Hidden Valleys

While Turkey's Government Cries Coup, Tech Startups Keep Coding

Photographer: Etohum

A presentation at Startup Turkey 2014. Close

A presentation at Startup Turkey 2014.

Photographer: Etohum

A presentation at Startup Turkey 2014.

Entrepreneurs from some of the world's most crisis-stricken countries convened in Turkey last week. They were there to put Middle Eastern politics aside to connect with like-minded technology enthusiasts and hopefully raise some cash to get their passion projects off the ground.

The StartupTurkey conference kicked off in 2009 as an intimate networking event for Turkish entrepreneurs. Since then, it’s morphed into a showcase for tech startups in a sprawling region spanning from Pakistan to Greece and claiming more than 750 million inhabitants.

Attendees hailed from more than 30 countries including Afghanistan, Saudi Arabia and Ukraine. International participation among startups hit a record high at this year’s event, with about half of the 70 companies on stage coming from outside Turkey, according to Burak Buyukdemir, who organizes the event.

Hamidreza Ahmadi traveled from Tehran on behalf of the Iranian Entrepreneurship Association to attend the three-day conference in the coastal city of Antalya. He kicked the tires on some of the most cutting-edge technology the Middle East has to offer.

"Turkey has advantages,” Ahmadi said in an interview. “We don't need a visa; it's our neighbor; and Turkey is four to five years ahead of us.”

On paper, Turkey looks like the perfect setting for a tech conference with global ambitions. The country is widely seen as a model for economic opportunity in the region.

But this is the same place where educated, Western-looking youth can be seen taking to the streets to protest increasing restrictions on their political freedoms. Turkish Prime Minister Recep Tayyip Erdogan has been criticized for the violent suppression of the Gezi Park protests in the summer and an assault on the judiciary after a corruption probe that broke on Dec. 17. Erdogan has called both of those events coup attempts, and his party introduced laws that made it easier for Turkey to censor the Internet, among other newly granted powers.

It’s hard for some folks to get excited about a tech conference taking place in a country that’s a flip of the switch away from online censorship.

"I think people are confused, of course, after the Gezi protests," said Ussal Sahbaz, a researcher at the Ankara-based think tank TEPAV, which also runs a startup incubator. "Most of these people were either on the streets, or they were watching it and sympathizing.”

Ozan Sonmez, who moved to Saudi Arabia from Istanbul for a job at a tech incubator two months ago, said political turmoil risks undermining Turkey's key selling point: a predominantly Muslim growth market that’s adopting European standards as it seeks to join the European Union. He said that some investors may now compare Turkey's situation unfavorably with that of other markets in the Middle East.

"There are times when a good monarchy is better than a bad democracy," said Sonmez, who works at the King Abdullah University of Science and Technology’s Kaust Venture Lab Accelerator. "The expectation was that Turkey would move toward EU accession, and we'd have more freedom after the military was put down. But now we see that's not happening."

A variety of factors, including political unrest, have already reduced Turkey's appeal for foreign investors. The lira has declined 17 percent in the past year, and the stock market is down by about 30 percent in dollar terms. Marvin Liao, a venture partner at Silicon Valley firm 500 Startups, is among the investors who are wary of putting money into the country.

"You could argue that the best time to come into a market is when it's not very good, but at least for this year, I'm not sure what we'll do,” Liao said in an interview. "There's relativity of opportunity, and our deal flow in the U.S. alone is just too good.”

That leaves a smaller pool of money for the young companies at StartupTurkey to fight over. Fatih Isbecer, a Turk who sold his mobile-money company Pozitron for $100 million earlier this month, encouraged the entrepreneurs to come up with original ideas, and he lamented the proliferation of clones based on websites from the West.

"If Turkey wants to escape the middle-income trap, we have to create businesses in new fields," he told attendees. "You need to start with fresh ideas."

For Kyrgyzstan's Mikhail Ageev, the idea was Akchabar.com, which allows people to compare fees on remittances from Russia to former Soviet states. He estimates the market for migrant workers in Russia sending money home totals $20 billion. Another attendee at StartupTurkey was Kabul-based TechSharks, which provides basic Web design for Afghans.

There were plenty of startups targeting Turkey’s economically attractive but politically unstable market. Giycem.com is an online lingerie store for bashful Turks, which co-founder Burak Hatipoglu said he started because in conservative parts of Turkey, "lingerie shopping is taboo and should be done behind closed doors." Ankara-based MagicLab runs a retailer for educational books that aims to capitalize on Erdogan's Fatih Project. The prime minister’s program, which aims to distribute free tablet computers to Turkey's 17 million schoolchildren, was a rare effort that won near-universal praise.

Alex Argyropoulos said he isn't concerned about how political tensions in Turkey could affect his business. The co-founder of Captainwise.com, a travel aggregator that displays vacation destinations based on the user's budget, knows the situation all too well. From crisis-stricken Athens, he's looking at Turkey's growing population of 75 million and its $800 billion economy to boost his startup.

"We're here to expand into the region," said Argyropoulos, whose company was one of six Greek companies at the event. "Our next city for sure is Istanbul."

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