Creative Turkish startups grow even in tough times

ANKARA - Few people seemed less likely to become an international gaming entrepreneur than Mehmet Ecevit.

Ecevit grew up as a shepherd in a small Anatolian village. He taught himself computer programming, and eventually started his own company in Istanbul building computer games on a shoestring.

But today, the 32-year old’s 1010 game earns $250,000 per day, and is one of the most popular mobile phone games in the world.  More than five million people have installed it on their smartphones via Google Play alone. 

Ecevit’s two-year-old company Gram Games is only one of a large number of recent Turkish startups that are prospering in difficult economic times.

The number of Turkish startup companies jumped sharply in 2014, fueled by relative confidence in Turkish business conditions despite relatively slow economic growth. Companies like Nanokomp, a maker of high-technology materials such as engineered composite materials, has made deals with several important international manufacturers. Or like, a services marketplace set up by a husband and wife last year, and which now has more than 40,000 associates listed, along with funding from the Dutch private equity fund, Hummingbird.

“Turkish entrepreneurs aren’t daunted by difficult conditions,” said Firat Ileri, a principal at Hummingbird which has made a number of investments in Turkish startups. “They tend to be experienced in their fields, and they have a clear vision of how they expect to succeed.”

--It's all about confidence

Confidence is clearly a critical factor for Turkish startups, agreed Seltem Iyigun, an economist with the credit insurance firm, Coface, in Istanbul.

“Business confidence indexes were relatively high for Turkey in 2014,” Iyigun said. “And there was still sufficient growth to bolster optimism among entrepreneurs.”

The number of new startups in Turkey was about 60,000 as of September 2014, up from about 45,000 in September 2013, according to statistics in the Coface Panorama Turkey report, published in January.

“Low funding costs, thanks to the weak Turkish lira, and the expectation of a stable economic performance by the country contributed to the increase,” Iyigun pointed out.

The wholesale and retail sectors contributed the most startups last year, along with manufacturing and construction, he said.

--Creativity can pay off

For Ecevit, starting a company seemed like a natural next step.

“I knew I wanted to develop games, and I knew I hated the corporate world,” Ecevit said. He spent a few years doing odd jobs in computer programming, as well as providing visual effects to Turkish singing superstar Tarkan for a while.

“As soon as I could manage to work for myself, I got started,” Ecevit said. His first game, Sanalika, a Facebook game, is still number 20 on the worldwide list of most-played games on the social media site.

Then Ecevit produced 1010, a global success in mobile phone games.

Currently, his 10-man team in Istanbul is working on a new production, with about $700,000 in financing from Hummingbird.  His company, Gram Games, reportedly earns close to $500 million a year.

--Room for new businesses in Turkey

Entrepreneurs keep trying in Turkey, because there is sufficient economic space for new businesses.

“There are a large number of services available elsewhere that are not yet up on the Turkish web,” Ileri said.

A good example is Bodru, an Istanbul-based online software firm that offers a customer relationship management package. Normally this kind of software is quite expensive, but Bodru offers it at a price a small company can afford. The user base is expanding rapidly, according to the company, and it’s caught the attention of California Bay Area investors, according to the U.S National Venture Capital Association.

Nanokomp offers a different kind of example. Formed in Istanbul by two PhDs in physics, the company obtained funding from the Scientific and Technical Research Council of Turkey. Nanokomp produces composite materials for the aerospace and defense industries.

“We started out in 2013 with our research and a vision,” explained Onder Guney, one of the two founders. “Although neither of us had any experience in business, we knew there was demand for these complex products with a high level of technological input.”

Guney took his product plans to potential clients, and he has already hooked up with the Malaysian company, Felda Global, for the production of high-grade advanced materials from Felda’s methane, a byproduct of its palm oil production.

As opposed to high-tech Nanokomp, is a low-tech niche service provider.  operates in a far less formalized market. A married couple in their thirties, Basak Taspinar and Erol Begim set up a portal on which freelancers of all types could offer their services. You can hire a maid, or a plumber, or a homebuilder on  Finding someone to provide a needed service quickly in Turkey can be difficult.

It took several years for the venture to take off, during which time Begim kept his day job as a financial consultant, but Taspinar worked on the project.

As the site grew, it attracted the attention of investors, and pulled in enough investment so that Begim could quit his job and work full-time.  

--Support is the challenge      

Getting support while the company is being started is the great challenge for Turkish startups.

“Not everyone can work at a day job while waiting for the new venture to earn income,” Ileri commented. “Some entrepreneurs can live with their families; others have to do part-time work to keep going until the profits start coming in.”

This is a difficult step for many Turks, as few are willing to assume the risks.

“The key is that we are seeing companies growing and succeeding, and that attracts people to give it a try,” Ileri said.

The sale of Turkish startup mobile payments provider Pozitron to British technology company Monetize for $100 million in February 2014 was a great encouragement to entrepreneurs in the country. It showed that highly paid trade sale exits from startups were possible.

But some entrepreneurs are in no hurry to sell out. “We keep doing the thing we like, and it keeps working and making money,” Ecevit insisted. “I’m in no hurry to found another company.”

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