High-Impact Entrepreneurship

Turkey’s “Internet Spring”: A tech boom for the ages

By Stephanie Sher

“Markafoni, the second most-visited members-only shopping network in the world, is a frontrunner in an industry that grew almost 60 percent in Turkey last year and has attracted investment from EBay Inc. (EBAY), Amazon.com Inc., Kleiner Perkins Caufield & Byers, Naspers Ltd. (NPN) and Tiger Global.”

So begins the Bloomberg article about Markafoni, a Turkish e-commerce website that is one of several entrepreneurial ventures leading a transformation of Turkey from a low-cost manufacturing country to one of Europe’s digital frontrunners. Endeavor Turkey network member Sina Afra, the Chairman of Markafoni, was formerly an eBay manager in Berlin. In 2008, Afra “settled in Turkey in 2008 and three years later sold 71 percent of Markafoni to Cape Town-based Naspers for about $200 million. It was one of the biggest foreign commitments to an industry that Deloitte & Touche says will help drive Turkish acquisitions in 2012.”

His presence in the Turkish digital marketplace was impeccable: ”Turkish e-commerce transactions increased 57 percent to 22 billion liras ($12.3 billion) in 2011 from a year earlier, according to the Interbank Card Center, which monitors transactions. Forrester Research Inc (FORR) says e-commerce will grow just 12 percent annually in Europe over the next five years.” Afra has good competition in Demet Mutlu, a Harvard Business School dropout whose website, Trendyol.com, reached $100 million in revenue less than 18 months after going online. “Mutlu wants Trendyol to be Turkey’s first tech company to go public on the Nasdaq Stock Market in New York.”

Put into perspective for a U.S. observer, “the largest U.S. private shopping site, Gilt Groupe Inc., gets fewer than one-third of the unique visits that Markafoni and Trendyol receive, according to Idil Kesten at Comscore. Gilt Groupe is valued at $1 billion on SharesPost Inc., which allows investors to trade in venture-backed private companies.” Burak Buyukdemir, who earned an MBA in Berlin and founded the e-Tohum startup camp in Turkey, suggests that Turkish-Americans are beginning to see opportunity in Turkey – and want to go back.

Afra and Mutlu are both good examples of the reverse talent migration that’s spurring innovation. Entrepreneurs who lived in United States for a few years are starting to return to Turkey, which is fast becoming one of the world’s largest internet markets. “Its $735 billion economy, the largest in eastern Europe and the Middle East, grew 9.6 percent in the first three quarters of 2011, trailing only China in the Group of 20. Half the population is under 30.”

Says Roland Manger, a partner at Munich-based Early Bird Venture Capital, which invested about $4.5 million in Istanbul-based games developer and Endeavor Entrepreneur company Peak Games, “We see a dynamic in Turkey of young entrepreneurs with great training, lots of talents, who often worked abroad and are returning… what we saw eight years ago in China and India when the best and the brightest started to come back to build companies, is happening there.”

Another Turkish success story is Yemeksepeti.com, an online food delivery portal founded by Endeavor Entrepreneur Nevzat Aydin. Aydin “co-founded food delivery portal Yemeksepeti.com in 2000 after dropping out of a master’s program at the University of San Francisco. He expects two or three e-commerce investments of $200 million or more in Turkey this year and a “serious increase” in the $50 million to $100 million range.

Yemeksepeti has expanded to Russia and Dubai, and is in the process of starting operations in three more countries, illustrating what Manger of Early Bird says is Turkey’s opportunity to become a regional e-commerce hub. “Turkish companies are very eager to expand into markets that the West is less familiar with,” Manger said. “Add in the Middle East and Central Asia and you’re adding in hundreds of millions of potential new customers.”

Says Nevzat: “Turkey’s geographical location, proximity to Europe and the Middle East, good Internet penetration and young population present a big opportunity. We’ll have this ‘Internet spring’ for some years to come.”

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