ISTANBUL TECHNOLOGY ENTREPRENEURSHIP ECOSYSTEM

By 2019, there were an estimated 865 entrepreneurial tech companies founded or headquartered in Istanbul. Between them, they employed over 25,000 people on a full-time, permanent basis. The sector has made a significant contribution to employment growth in the city. Most of this contribution, however, came from companies that scaled. Over 68 percent of these jobs were created by the 107 tech companies that employed 50 people or more — which comprise only thirteen percent of local tech companies. This trend is comparable to other tech ecosystems that Endeavor Insight has studied. For example, in Mexico City, 15 percent of 600 companies reached scale and generated over 80 percent of the jobs among entrepreneurial tech companies in the city. In Sao Paulo, 21 percent of 585 companies reached scale and generated over 87 percent of the jobs among local tech companies. Companies at scale tend to drive productivity in tech, and they are likely to pay higher average wages than smaller companies. They are also more resilient in times of crisis.

A number of sub-sectors emerged as competitive strengths and produced more companies at scale than others. 13 percent of entrepreneurial tech companies reached scale in Istanbul, but some sub-sectors emerged as important competitive strengths. As entrepreneurs gained expertise in one domain, adjacent domains began to develop. Enterprise software, e-commerce, payments and analytics grew most dynamically and produced more firms that scaled than other sub-sectors. As the table across the page demonstrates, these domains produced more companies at scale than other industries; between 15 to 18 percent of these companies reached scale. Some other sectors underperformed — of an estimated 50 gaming and mobile app companies, only 8 percent were able to reach scale.

The next generation of founders at scale will come from founders rapidly growing their companies today. For the tech sector to thrive in Istanbul, new founders need to achieve scale in greater numbers than they are today. The next generation of founders are most likely to come from the companies that are scaling the fastest today. In order to identify these founders, Endeavor Insight analyzed a subset of high-growth tech companies in Istanbul, defined by their placement in the top 20 percent of all tech companies in the study based on their annualized employee growth rate.

Istanbul has a number of resources available to entrepreneurs, such as comparatively low operational costs, great quality of life, and a cosmolitan city closely connected to the rest of the world. Compared to European cities, tech talent in Istanbul is inexpensive while still highly qualified. The city is famous for its high standards of living and it headquarters Turkish Airlines the world’s most connected airline in 2019 by number of destinations. One of the greatest strengths of the city are the entrepreneurs commitment to their community. Over 70 percent of interviewed founders were planning to stay in the city either long term or indefinitely. High net worth individuals, who control 51 percent of private wealth in Turkey, could also be a great asset to the ecosystem as investors, but are not as connected as they could be.11 The next section offers guidance to decision makers who wish to support tech entrepreneurship in Istanbul. They need to identify the entrepreneurs with the highest potential to scale and help them address the challenges that they are facing. Entrepreneurs who are successful in building companies that scale in the current environment are going to be leaders of Istanbul’s next era of tech growth and excellence.