Turkey sets its sights on creating innovation hub

Istanbul tech park offers free office space and regular business supports to its dozens of R&D partners


The hallways of Teknopark Istanbul still reek of freshly laid concrete. No one bats an eyelid when young PhD graduates and engineers dressed in shorts and sandals start up a game at the foosball table.

The paint may be wet but the ambitions is to have the sort of international appeal to tech firms – both international and start-ups – as Dublin’s Grand Canal Square. Istanbul is best known for its centuries-old architecture and unique east-meets-west dynamic. Quietly though it has become an innovation hub, a melting pot for ideas and technological advances.

A short walk from the city's Sabiha Gokcen Airport, Teknopark Istanbul offers free office space to 35 incubator projects and regular business support seminars, among other perks, to its dozens of R&D partners working on biotechnology, energy solutions and maritime innovation technology. The bright red furniture that dots the glass corridors, strategic relations officer Sercan Altinbas says, reflects the "dynamic flame" at work here.

Backed by an annual one million lira (€360,000) fund from the Turkish government and support from the under-secretariat for defence industries and Istanbul chamber of commerce, space at Teknopark Istanbul has been quickly gobbled up, standing at 100 per cent occupancy. A plan to build state-of-the-art laboratories is currently in the works.

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With 68 million mobile phone users in a country of 76 million people, Turkey is one of the most connected and tech-savvy countries in the world. Twitter penetration here is higher in only seven other countries and in the case of Facebook, just three.

"Internet and mobile adoption especially among the young population is quite high in Turkey, probably even higher than most European countries," says Teknopark Istanbul deputy manager Ismail Ari. "The young population and the high spirit of entrepreneurship is encouraging."

Istanbul’s first accelerator Startupbootcamp has already reached €2 million in funding, and nine start-ups are invited to pitch their ideas with the reward a three- month collaboration with dozens of mentors and investors at an Istanbul university campus.

"We focus a lot on talent rather than on the idea," said Ersin Pamuksuzer, managing director of Startupbootcamp Istanbul and one of the people behind the founding of Turkey's largest mobile phone operator. However, that talent has been hard to hold on to. Among other reasons, the drain of the country's smartest minds, to the US in particular, keeps Turkey from getting to the level of productive innovation enjoyed by nearby Israel.

Many of the country’s gifted youth are enrolled in the campuses of Yale, MIT and Harvard in the US, with Turkish citizens the recipients of more American PhDs than Britons, Germans or most other European countries over the last 10 years.

The Turkish government and the Scientific and Technical Research Council of Turkey (Tubitak) last year established an anti-brain drain initiative in the shape of a fellowship programme that pays €1,270 a month for a minimum of two years for PhD-qualified Turks returning home, on top of research funding and regular working salary.

The government says several hundred mostly US-based Turks have applied to come back, although with about 10,000 Turkish graduate students heading to the States every year to plug the brain drain much more will need to be done.

With Istanbul a €230 billion economy and Turkey dodging the euro zone crisis, now should be a good time for Turks to invest in R&D.

“Yet, access to venture capital funding is not as easy as in the Silicon Valley,” says Ari of Teknopark . “The due diligence process done by investors in Turkey is still quite tough and there is little risk taking.”

These sentiments are echoed by Michael Motta, a Bostonian who is director of product engineering at PI Works, a wireless networks solutions company based in Istanbul. "Risk is a four-letter word in Turkey," he says. "There's very little funding . . . there's a sense in Turkey that the government is expected to fix any problem, there's a kind of dependency."

At the same time, industry insiders say government bureaucracy, which includes making investors in start-ups register with the government in order to avail of tax breaks, slows the vitally dynamic nature of the innovation sector. In part as a result, only about 200 angel investors operate in Turkey at present.

Ari says that for Istanbul's burgeoning tech sector, Ireland has been an example to follow – up to a point. "We already learned a lot from the ICT ecosystem in Ireland. Tax exemptions may be good for firing up the innovation ecosystem [as is the case for companies in Teknopark Istanbul] and attracting global investors."