When you have it all but you can not show it. Izmir, not for startups. Yet.
The 1st day of the year in 2016 I was very ready for yet another great year and I wrote a blog post on Medium called: “Izmir for startups. I told you.”. I have been a staunch supporter of this city as the best place to develop a startup community. Even before writing this blog post I visited the startup scene in Berlin a few times and when the Berlin Startup enthusiasts showed their slides why Berlin is so fantastic compared with London or San Francisco I was always writing an extra line underneath showing how ideal Izmir is. Great weather, cheap cost of living and great talent thanks to the local universities. After 3 years of being the advocate for Izmir I must admit I didn’t see the complete picture. In my enthusiasm, I forgot to listen to the people in Izmir who tried but didn’t succeed before me. Nobody argues with me that the ingredients aren't good. You can make the best soup. But will people eat that soup? Will they like it? Will they be inspired? Will we make more soup and invite the whole world over? At this moment I doubt, after 3 years of telling everybody Izmir has it all. Maybe I was too early, too enthusiast or too naive. The ingredients are there though. Nobody denies.
There is no denial in the cost of living. Everyone in Istanbul and even Ankara will glorify the great food, the great climate and the cheaper rent. Any SAAS company working in Istanbul is foolish. The internet is everywhere (where available) and with cheap rents, you also have low wages. I was overhearing a story of a friend working for a bank in Istanbul and who is considering in moving to Izmir. One of the conditions is that you will earn less! Also in corporates they understand the cost of living is way less than Istanbul. Izmir is not having too much traffic problems although from Bornova to the coast, around the new high-rise buildings, a potential traffic heart attack is in the making. There is metro but as Izmir is rather big in surface you need a car as the buses drive in the same places as the cars and not everywhere as frequent. I honestly like public transport in Izmir a lot but only when your destination is near the lines, otherwise you better have some good shoes on.
With around 150.000 students in 6 universities there is no lack of young talent. It is also one of the weakest points of course. Our average age of the founder(s) is way too young missing out on management skills and simply experience in their domain of expertise. If my information is correct there are also 4 TTOs, buildings within the universities that give incentives to startups and companies who are renting space in the form of tax relief in different forms. They should also be doing some R&D but besides some “D” I see most of all the eagerness for the financial benefits. A potential good thing is that you can combine the students with the companies inside the universities but I see little to no activities here. There is always budget to construct buildings but no money or vision to create a community and bridge both worlds. Actually, everybody is complaining but instead of the TTO management listening and understanding, they prefer to push through on their vision, lacking on the basic key elements. Experience. Long-term Vision. In short ignorance. And it got worse. When I was in a meeting with a newly appointed TTO team I raised the question if somebody knew what an accelerator program was, as it is now included in the KPIs set by the government. The answer I got was that you need a license from the US to do it. I was baffled. When I explained that you need 3 ingredients (and no license) being a program, a place and money the same faces looking at me relieved. But clueless. It again drew my attention to the fact that even I relied too much on the universities. Mark Zuckerberg was a dropout when he started together with his friends on Facebook. I should not forget this. It is not thanks to the university he started, it was simply the fact that he had an idea at the university. Not even going to mention Jack Ma, founder of Alibaba. In the meantime universities are key to the success of Izmir. No doubt as the majority of 30+ people don’t want to risk anything. And they have good reasons why not anyway.
Returning to the talent, yes it is there in big numbers. Every time we organise a Startup Weekend or Hackathon we can see it. The Orka team, students at IYTE in Urla, Gülbahçe, are a winning team at Hackathons everywhere. Great students, focused and a joy to work with. Not from Izmir, but Denizli. This is an important fact. We see eagerness from the students coming from other places than Izmir, without a summerhouse in Çeşme. For those who have no idea what Çeşme is, it is a town at the sea with a great white beach and clear sea at around 90 kilometers from Izmir center. The running joke is that Izmir people drive on Thursday to Çeşme and return on Tuesday to work a couple of days. As I said, a couple. This is not the case for all Izmir people but when I see the traffic in the Çeşme direction I sometimes wonder. The fact is that I see more eagerness with the outside of Izmir students than the local students.
After all these positive ingredients we still have no startup scene in Izmir. I didn't cover 2 main items here. If you were wondering if coworking spaces is one of them I must disappoint you. With Originn as the biggest with around 3000m2 there is coworking space available. Some more into the startup scene some more into the free-lance side. What you don’t see in those coworking spaces, and you do see this in Istanbul, are funded startups, even Angel Networks physically present at the space. In Izmir it are individuals who start as free-lancer or create artisanal products. I only know of a funded game maker, http://www.cappuccinogames.co. To my utmost regret, I still did not visit them despite the many attempts I undertook. Coming back to investors, we don’t have them in Izmir, at least not in startups based in Izmir. We have some attempts but too little too small. I interviewed the former Egiad president and the track record in investments was close to nothing compared with Istanbul. If Izmir investors put money on the table it is for Istanbul-based startups anyway. In universities we have some government initiatives with grants for student startups. Nice but what does the 22-year-old founder do with money? All he managed before was pocket money. Not sure that is a great idea. I almost forgot that we have Egiad and Homeros Business Angel Networks. Egiad has around 30 investors mentioned on their website but only 2 investments. Homeros homepage is still nothing but an “under construction” page but does have a president if you do some research online. In short, the investment scene in Izmir is, let’s call it, “emerging”.
The second is maybe a bit more complex. Let me call it the social context. Izmir has a lot of talent that went to mainly Istanbul or Ankara or even abroad. Izmir and the larger Ege region is mainly populated by local family businesses, run in the old style. This made the talented people move out to the corporates in the big cities. I even know quite some startups with roots in Izmir but active in the big city. For those people the higher wages, the opportunity to grow and be successful is not in present Izmir. When I talk to the different Chambers in Izmir I also understood that these family businesses are going through tough times, most of them lacking cash as nobody is paying outstanding invoices anymore. This has the potential that the family businesses will implode. Maybe that is also what we need here to restart the local economy as too little was invested in technology, innovation and sustainability. For those businessmen and women in Izmir, who are doing good, the eagerness to invest in local startups is also close to zero. Some invest in their own companies, while others in art or buildings. While in Istanbul we have had some successes through young starters or even exits, we have nothing in Izmir. Looking at GBA, the almost oldest Angel Network, the members are successful business people who re-invest in the local startup scene in Istanbul.
In short, only 50% of the ingredients are present to make Izmir a great startup scene. Coming back to Çeşme it reminds me of a nearby city called Alaçatı. Today this city is almost rebuild from ruins thanks to Istanbul money (as claimed by anyone I already talked about it). Çeşme is the traditional place build with Izmir money but unchanged for years. So now Alaçatı is for most people way more attractive. Honestly, every year the village expands, tourists find their way and it looks more like a Greek tourist place (and that is good) than the typical Turkish cities close to the sea. You have to see for yourself to judge. This might also be an opportunity for the Izmir startup scene. More and more people from Istanbul, professionals with at least 15 years of experience, move out of Istanbul as too much stress and with kids too costly. They move to Izmir, Urla, Seferihisar, even Güzelbahce and bring knowledge, experience and hopefully money to here. I strongly believe those might change the whole ballgame. It is estimated that around 20.000 people will move in the next 2 years, especially with better highways and railroads connecting the main cities Istanbul, Ankara and Izmir.
I am welcoming any comment on my thoughts. My Turkish is not good enough to understand everything let along all the subtilities. I do have almost 3 years of experience working as a consultant with 2 universities in Izmir and with Stage-Co I dare to say we are together with Originn one of the most active players in Izmir with Startup Weekends and Hackathons. I believe in the potential of Izmir but I also realized that you need all the ingredients to make a tasty soup. Let’s go for the missing ones! Especially address the persons who have money and experience and make them part of this new community, the future of Izmir. One thing is for sure, we have no answer for the moment when the family businesses fail. So better to act now. A new generation for a new future, the next story for a city that is already 8500 years young. Devam.
Patrick Bosteels, Stage-Co Co-Founder