Europe's 'Silicon Valley' Istanbul

World famous newspaper Financial Times (FT) wrote that, this year's hottest new ideas in online retail started not in Silicon Valley but in Istanbul. In the article titled 'How Turkey became a star of European tech', It is stated that the success of start-ups such as Getir was a turning point in Turkey.

Getir co-founder Nazım Salur whose views are included in the article, stated that no venture capitalists would return calls from a Turkish start-up 3 years ago, and drew attention to the high potential of Istanbul in the field of technology.

In the article of the FT, It is stated that this year's hottest new idea in online retail started not in Silicon Valley but in Istanbul. In the article published with the headline 'How Turkey became a star of European tech', It is pointed out that tech investors have poured billions of dollars into start-ups delivering groceries in just 10 minutes and its pioneer, Getir, is now valued at $7.5bn.

'THAT NEEDS RESOURCES, BOTH PEOPLE AND MONEY'

Getir co-founder Nazım Salur's views are also included in the article. Back in 2018, according to Salur, no venture capitalists would return calls from a Turkish start-up. It is stated in the article that for this reason the launch of Getir to overseas countries was delayed for 3 years, and also "The right funding wasn't there. I wanted to go in strong and win [in new markets]. That needs resources, both people and money" said Salur.

Getir's Salur stated in the article that he was 'surprised' Istanbul had not produced more tech successes, given it was a 'true international city', which he blamed on some 'selling themselves too early to Big Tech'. "Great companies are built after 10 years. The first 10 years are your primary school education. You have to have a 20-year timeframe in mind" Salur also said in the article.

'TURNROUND IN GETIR'S FORTUNES IS PART OF A HUGE SHIFT IN TURKEY'

Additionally, It is pointed out in the article that the turnround in Getir's fortunes during the past year is part of a huge shift in Turkey's technology industry.

The following statements are included in the FT's article:

"Since last summer, Turkish tech companies, including ecommerce platforms Trendyol and Hepsiburada and games developers Peak Games and Dream Games, have seen their valuations vault above the billiondollar mark that is seen as a global marker for start-up success. "The Turkish ecommerce market is at an inflection point," said Hanzade Dogan, founder of Hepsiburada, which is now valued at $4.4bn after an initial public offering on the Nasdaq last month."

According to the article which states that ecommerce penetration in Turkey is estimated to have risen from 3.5 per cent three years ago to about 10 per cent today, one of the biggest reasons behind this is the pandemic effect that has supercharged online retail all over the world.

"Covid created a step change. All the pieces fell into place now for Turkish companies to start thinking more globally" said Melis Kahya Akar who is managing director at General Atlantic, who led Trendyol's $1.5bn funding round alongside SoftBank this week, in the article.

'NEWFOUND SUCCESS HAS BEEN MANY YEARS IN THE MAKING'

It is stated in the article that while the flurry of investment has put Istanbul on the map alongside other European tech clusters such as London, Paris and Berlin, its newfound success has been many years in the making, also, "The activity started 10 years back, when it could be seen that there was something emerging" said Hendrik Brandis, a tech investor at Earlybird, which has a dedicated fund for central and eastern Europe, in the article.

In the article it is reported that Trendyol, which is now valued at $16.5bn and is majority-owned by Alibaba, started out as an online fashion retailer in 2010 before expanding into food delivery and launching a digital wallet. Hepsiburada, sometimes seen as Turkey's answer to Amazon, was founded in 2000 and has largely been self-funded, Dogan said in the article. According to the article, which stated as a result, homegrown companies have flourished, eventually growing big enough to attract international attention, "We didn't let the market [go] to the usual suspects," said Dogan.

MOST EXECUTIVES FROM TWO COMPANIES

According to the article, many of today's tech executives in Turkey cut their teeth at one of two companies: Rocket Internet, the German start-up incubator that launched in Turkey in 2011 then abruptly pulled out of the market a year later; and Peak Games, the mobile games developer that was founded in 2010 and acquired by Zynga last year for $1.8bn.

In the article Akin Babayigit, an alumnus of both Rocket and Peak, and now co-founder of London-based games company Tripledot Studios, said that "A lot of these very smart, hungry, super-analytical people that we hired at Rocket ended up joining either Trendyol or Peak" along with stating that the two Turkish companies turned into something like 'universities' for tech talent.

While Babayigit stated in the article that the success of Peak, in particular, 'changed everything' for Turkey's start-up ecosystem, he also said, "Peak Games showed people that it was possible to think global and win global."

According to the article, since its first deal there in 2017, San Francisco-based Zynga has now invested more than $2.3bn in four acquisitions with operations in Turkey, including Rollic Games, one of several 'hyper casual' games developers in the region. It is also stated in the article that Bernard Kim, the Zynga executive who led those deals, said "I do believe Zynga was the beachhead of any foreign company investing in Turkey."

'OTHER THAN GETIR, WE DON'T SEE A GREAT COMPANY'

The following statements are included in the article: "Another graduate from the Rocket, Peak and Trendyol schools of start-ups is Soner Aydemir, who co-founded Dream Games in 2019. The maker of the puzzle app Royal Match became Turkey's newest unicorn. 'It was really easy to raise money,' said Aydemir, thanks largely to his team's record creating Peak's hits Toy Blast and Toon Blast. 'Everyone wanted to invest in us'."

Stephane Kurgan, former operations chief at Candy Crush Saga developer King and now a partner at Index Ventures, the venture capital firm that backed Dream, said "You have a community of game developers in Turkey who are world-class now" in the article.

It is stated in the article that Aydemir still has concerns about Turkey's limitations for tech start-ups, from a lack of experience in product development to a dearth of role models for rapidly scaling up a business. Also Aydemir said in the article that "It's a very young industry. Other than Getir, we don't see a great company in Turkey which succeeded to scale in the organisation."

Also according to the article other entrepreneurs complain about excessive bureaucracy, which can mean it can take six months to establish a new company, and a complex tax system, including a new digital services tax that could hit Trendyol just as hard as Amazon.