MAPPING THE
ISTANBUL TECHECOSYSTEMH OW A S M A L L G RO U P O F FO U N D E R S SCA L E D A N D
C R E AT E D T H O U SA N DS O F J O B S I N I STA N B U L BY
S U P P O RT I N G OT H E R FO U N D E R S .

P OW E R E D BY:

This research was made possible by funding from the
Istanbul Development Agency.

AUTHORS:
Lili Török, Project Leader at Endeavor Insight (lili.torok@endeavor.org I @lilitorok)
ADDITIONAL CONTRIBUTORS:
Rhett Morris, Director of Endeavor Insight (rhett.morris@endeavor.org I @rhettmorris)
ABOUT ENDEAVOR INSIGHT:
Endeavor Insight is the research division of Endeavor, a non-profit organization that supports highimpact entrepreneurs across the world.
Its work seeks to answer three questions:
1 How do entrepreneurs reach scale at their companies?
2 How do entrepreneurs reach scale in local networks or ecosystems?
3 What can policymakers, philanthropic leaders, investors, support organizations, and otherstakeholders do to empower more entrepreneurs to reach scale in their communities?
The methodology utilized in this study builds on previous Endeavor Insightresearch supported by the Argidius Foundation, the Bill and Melinda Gates
Foundation, the Omidyar Network, the Inter-American Development Bank,as well as partners in the Global Entrepreneurship Research Network.
SPECIAL THANKS:
The authors of this report would like to thank their colleagues at Endeavor including Adrián GarciaAranyos, Maha AbdelAzim, Leah D. Barto, Penmai Chongtoua, Luisa Fajardo, Patrick Linton, and Linda
Rottenberg, as well as the Endeavor Turkey team, especially Aslıhan Kurul Türkmen, Utku Tuncay, Oktay
Azbazdar, Orhan Gazi Yalçın, Leyla Unat, Berkan Orta, Alev Ertem, İdil Mayzel, Mehmet Ege Kurt, andMelisa Fakabasmaz Özerdim. A number of research assistants and analysts were also critical to theproject’s success, including Tanya Kapoor and Camila Navarrete. In addition, the following individuals
provided valuable input as Endeavor Insight developed the analyses and content in this report: Hande
Cilingir, Fırat İşbecer, Ahmet Kayhan, Emek Kirbiyik, and Cenk Soyak.
Published in October 2019.

EXECUTIVE SUMMARY
In early 2019, Endeavor Insight partnered with Endeavor Turkey and the Istanbul Development Agency to assess theentrepreneurship ecosystem for technology companies in Istanbul. Powered by Eczacıbaşı, The purpose of the study is toprovide a snapshot of the sector’s current state, evaluate its strengths and weaknesses, and enable decision makers to better
understand and support local tech entrepreneurship. The following findings are based on over 200 interviews with techentrepreneurs in Istanbul, as well as interviews with over 20 investors and entrepreneurship support organization leaders.
1 The Istanbul tech sector has been growing
steadily for decades, but dynamism has
slowed down in recent years.
The Istanbul tech entrepreneurshipcommunity emerged from email and internet
provider companies in the 1980s, and has
gained worldwide recognition in the past
decade as an e-commerce tech hub with aseries of successful exits. Companies like
Yemeksepeti, Trendyol, and Gittigidiyor
have been sold to companies like Delivery
Hero, Alibaba, and eBay for over USD 100
million dollars each. Today, there are over
800 tech companies operating in Istanbul.
The tech community’s resilience was tested inrecent years when Turkey entered a period of
geopolitical instability, followed by a currency
and debt crisis. Valuations dropped, as did theinflux of foreign capital into tech companies
in Istanbul. Companies with foreign revenue
sources weathered the crisis more easily,
but new entrepreneurs have not been able toscale at the same rate as their predecessors.
Looking ahead, strategies that previously
enabled entrepreneurs to thrive in Istanbul may
not ensure future growth at the same rate.
2 Decision makers need to focus on helping
a new generation of tech entrepreneurs reachscale in Istanbul.
Companies with 50 or more employees havebeen driving most of the economic growth inIstanbul’s tech sector, but only 13 percent ofthese firms were founded in the past five years.
This is an indication of slowing dynamismthat could have long-lasting implications
for the sector’s growth if the city does notincrease the number of new companies .
Istanbul has demonstrated strengths in certain
subsectors — most of the companies at scalethat were founded more recently operate
in the enterprise software, e-commerce,
and analytics sectors. Decision makers
should look to the entrepreneurs scaling
fast in these areas, as well as new domains
with demonstrated scale, to identify thenext pathways for Istanbul to excel.

3 Decison makers should work to address
the challenges that scaling tech founders
have identified. Based on interviews withthe founders of high growth companies(the fastest 20 percent of companies
with over 10 employees), access to techtalent and late-stage capital are two mainbarriers holding entrepreneurs back.

Pozitron reinvested their resources in othertech entrepreneurs. Over one third of thetech companies in Istanbul today can betraced back to one of these four companies
through either investment, mentorship, former
employment, or serial entrepreneurship.
These high quality connections havehelped scaling founders perform better.

 Access to capital: International investors
have been approaching entrepreneurs withmore caution than before. The currency crash
caused revenue numbers and valuations
to collapse, which left founders struggling
to demonstrate the growth rates that
foreign investors expect while navigatingcomplicated relationships with investors at
home. There was a sizeable decline in larger
investment rounds: the number of investment
rounds above USD 1 million has gone from
26 in 2017 to just 6 in the fall of 2019.

 A number of entrepreneur-led support
organizations and investors have been
instrumental in engaging accomplishedfounders to give back. There are over 80 active
investment firms and support organizations
working to support tech entrepreneurs in
Istanbul today, and collectively, they supported
nearly thirty percent of the companies in thesample. Some of the most influential support
organizations in Istanbul like Endeavor,
Galata Business Angels, and ITU are led byscaleup entrepreneurs, and some of the mostaccomplished tech entrepreneurs are involved
as senior executives or board members of
support organizations and investment funds.

 Access to technical talent: Qualified techemployees are hard to find, and even harderto keep in Istanbul today. Several decades ofsustained growth in the tech sector fostereda high quality talent pool, but it is fastdisappearing today. Istanbul founders have tocompete for tech talent with European techhubs like Amsterdam and Berlin, where there isan established and growing Turkish diaspora.
 Regulation: Regulation around researchand development and startup support,
as well as a lack of regulation aroundemployee stock options, have made it moredifficult for companies to retain talent.
4 Decision makers in the public and theprivate sector who want to help moretech entrepreneurs scale need to focus onconnecting established company founders
with the new generation of entrepreneurs.

 Network effects may slow down because
fewer resources are recycled back in thecommunity. With every new generation oftech founders that has scaled and engaged
with the network, the sector has further
specialized, moving from IT, to enterprisesoftware, to e-commerce, to payments andanalytics. Each new sector has drawn on
value from its precursors. In the past five
years, companies have been exiting at earlier
stages and for lower dollar amounts thanpreviously. To keep the tech sector moving
forward, founders need to keep scaling
and injecting new values, information,and resources back into their industry.

 The Istanbul tech community has beenable to thrive because earlier generations offounders generously reinvested their resourcesin the ecosystem. Like the founders of Fairchild
Semiconductor in Silicon Valley, the foundersof the first great Istanbul tech companies
like Mynet, Markafoni, Yemeksepeti, and1

RESEARCH QUESTIONS

As soon as internet
technology became
widely available inthe 1990s, Istanbul
entrepreneurs
recognized
the potentialof building thecountry’s internet
infrastructure.

2

The purpose of this study is to understandhow technology companies in Istanbul arereaching scale, and to identify the greatest
opportunities and challenges faced by these
scaling companies that decision makers canhelp address. Over the course of this project,
the research team identified over 865 techcompanies in Istanbul; interviewed thefounders of over 230 of these tech companies;
and analyzed additional secondary data on
former employment, investment rounds, andexits from publically available data sources(i.e., Linkedin and Crunchbase) on over 1,000
tech founders from over 865 tech companies.
Throughout this report, Istanbul refers to
the greater Istanbul Metropolitan Area,
also known as the administrative provinceof Istanbul. Technology companies were
defined as for-profit companies whose
primary activity can be described as either
software development, internet-basedor mobile-based retail services such as
e-commerce, delivery platforms, content
platforms, or online lenders, or as electronic
hardware or manufacturing. Companies
were only included in the research if they
were entrepreneurial: founded by people,
not corporations or government agencies.

Three principal research questions
guided the research process:1.

What is the current state of the techentrepreneur community in Istanbul?

2.

What is the role of support
organizations and other institutions
in fostering entrepreneurship andeconomic growth in the sector?

3.

Where do opportunities exist
to accelerate the growth of thiscommunity so that it can generate
more jobs and wealth for the region?

CONTEXTOn May 5, 2015, the Istanbul tech sector
made headlines around the world when
Yemeksepeti, a Turkish on-demand fooddelivery company, was sold for USD 589
million to Delivery Hero, its Germancompetitor. This was the largest acquisition in
Turkish history at the time, and the story wascovered by all major online media platforms
from CNN to the Wall Street Journal. 1 2Founders Nevzat Aydın and Melih Ödemiş, whostarted the company with USD 50,000, publicly
thanked employees for the company’s success.
In July 2015, the Independent published anarticle calling him the world’s best boss 3
By the time the story broke about Yemeksepeti,
there was a vibrant tech ecosystem in Istanbul.
When internet technology became widely
available in the 1990s, Istanbul entrepreneurs
recognized the potential in building thecountry’s internet infrastructure, including
its email, IT, and web security services. Local
entrepreneurs launched companies like Mynet(an email and internet portal), Logo Yazilim(an enterprise software company), and Pronet(a security firm). When this first generationof founders sold their companies, they began

investing in the industry, inaugurating whatbecame a culture of generousity in the sector.
Over 540 entrepreneurial tech companies
were founded just between 2000 and 2015,
based on Endeavor Insight research.
By the mid-2000s, Istanbul gained recognition
as an e-commerce hub among emerging
markets, marked by a series of high-value exits.
Yemeksepeti was one of seven companies
acquired for over USD 100 million, accompanied
by Markafoni, Gittigidiyor, Pozitron, Gram
Games, Trendyol, and Iyzico. General Atlantic,
Kleiner Perkins, and Tiger Global wereamong the major investors. The list of buyers
includes companies like Alibaba and eBay.4
Global tech companies were keen to tap into
the Turkish market, a young population of
80 million native Turkish speakers who weredifficult, if not impossible, to access without
the involvement of Turkish companies. Threeof the largest merger and acquisition deals
in Europe in 2018 came out of Istanbul. 5
The Istanbul tech entrepreneurshipcommunity’s resilience was put to the test in
recent years when the city endured a periodof geopolitical instability, followed by a debt
crisis and a currency crash. In the first halfof 2018, the Turkish lira dropped 40 percent
against the U.S. dollar, and so did the valuationsof tech companies in Istanbul. 6 Investment
activity slowed down. Companies were not
only worth less nominally; their revenues in
Turkey were discounted by 40 percent in anear instant. In a capital raising process, adrop of this magnitude was unprecedented,
and posed a major challenge. Growth rates
vanished when they were measured in dollars.7
The current generation of growing companies
was hit hardest by the new macroeconomic
circumstances; large tech companies
weathered the crisis more easily. Those thatgenerated most of their sales abroad, but
kept their operational costs in Turkey proved
to be especially resilient. To some, the new
reality had some advantages as operationalcosts fell together with valuations.8 But new
entrepreneurs have not been able to scale atthe same rate as their predecessors. Of the 107
tech companies with 50 or more employees
in Istanbul, only 14 companies, or 13 percent,were founded in the past five years. 93

4

A SMALL MINORITY OF TECH FOUNDERS CREATED MOST OF THE JOBS IN THE
ISTANBUL TECH ENTREPRENEURSHIP COMMUNITY.

By 2019, there were an estimated 865
entrepreneurial tech companies foundedor headquartered in Istanbul. Between
them, they employed over 25,000 people
on a full-time, permanent basis. The sector
has made a significant contribution toemployment growth in the city. Most of thiscontribution, however, came from companies
that scaled. As the chart below indicates,
over 68 percent of these jobs were createdby 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 techecosystems 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 scaleand 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 arealso more resilient in times of crisis.

By 2019, there werean estimated 865
entrepreneurial techcompanies foundedor headquartered in
Istanbul. Between
them, they employedover 25,000 people.

EMPLOYMENT CONTRIBUTION BY COMPANY SIZE
Sample size: 865 entrepreneurial tech companies founded or headquarted in Istanbul.
COMPANIES WITH 50 EMPLOYEES OR MORE
COMPANIES WITH 1-49 EMPLOYEES

100%

13 %

68 %

SHARE OF COMPANIESSHARE OF EMPLOYMENT

13 percent of local
tech firms with 50
employees or more
contributed 68 percentof the jobs in the sector.

75%

50%

25%

0%

Source: Endeavor Insight analysis.

5Enterprise software,
e-commerce,payments andanalytics grew more
dynamically. These
domains produced
more companies
at scale than otherindustries.

A number of sub-sectors emerged ascompetitive strengths and produced morecompanies at scale than others. 13 percent
of entrepreneurial tech companies reachedscale 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 andproduced more firms that scaled thanother sub-sectors. As the table acrossthe page demonstrates, these domains
produced more companies at scale thanother industries; between 15 to 18 percent ofthese companies reached scale. Some othersectors underperformed — of an estimated
50 gaming and mobile app companies,
only 8 percent were able to reach scale.
Newer companies have been struggling
to reach scale at the same rate as theirpredecessors, and only one percent ofcompanies have been able to reach scalein the past five years. Scaling a company
today looks different than it did before
the crisis, and it takes new types ofresources. Scaling an analytics company
today also looks different from scaling an
e-commerce company 20 years ago.
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 needto achieve scale in greater numbers thanthey are today. The next generation offounders are most likely to come from thecompanies that are scaling the fastest today.
In order to identify these founders, Endeavor
Insight analyzed a subset of high-growthtech companies in Istanbul, defined bytheir placement in the top 20 percent of
all tech companies in the study based on
their annualized employee growth rate.
High-growth companies differ from lowerperforming companies in their industry
representation and founder work history.
Often, they operate in industries where
Istanbul has demonstrated historicalstrengths, like payments and analytics aswell as e-commerce. These companies were
60 percent more likely to be analytics, and25 percent more likely to be e-commerce,than lower-performing companies.

6

The founders of high-growth companies
also had distinct careers prior to starting
their company. These founders were twice
as likely to have over 10 years of total work
experience among their co-founding team,and 60 percent more likely to have worked at
a local entrepreneurial company that scaled.
To emerge from a challenging macroeconomic
environment, new tech firms need to scale.
In a new economic environment, the techcommunity needs to be more self-reliant andmore founders need to be able to leverage
local resources to generate revenues abroad.
Istanbul has a number of resources available
to entrepreneurs, such as comparatively low
operational costs, great quality of life, and acosmolitan city closely connected to the restof the world. Compared to European cities,
tech talent in Istanbul is inexpensive whilestill highly qualified. The city is famous for its
high standards of living and it headquarters
Turkish Airlines the world’s most connectedairline in 2019 by number of destinations.
One of the greatest strengths of the city
are the entrepreneurs commitment to theircommunity. Over 70 percent of interviewed
founders were planning to stay in the cityeither long term or indefinitely. High net
worth individuals, who control 51 percent
of private wealth in Turkey, could also be agreat asset to the ecosystem as investors,
but are not as connected as they could be.11
The next section offers guidance todecision makers who wish to support techentrepreneurship in Istanbul. They need to
identify the entrepreneurs with the highest
potential to scale and help them address thechallenges 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.

MAJOR SUB-SECTORS IN THE TECHNOLOGY SECTOR
Estimated start of sub-sector, number of total firms, total jobs, percentage of 50+ firms, and notable exits.
ENTERPRISE
SOFTWARE

E-COMMERCE AND
DELIVERYPAYMENTS ANDANALYTICS

MOBILE DEVELOPMENT AND
GAMING

Estimated Start

1980s

1990s

Early 2000s

2010s# of Companies

~140

~200

~80

~50

# of Jobs~5,400~9,000~2,000~1000

Percentage with 50+
Employees

18%

16%

15%

8%

Pozitron,(Monitise, 100M)

Trendyol(Alibaba, 728M)

iyzico(PayU, 165M)

PeakGames(Zynga, 100M for a single game)

Logo Yazilim(Mediterra, 27M)

Yemeksepeti(Delivery Hero, 589M)

Foriba(Sovos, 50M)

GramGames(Zynga, 250M)

Notable Exits

Gittigidiyor(Ebay, 183M)

Masomo(Miniclip, 100M)

Markafoni(Naspers, 146M)

INDUSTRY REPRESENTATION OF HIGH GROWTH COMPANIESPercentage of high-growth and regular companies by industry.
AVERAGE GROWTH
HIGH-GROWTH
40%

High-growth companies
are more likely to be
E-commerce, SaaS, andPayments and Analytics
companies.

30%

20%

10%

0%

E-commerce / On
Demand Delivery
Platform

Software Development
for Enterprises / SaaS

Payments andAnalytics

Adtech / Media /Content Delivery /Social Media

Agtech / Biotech /Cleantech

Note: Industry representation of high-growth companies compared to others. Sample size: 865 total companies, 90 of them high-growth companies. Source: Endeavor Insight Analysis.

78ACCESS TO CAPITAL, ACCESS TO TECH TALENT, AND GOVERNMENTREGULATION ARE THE GREATEST CHALLENGES FOR SCALING FOUNDERS IN
ISTANBUL.

Endeavor Insight conducted interviews with over 230 founders, including 39 founders of high-growth companies in Istanbul and leaders of the
support organizations. Istanbul tech entrepreneurs identified three major challenges that are preventing them from scaling their companies: accessto capital, access to tech talent, and issues related to regulation.

CHALLENGE 1
ACCESS TO CAPITAL
The past several years of economic volatility
and political risk have had a significant impact
on investment activity. Following several
years of uneven growth, the greatest drop
in investment activity over the past decade
occured in recent years. In a dataset of over
900 investment rounds in the industry
between 2008 and 2019, 134 investment
rounds occurred in 2017; 87 in 2018; andonly 29 by August 2019 when this report
was written. Between 2017 and 2018, thenumber of investments in the industry
dropped by an astounding 65 percent.
Larger investment rounds, which usually draw
foreign investments, suffered the greatest
loss. Sixty-three percent of investment rounds
above USD 1 million involved the participationof a foreign fund, and nearly all — 95 percent— of investment rounds above USD 5 million
involved the participation of a foreign fund.
While the year 2017 saw the closure of 26

investment rounds in Istanbul, this dropped
to a mere 18 by 2018, and to 6 by August
2019 when data collection closed for thisreport. Interviewees confirmed that after
the valuation and sales of local companies
collapsed, international investors have had
a reduced appetite for making investments
in Turkey. Valuations of Turkish companies
collapsed — alongside the Turkish lira — andso did domestic sales at Turkish companies.

INVESTMENT ROUND SIZESIN ISTANBUL TECH COMPANIES IN
US DOLLARS

150

Sample size: 250 investment rounds
that took place between 2017 andAugust 2019, when data collection wasclosed for this study.

100

UP TO 100,000
1,000,000
ABOVE 1,000,000
50

0

2017

2018

2019 AUGUST

Source: Endeavor Insight Analysis.

9

CHALLENGE 2

CHALLENGE 3

ACCESS TO TECH TALENTREGULATIONAs tech entrepreneurs call it, Istanbul isa developers’ market: tech employees
are hard to find and even harder to keep.
Over decades of growth, the Istanbul techcommunity has fostered a quality talentpool, but entrepreneurs are now faced witha great challenge as coders leave en masse
to pursue opportunities abroad. Over 40
percent of founders classified access toqualified coders and engineers as a challenge,
and founders of high-growth companies
were the most likely to bring up this issue.

Government regulation, or the lack thereof,
has also impacted the potential to createcompelling work environments and retain
employees. Employee stock options, a
powerful retention tool for tech companies
that scale, are generally unknown andunregulated by law. Employment stock options
are a type of equity compensation granted bycompanies to their employees, widely usedin the U.S. and many other vibrant startup
hubs. This is a significant challenge in anenvironment where companies are racing
against brain drain, or even seeking to lure
members of the diaspora to work for them.

Tech employees with a few years of experience
are frequently approached by tech companies
in Amsterdam and Berlin, where many of
the regional headquarters of the largest
tech companies are located. For instance,
the headquarters of Tesla, Netflix, Uber, andBooking are all based in Amsterdam, as well as
the European branches of Y-Combinator andTechstars. There is also an existing diaspora
of nearly 6 million Turkish citizens in Western
European countries, making Turkish migration
to these countries significantly easier. 12
Scaling companies in Istanbul go to
great lengths to create appealing work
environments to retain employees. Offices
are often based in Istanbul neighborhoods
like Beyoğlu or Galata, equipped with anespresso bar and a barista. In one case, acompany hired a dietitian and a dentist to
attract the best coders. Another tech founder
was piloting a program to establish an
Amsterdam campus for his company, arguingthat it would be less expensive than losing
his best talent and institutional knowledge.

10

National regulation ties startup support
to policies that encourage R&D activity inthe country. This has resulted in startup
support initiatives that are overly prescriptive
for entrepreneurial companies, including
policies that require companies to movetheir headquarters to technoparks in theoutskirts of Istanbul to qualify for tax
benefits. As most top-performing founders
noted, technoparks are much less attractive
environments for coders than the alternativeof an office in downtown Istanbul.

11

NETWORK EFFECTS HAVE PLAYED AN IMPORTANT ROLE IN SHAPING THE
ISTANBUL ENTREPRENEURSHIP COMMUNITY.

Networks are important vehicles totransmit resources and information in acommunity, and they can be powerfully
leveraged to address the challenges ofscaling tech companies in Istanbul.
Network analysis helps trace the flow ofpeople, capital, and information between
entrepreneurs, their co-founders, employees,
mentors, investors, and other stakeholders.
To get a snapshot of Instabul’s techentrepreneurship network, Endeavor Insightinterviewed 230 founders and analyzed theconnections among them using a methodologythat was developed by members of the Global
Entrepreneurship Research Network.
The methodology looks at four types ofrelationships among founders and companies
that illustrate the ways in which local
founders take knowledge and other resources
acquired from founding one firm and use it
to help launch or grow another. These are:1.

Serial entrepreneurship;

2.

Former employment;

3.

Mentorship; and4.

Investment.

Three important lessons emerged.

LESSON 1

1.

THE ISTANBUL TECH COMMUNITY
HAS THRIVED BECAUSE EARLIER
GENERATIONS OF FOUNDERSREINVESTED THEIR RESOURCES IN THE
ENTREPRENEURSHIP COMMUNITY.

Mynet, an email provider and social
media company with over 250 employees.
Founded in 1999, and still owned by thefounder, Emre Kurttepeli, Mynet is oneof Istanbul’s earliest success stories.

2.

Yemeksepeti, a marketplace company
with almost 400 employees, which
was acquired for more than USD
589 million by Delivery Hero;3.

Markafoni, an e-commerce company
with over 500 employees, acquired
for USD 146 million by Naspers.

4.

Pozitron, an enterprise software company
founded by Firat İşbecer and Fatih İşbecer
with more than 100 employees, acquired
for USD 100 million by Monitise.

The Istanbul tech community is highlyinterconnected. Of an estimated 865
entrepreneurial tech companies in the sector,
186 were connected to at least one othercompany through serial entrepreneurship,
former employment, mentorship, and/or angel investment. There is also strong
peer-to-peer connectivity: 74 percent
of founders believe they could get thephone number of any founder in the city
they wanted to meet the same day.
Tech entrepreneurs in Istanbul seem toappreciate the importance of building theright connections. In a sample of 163 techentrepreneurs who answered this question,over 90 percent believed that knowing the rightpeople was either very important, or essential
to getting ahead as an entrepreneur in Istanbul.
More importantly, the network is dominatedby high-quality connections. Over halfof the local tech companies that wereable to reach scale were connected to atleast one other company through serial
entrepreneurship, former employment,
mentorship, or angel investment, as themap on the opposite page illustrates.
Previous research by Endeavor Insight has
shown that when entrepreneurs at scale
are more connected to other founders,
entrepreneurship communities are moreproductive. (Endeavor Insight, 2018)
In Istanbul, the four most influential
companies in the network are:

12

Over half of the 186 entrepreneurial techcompanies in the network were directly
related to one of these four companies.
The network map on the top of the opposite
page represent the connections between
tech founders in Istanbul. The map on thebottom of the page highlights the companies
at significant scale. Significant scale isdefined by having 100 or more full-time,permanent employees, or an exit over USD
5 million. These are highlighted in yellow.

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Year
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SOBEE

20142019

FIXTABLE

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MADENCILIK

PLAYZ

20102013

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VISIONADINTERACTIVEEVIDEAFLYMEDISAMBA
POS

ENOCTA
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VOLTCOLENDIOTELZ.COM

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COMMENCISRIMUUTYENICARSIM

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Companies with 100 or more employees andcompanies that were acquired for over USD 5 million.

EKIP
PROJE

SHOPI

TASIT.COM
GIDEROSENHENCERCAYCIPEMBEPANJUR.COM

DOGALZEKA

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Former employment

STAJIM.NETDATABUL
MODANISAMIDPOLYGAMESBEETOUCHDORUKNET POZITRONAIRTIESARTIWISEPAYFULL

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MOBILECRAFTCONNECTIONS:AGENCY
ARCANAANLATSIN.COM
ANNEYSENMARKAFONIDONE

BALERIN

ADACHYPAYGARAJYERI

VIPME

D-CAT
TECHNOLOGIESSIMULARGE MEKAN
COM

GLAMY

BUNSAR

INSIDERLIDYANA

MANIBUXGARDROPS
(NEO)

PAKET
TAXI

RUUP

ALWAYSFASHIONDOTTOTMOBTECHDUGUN.COM

SYMBIE

SPORCUMCARLACAR
RENTALTRENDYOL SEKIZGENYENIBIRISREZTORAN

AHTAPOTAPPYOUR
PORTER
APP

LENA

UZMAN
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BEFORE 2004
2004–20092010–20132014–2019

The size of the circle reflects the number ofconnections originating from the foundersof each company or the leaders of eachorganization. Founders are represented
by their most prominent company ororganization.

SWEATERSSCOTTYSCORPCARBON

ESNEK
ÖDEME

ADTECHRESTROID

EXASTAXUSERGUIDINGAPLIKALAB

VOLEPAPARA
MAPPLICO

SALESMOTOCTOVANDOPIGOSWINGOTWENTIFY(BOUNTY)SOSYOPIXCARLAPABBLERQUMPARA(NOBIUM)

BUY
BUDDY

CEPFIXALLDAYWIFIKOLAYIKYEAR FOUNDED:

MUTLUBIEV

3DURAKANALYTICAHOUSESIHIRLIYOLCULUKFULLEGITSINOPTIYOLBIOPIPE(GREE-GETECH)ARKENUSDOLAPARDELATECHNOLOGIESAKAUNTING

MASOMOCODFABRIKSTARTUPMARKET
ARASTTA

COSA
GETIR

MOVENDE

INSPREABOTGATEPRATIXRM
DENEBUNUANIBERAFIELDPIENEXT
HORIZONS

TRUSTURKIVENTEKKREDI

DEKOPASAJ
ORTHEROONCECOUPONA
TIME
OTOTRINK

SORUN

TAPU.COMGEEN

BANTTANCANLÄ±APIPLUG

BANTTANCANLIWHISPTOTANBULACEPSTOPINOVENS-PBUYZAXEPARTYMAG (ZONE
3DPRINTER)

13

Support fromexperienced
entrepreneurs
measurably helped
tech entrepreneurs
scale in Istanbul.

The tech community was able to thrive
because tech entrepreneurs remained
strongly connected to the community. They
reinvested their resources and knowledge
through mentorship and angel investment.
Support from experienced entrepreneurs
measurably helped tech entrepreneurs scalein Istanbul. The fact that accomplishedentrepreneurs are the most influential in thetech community in Istanbul explains why thecommunity was able to produce over a 100
companies at scale and a number of exits over
USD 100 million.

Previous research suggests that connections
to entrepreneurs who have experiencein building a company that employ a 100
people or more can demonstrably improve a
company’s chances to be one of the fastest
growing companies by number of employees.
The network map of Istanbul’s tech community
reflects this same story.
The chart below demonstrates this relationshipbetween connections to experienced
entrepreneurs and the likelihood of building
one of the fastest growing companies among
companies of the same age.

CONNECTIONS TO SCALED ENTREPRENEURS VS. COMPANY PERFORMANCE
Sample size: 865 entrepreneurial tech companies in Istanbul.

NON-TOP PERFORMERTOP PERFORMER*

60%

50%

40%

30%

20%

10%

0%

Former Employee of
Scaled Entrepreneur

Mentored by Scaled
Entrepreneur

Received Angel
Investment from
Scaled Entrepreneur

Received
Institutional
Investment Led by
Scaled Entrepreneur

Received Support
from Organization
Led by Scaled
Entrepreneur

Source: Endeavor Insight Analysis.
* Top performing companies were defined by their placement in the top 20 percent of the sample by their employee CAGR.

14

Any Connection to a
Scaled Entrepreneur

In Istanbul, companies that received support
from entrepreneurs with a 100 or more
employees were almost twice as likely to
become high-growth companies. Companies
founded by former employees of companies
at significant scale were nearly twice as likely
to reach high growth; companies that received
mentorship from a founder at significant
scale were over three times as likely to be top
performers.
The network between tech entrepreneurs
is also founded on a strong foundationof trust between entrepreneurs.

Endeavor Insight adapted a question fromthe World Values Survey to ask how much
respondents trusted each of the following
groups: people in general, neighbors,
corporate executives, investors, other techentrepreneurs, other members of the techentrepreneurship community, and politicians.

The network
between techentrepreneurs isbased on a strong
foundation oftrust between
entrepreneurs.

Other tech entrepreneurs were by far thehighest trusted group; more than two-thirdsof respondents said that they trusted themsomewhat or completely. In comparison, only
36 percent of entrepreneurs trusted otherentrepreneurs at the same levels in Mexico
City, a tech ecosystem of similar age and size.

THE TRUST LEVELS OF INTERVIEWED TECH FOUNDERS IN ISTANBUL
Sample size: 173 unique responses.
Over 60 percent of founders
reported that they trusted
other tech entrepreneurs
either somewhat, or very
much.

80%

60%

40%

20%

0%

Politicians

Investors

Corporate
Executives

Entrepreneurship
Community

People inGeneralNeighbors

Tech
Entrepreneurs

15

Founders who
scaled reinvested
the resources theyacquired founding
one company tosupport the newgeneration.

Renewal in the network has been driving
innovation in the Istanbul tech sector. With
every new generation of tech founders in
Istanbul, the sector further specialized, movingfrom IT, to enterprise software, to e-commerce,
to payments and analytics. Each sector has
added value to the previous one. Founders
who built successful companies reinvested
their resources towards supporting the newgeneration. Whenever a new generation
reached scale, the community received fresh
inputs of information on what makes growth
possible in Istanbul.
Nevzat Aydın, Fırat İşbecer, and Emre
Kurttepeli made over 85 direct investments in
Istanbul tech companies, directly influencing
over 10 percent of the entrepreneurial
companies in the industry between the threeof them.

An analysis of recent acquisitions over USD
1 million over two- to three-year periods
demonstrates the shift from e-commerce topayments and analytics in the past five years.
In the three years between 2015 and 2017, themajority of companies acquired for more than
USD 1 million were e-commerce companies,
like Gittigidiyor, Markafoni, and Yemeksepeti.
A smaller number came from the subsector of
payments and analytics.
In the past two years, seven out of the nine
acquisitions over USD 1 million were inpayments and analytics companies likeIyzico, Foriba, and Paraşüt. Only one was in
e-commerce.

RECENT EXITS OVER USD 1 MILLION IN ISTANBUL TECH
Sample size: 19 exits over USD 1 million between 2015 and 2019.

100%

OTHER
PAYMENTS AND ANALYTICS
E-COMMERCE

75%

50%

25%

0%

16

2015 - 20172018 - 2019

LESSON 2

LESSON 3

ENTREPRENEUR-LED SUPPORTORGANIZATIONS AND INVESTORSHAVE BEEN INSTRUMENTAL IN
FOSTERING NETWORK EFFECTS.

NETWORK DYNAMISM ISSLOWING DOWN BECAUSE FEWERRESOURCES ARE INVESTEDBACK IN THE COMMUNITY.

When tech entrepreneurs are more involvedin leading investment firms and support
organizations, entrepreneurship communities
are more productive, and they create morejobs and wealth.13 Istanbul is a textbook
example of this relationship: entrepreneur-led
investment firms and support organizations
have been influential in making Istanbul’s techcommunity thrive. The next section covers therole of these organizations in more detail.

There are a number of reasons to think thatthe network effects that helped the Istanbul
tech community succeed have slowed down
in recent years. In the past five years, founders
have been selling companies earlier and forlower dollar amounts than they did in the five
years prior. They are less experienced when
they sell, and they receive less capital to injectback into the community. Based on a datasetof 63 exits, between the five year periods of
2008-2013 and 2014-2018, the median priceof acquired companies and the median numberof their employees dropped by about half.

In Istanbul, the top investment firms
and support organizations are all led byentrepreneurs or former senior executivesof entrepreneurial companies. Most of theseorganizations have at least one executive or
board member with experience at a company
that reached a 100 employees or more.
Conversely, the majority of the mostaccomplished tech entrepreneurs are
involved in the leadership of the most active
investment firms and support organizations.
The founders of Airties, Mynet, Pozitron,
Pronet, and Yemeksepeti are all involved asboard members and leaders in at least one
entrepreneurship support organization, andmany of the founders of the more recently
exited companies are active angel investors
through Galata Business Angels or other angelgroups.

Tech companies are selling earlier because
they are being bought by foreign competitors.
While investors were deterred by the valuation
drops, foreign tech companies saw this as
an opportunity. Buying access to the Turkish
market remains an appealing opportunity forany global tech company. At the same time, as
circumstances became more difficult, founders
were more willing to cash out, rather thanstruggle to scale their companies in a difficult
investment climate.
The talent pool is also thinning. Former
employees of scaled companies are
particularly well-positioned to become
top-performing founders, but they are more
likely than ever to leave the country instead ofstarting their own company. They are currently
undervalued compared to European salarylevels, and so many of them decide to pursue
opportunities abroad.

17

PUB LI CALLY S P ON SO R ED IN T I ATI V E S LAI D THE GROUNDWORKFOR A D I VE R S E, LO CA L LY D R IV E N, AND DYNAM I CALLY E XPANDI NG
E N T RE PR E N E U R S H IP ECOSYSTE M I N I STANBUL TODAY.

THE SUPPORT SYSTEM FORENTREPRENEURSHIP IN ISTANBULRAPIDLY EVOLVING.
Investment firms and entrepreneurshipsupport organizations like acceleratorsand incubators play an important role in
the Istanbul entrepreneurship community.
Endeavor Insight identified over 80
active investors, accelerators and othersupport organizations in Istanbul.
The support system for tech entrepreneurs
in Istanbul has evolved rapidly over the
past decade. In 2010, less than 5 support
organizations were active in the city, but
by 2019, there were over 80 incubators,
accelerators, and institutional investors
working to support local tech founders.
This abundant support activity is a relatively
recent trend in Istanbul, especially comparedto the maturity of the tech entrepreneurshipecosystem, which has seen entrepreneurs
scale and reach success in the city sincethe 1980s. Over 90 percent of the support
organizations were founded in the past decade.
Today, there is an incubator or accelerator for
every 12 local Istanbul tech firms.
TODAY, UNIVERSITIES AND NGOS
DRIVE BUSINESS INCUBATIONEFFORTS, WHILE ACCELERATORPROGRAMS ARE MORE EVENLY SPLIT
BETWEEN PRIVATE INITIATIVES, NGOS,CORPORATES, AND THE GOVERNMENT.
Today, according to data gathered fromStartups.watch the entirety of the support
ecosystem for startups in Istanbul comprises of
58 local Incubation and accelerator programs.
The general allotment amongst these support
program owners are universities and NGOs
at 50 percent, privately held institutions at 22
percent, corporate companies at 21 percent
and finally the government at 7 percent.13

18

Among the 30 accelerator programs, about
30 percent are privately held programs, 33
percent are corporate programs, 33 percent
are university and NGO programs, and 3
percent are government programs; revealinga balanced distribution of responsibilities
among actors. On the other hand, there isan uneven ownership among incubation
programs where university and NGO-run
programs take the lead with 68 percent,followed by privately held institutions at 14
percent, the government at 11 percent andfinally by corporate companies at 7 percent.
Corporations have increased theirentrepreneurship support dramaticallyin the last few years, making them oneof the active players in entrepreneurshipsupport. Banks have become the prominent
actors running the majority (80 percent)of corporate accelerator programs.
GOVERNMENT AND UNIVERSITYPROGRAMS WERE THE FIRST TOSUPPORT TECH ENTREPRENEURSHIP IN
ISTANBUL.
The first movers in entrepreneurship support
were government institutions like TÜBİTAK
and Kosgeb, followed by university programs
like the programs of Yıldız Technical University,
Sabancı University, Istanbul Technical
University and Koç University. The past decade
has seen an expansion of corporate support
programs (such as Fincube, Garanti Partners,and Albaraka Garaj), and independent
programs (such as Etohum, 500 Startups,
SDG Impact Accelerator, taking over a lotof the support tasks that government anduniversity programs kickstarted in the early2010s. Investment firms have differed in theirsource from accelerators and incubators: it is
not typical for university programs to invest
in local entrepreneurs; instead, independent
investment firms tend to dominate that field.
Corporate programs tend to be more active inentrepreneurship support than in investment.

ENTREPRENEURSHIP SUPPORT IS
OVERWHELMINGLY LOCALLY DRIVENIN ISTANBUL.
Support organizations are not only numerous
in Istanbul today but also very active: over 165
of the estimated 800 local tech firms in thesample have passed through an incubator or
accelerator program at some point -- or over
one in five local tech firms.
Most of the support activity appears to
be locally driven. 126 of the 165 firms thatparticipated in incubation or acceleration
programs went through programs that werelocally founded. The most active support
organizations were all local organizations:Endeavor, Istanbul Technical University. The
most active investors were also local: 212, Revo
Capital, Galata Business Angels, and Aslanoba
Capital.
HIGH-GROWTH COMPANIES ARE
PASSING THROUGH AT LOCALSUPPORT PROGRAMS AT SIMILARRATES TO OTHER COMPANIES.
About 16 percent of the local tech firms inthe study participated in a local incubation or
acceleration program. To gauge the economic
performance of these programs, Endeavor
Insight assessed the percentage of top
performing companies who passed throughthem, and compared it to the percentage
of other companies that passed through.
19 percent of top performing firms passed
through local organizations at some point,
compared to a little less than 16 percent of allother firms — an insignificant difference.

SUPPORT ACTIVITY IN THE ISTANBUL TECH SECTOR, 2010 - 2019
Government and university programs were the first movers of entrepreneurship support.

40

GOVERNMENTUNIVERSITYCORPORATEINDEPENDENT

35
30
25
20
15
10
5
0
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

INVESTMENT ACTIVITY IN THE ISTANBUL TECH SECTOR, 2010 - 2019
Corporate programs are more active in entrepreneurship support than in investment.

40

GOVERNMENTCORPORATEINDEPENDENT

35

30

25

20

15

10

5

0
2010

2011

2012

2013

2014

2015

2016

2017

2018

19

Today, there isan incubator or
accelerator for every
12 local Istanbul techfirms.

SUPPORT ORGANIZATIONS CANINCREASE THEIR ECONOMIC IMPACTBY INVOLVING ACCOMPLISHEDENTREPRENEURS IN THEIR LEADERSHIPAND THEIR BOARD.
There is a strong and dynamically evolving
support system in Istanbul. There are also
opportunities to enhance the performanceof local organizations, and increase thepercentage of alumni who go on to become top
performing employers in the sector.
Istanbul’s support system for techentrepreneurs is relatively young, and it has
shown great potential based on the dominanceof locally founded and headquartered support
organizations and investment firms in the city.
Because most of the technology companies
in Istanbul are early stage (the median ageof tech companies is 4.5 years), the majority
companies supported by accelerators andincubators is also young. As organizations keep
growing, they will keep gaining expertise.

20

As the section on page 14 illustrates, supportand investment connections to experienced
scaleup entrepreneurs can significantly
increase a company’s chances to be a fastgrowing company. Support organizations canfurther improve their performance by involving
accomplished tech entrepreneurs in theirleadership or their board.

THERE ARE FURTHER OPPORTUNITIESTO INCREASE THE IMPACT OF LOCALSUPPORT ORGANIZATIONS BASEDON ENDEAVOR INSIGHT RESEARCH IN
OTHER GEOGRAPHIES.
Government-funded entrepreneurshipsupport should adapt to the needs of theecosystem as they evolve and provide
services tailored to entrepreneurs in specificsectors and stages. Research that Endeavor
Insight has conducted with entrepreneurshippolicymakers around the world also suggeststhat support services tailored to entrepreneur
needs in specific sectors and stages areassociated with measurable improvements intheir economic footprint.
The government is often a first mover inproviding entrepreneurship support, but withtime, as other actors appear in an ecosystem,
government-funded entrepreneur programs
perform best when they adapt to the needsin the ecosystem and fill the gaps that private
sector actors are unable to fill.

Entrepreneurship programs should address
the needs of scaling entrepreneurs, including
services to help with talent recruitment,
retention, and development. As it is discussed
in earlier sections of the report, access totalent is a major challenge for tech founders
in Istanbul. Research from other geographies
demonstrates that support programs canbetter help entrepreneurs scale if they movebeyond providing access to financing andassist entrepreneurs with recruitment (forexample through targeted job fairs), andtalent development (for example, offering
government-sponsored online courses, such as
the governments of Sweden or Colombia).
Local support organizations should cooperatewith experts in selecting entrepreneurs
for their pipeline. TÜBİTAK BIGG’s newpractice in cooperating with universities intheir entrepreneur selection and mentoringsuggests that support organizations canbetter maximize their impact if they cooperatewith other organizations with demonstrated
expertise in vetting entrepreneurs.

Local support organizations can also
maximize their economic impact byshowcasing successful entrepreneurs who
have attended their programs, thereby
signalling to other founders with ambitions toscale that their support services are equipped
to assist them with their challenges, and they
are not limited to early stage companies.
A NUMBER OF CURRENT TRENDS MAY
HAVE IMPLICATIONS FOR THE FUTURE
OF THE TECH ECOSYSTEM IN ISTANBUL.
The following trends may shape the challengesof scaling entrepreneurs and the availability ofresources, and as a result, inform the actions ofsupport organizations in Istanbul in the future.
1. The emergence of a new generation ofentrepreneurs in new domains;
2. Continuing trends in talent migration;
3. A newly emerging corporate VC
environment;
4. New resource injections from current
exits, especially if coupled with new giveback
policies.

21

RECO M M E N DAT ION S

1. FOCUS SUPPORT ON FOUNDERSWITH TOP-PERFORMER
CHARACTERISTICS.

2. ENCOURAGE THE LATEST
GENERATION OF ACCOMPLISHEDENTREPRENEURS TO GIVE BACK.

4. WORK WITH GOVERNMENTREGULATORS TO FACILITATEEMPLOYEE RETENTION.

The tech sector in Istanbul has been able
to grow and thrive because of a small
percentage of founders who scaled
and reinvested their resources in thecommunity. The next generation of thesefounders is going to emerge from the techcompanies that are growing fast today.

One of the keys to Istanbul’s magnificent
growth over the past decades has been
the fact that early generations of founders
who scaled were engaged in supporting
scaling entrepreneurs. Fewer companies
are now achieving scale, companies are
acquired earlier and for lower amounts,
and employees are leaving en masse
to seek opportunities elsewhere.

Regulation was one of the highest rated
challenges among entrepreneurs in thisstudy. Over 50 percent of all interviewed
considered it either a severe or very severe
obstacle. In particular, regulation related
to employee retention was frequently
mentioned by entrepreneurs.

Decision makers in the public sector
and private sector will maximize theirimpact by designing support programs
to select and support entrepreneurs
with these characteristics.
Top-performing companies are distinctivefrom lower-performing companies in theirindustry representation and founder’s work
history. These companies were more likely
than other founders to start companies in
e-commerce and payments or analytics.
Founders were twice as likely to have worked
for a tech company that reached significant
scale. They were also twice as likely to have
10 or more years of collective experience on
the co-founding team. In addition, they twice
as likely to have connections to experienced
entrepreneurs who have built companies
with 100 or more full-time employees or soldtheir companies for over 5 million dollars.

In this tough environment, support
organizations will need to engage an evenhigher percentage of new companies atscale to reinvest their resources in the next
generation. This will help maintain thelevels of network activity that allowed thecommunity to thrive in the past. Support
organizations should continue to involve
entrepreneurs in their leadership, measure
their impact, and listen to the challenges that
top performing entrepreneurs are voicing as
they are working to scale their companies.
3. INCREASE DOMESTICINVESTOR ACTIVITY.
Turkey’s political struggles coupled withthe currency and debt crisis had significant
negative impact on founders’ ability toraise capital outside of Turkey, but Turkey
has significant resources at home andfor the first time, a large diaspora.
Decision makers in the public andprivate sectors who wish to support techentrepreneurs in Istanbul should work toleverage private wealth in Istanbul. They should
also work to engage the Turkish diaspora
living near other developed tech communities
like London, Amsterdam, and New York.

22

Employees are Istanbul’s competitive
advantage, but tech employees are in shortand decreasing supply in the city. Topperforming entrepreneurs are able to keep
employees and attract members of thediaspora back by sharing their profits withthem, by investing in employee culture, andby creating appealing work environments.
Keeping and developing talent in Istanbul
and bringing talent back is a collective
priority for the tech community. Previous
Endeavor Insight research has demonstrated
that comprehensive regulation aroundemployee stock options and fiscal incentives
for returning employees are powerful tools
for employee recruitment and retention.
Decision makers in the public and private
sectors should work to pass policies thatwould create a comprehensive framework
to facilitate employee retention for growing
companies. As part of this work, policymakers
should work to separate startup support
from R&D support strategies what are illfitted for companies seeking to grow fast.

METHODOLOGY:GLOSSARY: Angel investment: an investment in
a company made by an individual, not onbehalf of a business or investment firm.

SAMPLING FRAME:
Companies were considered “targets”
and included in the sampling frame
if they met the following criteria:

 Entrepreneurial firms: for-profit
businesses that are started by individuals
who possess ownership and control of
the firm. This excludes businesses thatbegan as either government entities
or subsidiaries of larger companies.

1. The company is local.

 Local companies: businesses
that were founded or are
currently headquartered in the
Istanbul metropolitan area.
 Mentorship: a connection throughwhich a mentee will meet the mentor atleast three times for a minimum of 30
minutes to discuss critical business issues.
 Metropolitan area: the boundaries
of a city’s metropolitan area were
defined using local input.
 Serial entrepreneurship: theactivity of founding of a company bysomeone who previously founded
one or more companies.
 Software companies: firms
where the primary business activity
is either software development,
fintech, or e-commerce.
 Spin-off: a company started by aformer employee of another company.
 Startups: companies foundedno more than three years earlier.
 Target companies: entrepreneurial
firms founded or currently headquarteredin the city’s metropolitan area
and in the software industry.
 Top performer: a company in the top
twenty percent of all local, entrepreneurial
companies founded in the same year
based on its number of employees.
Used interchangeably with high-growthcompanies throughout the report.

24

Companies were included if they were:a) Founded in the Istanbul
metropolitan area, orb) Currently headquartered in
the city’s metropolitan area after
they were founded elsewhere.
Target companies also included
businesses that have closed after
being founded or headquartered in
the metropolitan area, and thosethat have been acquired after being
founded or headquartered in the area.
2. The company fits the definitionof a technology company.
Software companies are defined as
for-profit businesses whose primaryactivity could be described as either:a) Software development for enterprises(e.g., CRM, logistics systems, or
security software), or consumers (e.g.,mobile apps, digital gaming); orb) Internet-based or mobile-based retailor services (e.g., e-commerce or fintech).
This definition excludes firms forwhich software development is asecondary activity, such as consulting
firms and graphic design firms, as wellas businesses in which internet andmobile-based platforms are secondary
platforms, such as print newspapers.
3. The company is entrepreneurial.
Entrepreneurial companies are thosestarted by individuals. This excludes
businesses that began as either:a) Government entities, orb) Local divisions of corporations
based in other cities.

DATA COLLECTION:
The data collected for thisproject comes primarily fromsurveys and interviews with local
entrepreneurs and stakeholders.
This study began by identifying “VIP
entrepreneurs” and other stakeholders
who had an in-depth perspective on
the sector (Heads of venture capital
firms, government officials, etc.) in eachcity. VIP entrepreneurs selected forinterviews were identified based on:A) Scale – i.e., the current largest
companies in the sector, orB) Influence – i.e., companies thathave made large exits, received alarge investments, or were otherwise
noteworthy or influential.
The preliminary interviews, which were
mostly in person, focused on theseimportant stakeholders. The responses
helped establish a list of the sector’s
most “influential organizations,” i.e.,organizations with outsized influence.
It also provided critical data on thechallenges, city characteristics, andeach industry’s entrepreneurial scenethat helped inform later analysis.
The resulting primary company list
formed a basis for the study, alongwith additional companies identified
through other sources including
databases such as Pitchbook, D&B
Hoovers, and Crunchbase, as well as
the portfolio companies of investors
and entrepreneurship support
organizations operating in the city.
Only target companies moved
forward for further investigation, i.e.,
those founded or headquartered in
the mapped city, entrepreneuriallyfounded and in the selected industry,
and those fitting the aforementioned
criteria on scale and influence.
Entrepreneurs from the target list
received invitations to fill out an online
survey or set up an interview (either
in-person or over the phone). This massoutreach campaign used standard
questions, but the interviews wereadapted to be more conversational.

In order to ensure that the company
list was comprehensive, a secondary
list of companies was compiled fromthose mentioned in the interviews andsurveys that were not already on the
primary list. The secondary list also
included additional companies sourced
from the portfolio companies of those
associated with the new mentions. T

LinkedIn provided data for the analysis
of founder work and education histories.
The responses to these questions formed
an edge list of connections amongorganizations, along with a corresponding
set of four types of outbound connections.
The edge list then informed all subsequent
network analyses and created the
network map visualizations in D3.

he secondary list also included newcompanies found on LinkedIn whilecollecting data on entrepreneurs andcompanies. These secondary targets
then received invitations to complete
surveys and interviews. The research andoutreach process was repeated multiple
times depending on the size of the city.

For all network analyses, each founder
was assigned to only one company ororganization. Where an entrepreneur
had founded multiple companies, his or
her most prominent company represents
his or her influence in the analysis andon the map. This was based on an index
of founding date, number of employees,
total investment, and exit sizes. Where an
entrepreneur had founded an investment
firm or support organization, it was thecompany entity that took precedence(if they founded one), followed by thefounder’s investment firm, followed by
the accelerator or support organization.

Additional data was included on investments and support organization portfolios using Startups.watch.
The number of companies mappedand entrepreneurs interviewed varied
depending on the size of the sector.
NETWORK ANALYSES:
Previous research by Endeavor Insighthas found that there are four main
connection types among entrepreneursthat drive the growth of an industry.
For analyses that only include
connections between entrepreneurial
tech companies, these are:
1. Angel investment;
2. Mentorship;
3. Serial entrepreneurship; and4. Former employee spinoffs.
To learn about these connections
within entrepreneurship communities,
the surveys and interviews discussed
above focused on four core questions:
1. Who invested in your company?
(This includes both angel andinstitutional investors.)
2. Who was your mentor during
the growth and developmentof your company?
3. Have you founded other techcompanies in your city?
4. Which of your former employees
have gone on to found techcompanies in your city?

The size of an organization’s influencein the network was based on directedcloseness centrality for unconnected
graphs. In other words, the size of anorganization was a function of thenumber of first-, second-, third-, etc.
degree connections that the organizationand its entrepreneurs had to others in
the network. All connections on the
map were weighted equally. Financials
and employee counts did not factor
into an organization’s centrality.

authors used the median number of
employees for companies founded in thesame year, where companies foundedover ten years ago were combined into
one cohort. Companies that were nolonger operating were included in theanalysis if it was possible to find enoughdata to target them. For companies thatwere acquired, the number of employees
at the time of acquisition were used.
LIMITATIONS:
Omitted variables may have played arole in sampling, creating bias that would
otherwise expose gaps in the research
process. The study’s double interview,
verification and analysis procedures
were meant to offset any adverse effects.
If gaps in or misinterpretations of thedata were revealed during the analysis,
the map and results were corrected.
While efforts were made to be ascomplete as possible in data collection
by using a mixed methodology
for data gathering and a detailed
respondent verification process, theobserved data used in this study is
only a highly developed representationof the entrepreneurship networkin each community and may omit
certain data or attributes.
CONFIDENTIALITY:
Endeavor maintains confidentiality,
and collected data is accessible only to
Endeavor and its research partners.

Connections accrue to an organization
based on the time period in which theconnections occurred. Where the year of
a connection was unknown, two different
approaches informed the date used in
the study. Where year information for aformer employee, investment, or founderconnection was missing, it was assumed
that the year of the connection between
the source and the target companies wasequal to the year the target company
was founded. To estimate a mentorship
relationship start year, authors
reviewed mentorship relationships.
Companies were only included in theanalysis if it was possible to identify theirfounding year. For companies whose
employee count could not be determined,

25

ENDNOTES:1

CNN Money. CEO shares $27 million with staff after selling his firm, July 29, 2015
URL: https://money.cnn.com/2015/07/28/news/companies/turkish-ceo-staff-bonus-millions/index.html

2

The Wall Street Journal. Delivery Hero Acquires Turkey’s Yemeksepeti
URL: https://www.wsj.com/articles/delivery-hero-acquires-turkeys-yemeksepeti-1430802002

3

The Independent. Best boss of the world? Turkish tech CEO gives employees £150,000 each after sale of company
URL: https://www.independent.co.uk/news/business/news/yemeksepeti-turkish-tech-ceo-nevzat-aydin-hands-workers-bonuses-worth-17-after-sale-		
of-firm-10424378.html

4Venturebeat. Zynga buys 1010 maker Gram Games for $250 million.
URL: https://venturebeat.com/2018/05/30/zynga-buys-1010-maker-gram-games-for-250-million/

5

Endeavor Insight interviews.

6

The Economist. The struggle to restore Turkey’s stricken economy
URL: https://www.economist.com/finance-and-economics/2019/03/14/the-struggle-to-restore-turkeys-stricken-economy

7

Endeavor Insight interviews.

8

Endeavor Insight interviews.

9

Endeavor Insight analysis.

10

Endeavor Insight interviews.

11

Endeavor Insight interviews.

12

The industry distribution of recent exits over USD 1 million demonstrates the way the tech sector has diversfied over time as experienced founders rein		vested their resources in the network.

13

Endeavor Insight analysis based on data from startups.watch, accessed September 13, 2019.

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