Last Updated on 29/11/2023

The importance of Startups in economic growth

 

Startups are a major contributor to economic expansion. They helped to set up a more developed and better-functioning economy. In fact, they contribute to lowering unemployment, creating competition, and pushing people to be more innovative and creative. Turkey is aware of the impressive impact of these small businesses on the local and international economy. Therefore, the Turkish government provides important incentives to young entrepreneurs.

What is a Startup?

Startups refer to a business that is just getting started. They are created by one or more owners who desire to provide a good or service for which they feel there is a market. These businesses typically have large startup expenses and little income, which is why they seek funding from several sources, including venture capitalists

How startups ecosystem impacts the economy?

Advanced technology

Older businesses or industry leaders are more inclined to spend money on incremental innovation and R&D on already established technologies. While startups are more concerned with cutting-edge innovation and innovative technologies.

Startups are more nimble and able to develop a concept into a product and update it in response to customer demand with quicker decision-making communications as they are not constrained by a multi-layered corporate bureaucracy. Employees are driven to go above and beyond to succeed by the high risks involved.

For instance, giant corporations, like Google and Microsoft, frequently procure startups to better innovate and increase sales through their size and distributions

New Markets creation

By releasing products that transform the world, startups either radically revolutionize existing markets or establish new ones. In other words, giants like Apple, Facebook, and Google were once modest companies with big ambitions.

Startups frequently seize the opportunity presented by new technologies.  They add value over established companies, spur competition, and force the economy to change.

Goods and services production enhance

Generally, recently created startups have disproportionately advanced technology. Thus, they increased the production of goods and services. According to a 2017 analysis from the US Census Bureau’s Center for Economic Studies, enterprises with high growth output tend to be younger than average and make disproportionate contributions to production and productivity growth. Another paper by the Small Business Administration from 2011 found that new businesses produce greater revenue with the same amount of capital inputs than established businesses do.

Job creation

Startups produce employment. These “high-growth” businesses create jobs at a pace of at least 25%. In fact, according to a 2017 analysis by the Progressive Policy Institute, areas with a high startup activity also have much higher job growth in the private sector. In contrast, less than 50% appear in areas with little entrepreneurship activity.

Startups in Turkey

The Turkish startup ecosystem had not received much attention before 2010, but it has since risen in size and significance. Therefore, Turkey is fast emerging as a major regional hub for startups.

The development of fresh venture capital firms and angel investors throughout the first half of the 2010s allowed the Turkish startup ecosystem to record yearly investments of USD 100 million. Many of these new venture capital funds made exits during the second half and got to work creating their second fund. In comparison to the years before 2010, the time to exit greatly reduced during this period.

The presence of individuals with more experience enabled the Turkish ecosystem quickly realize its potential by the beginning of the2020s.

A promising startups ecosystem in Turkey

Due to the abundance of entrepreneurs and creative minds, Turkey is one of the nations with the most potential startup ecosystems. In fact, the overall amount invested in companies has increased by 66% over the past few years. This was thanks to investors and venture capital funds. Moreover, the funding for these programs is likely to rise significantly, indicating that Turkey is emerging as an important location for global startup ecosystems in the future.

A total of $102 million  have been invested in 92 different businesses in 2019. These startup ecosystems have quickly developed in Turkey as the power of the internet and communication has grown. The majority of them carry on expanding as they do now.

We can conclude that Turkey has all the appropriate conditions for entrepreneurship. If you consider creating a startup in Turkey, you can have more details about how to open a business in Turkey.  You can also check the best sectors for investment in Turkey.

Moreover, it would be useful for you to check the terms of foreign investment in Turkey.

Examples of successful startups in Turkey

The two companies with the largest rise of fundraising that totaled $509 million were Getir and Dream Games. Getir in particular was able to raise $428 million in two stages. It became the second Turkish unicorn after receiving the second investment, increasing its worth to USD 2.6 billion.

Moreover, the online retailer Trendyol, just attained a valuation of USD 10 billion after a USD 350 million investment by Alibaba which now controls 86.5% of the Turkish firm. Trendyol is another illustration of the success of the Turkish start-up ecosystem. More than 60 million people have downloaded Trendyol’s app, making it the most popular e-commerce app in Turkey.

 Government incentives to boost the startup ecosystem in Turkey

Governmental policies toward startups in Turkey

It is indisputable that startups require a supportive atmosphere to grow and thrive. The Turkish government and other public institutions have done a good job building the groundwork in this area. Grants, subsidies, and other incentives are offered to entrepreneurs by the Turkish Scientific and Technological Research Council (TÜBITAK) and the Ministry of Science, Industry, and Technology.

Since 2012, the United Nations Development Program (UNDP), the Turkey Vodafone Foundation, and the Habitat Association have worked together as well as other important players to increase the entrepreneurial input into the ecosystem. As a result, business concepts that are pro-poor, ecologically sustainable, and socially responsible are thriving throughout Turkey.

Special support to female entrepreneurs in Turkey

Turkey’s female business owners have recently been very active in starting companies. A variety of governmental regulations and NGO programs offer incentives for female business owners to enter the market. The Small and Medium Enterprises Development Organization (KOSGEB), also supports women in this regard. Women are trained at the beginning and growing enterprises by civil society organizations such as TurkishWin and the Women Entrepreneurs Association of Turkey (KAGIDER), which supports their success as entrepreneurs.

Businesses run by female entrepreneurs, such as Big Chef’s, Cambo, Ickale, Armut, Butigo, Trendyol, Evmanya, Bebeshop, Bonvagon, and Bonnyfood, serve as excellent role models for other women.

If you consider creating a startup or invest in Turkey, our experts provide you with a full-service advisory and a complete-instructions procedures. You only need a risk-free initial consultation.

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