding a way to transfer more money to the startups. Apart from Hasan Aslanoba, who invested in 7 startups in 6 months, all others are on their a** being unhappy. By the way, practically all of them situated in Istanbul, ignoring the rest of the country. If you feel addressed, don’t take this wrong, merely pointing out some statements to clarify.
There is only one way for me to get out of this and that is by doing more and learn from what we do wrong. Therefor we are working hard to start a pre-accelerator with pre-seed fund. I found some great partners to achieve this and we hope to announce soon what exactly we will build. And it will not be real estate! Anyone who wants to be involved can just contact us through mail: firstname.lastname@example.org or email@example.com, we will be happy to hear your thoughts.
In the meantime my focus is on Izmir, no surprise for those who are following me. In intellectual capital we are sitting on a goldmine but we need to dig it. Today, not tomorrow. This is not the only region of course. We are looking for 5 major cities/regions to start exploring local talent for the moment. Everybody is waiting for startups to come to Istanbul, but that is not how to detect new talent. We need to tour Turkiye and hand out to those who hold the future in their hands and help, train, mentor locally. And let’s be honest, there is not a more beautiful country to tour around, with excellent food available in all places!