One of the largest defence events worldwide, the International Defence Industrial Fair, showcased Turkeys latest military and technical products in August, along with those from around the world. The four-day event hosted 1,200 companies from Turkey and abroad, and featured a broad array of defence products across different fields, including ground vehicles, unmanned aircraft vehicles, weapons, simulations, radars, sonar, solutions for ship platforms, air systems, rockets, logistics vehicles, refueling gear, and safety systems. The SAHA Second Biannual Expo, a leading Turkish defence industry event, opened its doors for its second annual SAHA Expo in November, gathering industry professionals, officials, defence companies and technology developers. Turkeys biggest air, space, technology and innovation festival, TEKNOFEST, started in September at Istanbuls Ataturk airport, hosting events like air shows featuring warplanes, UAVs, and helicopters; seminars, summits, competitions, and trade shows.
While many visitors to Teknofest in Istanbul come to witness attractions, such as Turkish Stars air show teams flying over Ataturk airport, it is young innovators that are likely to make or break Turkeys economic competitiveness going forward. To highlight just how much Turkey places value in encouraging the young innovators of tomorrow, the person handing out prizes to the winning teams — Selcuk Bayraktar — is a driving force in Turkeys growing domestic drone industry. Istanbul, Turkey – Behind the displays of fighter planes and assault helicopters displayed at Teknofest in Istanbul last week, lay perhaps the best hope Turkey has of realizing its high-tech ambitions. Turkeys weaponized UAVs, which have proven themselves worthily flying over Syria, Libya and Nagorno-Karabakh, are the clearest external indication yet that the country is racing ahead with a bid to tap into its potential with an increase in STEM education — science, technology, engineering and mathematics.
Turkeys educational systems also make impressive contributions to an emerging domestic technology scene. In the past few years, STEM centers and labs have been established throughout Turkey, and increasing numbers of teachers are being trained to apply STEM-sciences to real-world problems. With a young, well-connected population, Turkey is becoming an incubation ground for innovation, and an investment destination.
Many of the most innovative companies in the world are already investing in Turkey, and a thriving start-up economy is only going to fuel more investments. International equity firms have begun supporting companies in Turkey, while a range of local angel investors and VC firms are already supporting emerging startups. In addition to angels, venture capital, and private capital, this year has seen an exceptional amount of venture capital investments from corporations, with large corporations and CVCs becoming major players in the Turkish start-up ecosystem.
In the past, we used to meet with a couple different players, but we recently saw a rise of both Turkish and international venture capital funds setting up local offices or having representatives here in Turkey. For instance, 212 Capital Partners has recently launched with $30m investments, and the Dubai-based Abraaj Group has invested over $800m in Turkey since 2007, and is raising money for a $500m fund dedicated to the country.
These investments are driven by incredible growth in the online retail industry, which has grown seven times more rapidly since 2007 than in the brick-and-mortar retail space, according to the Abraaj Group. This growth of startups and tech companies has been fuelled by investments and incentives by government. In 2017, business-funded research and development (R&D) exceeded funding by government and higher education combined, a first, though the majority of investment from businesses went into dual-use military and tech.
Turkish exporters continued to grow their share of high-technology products in total exports, thanks to the countrys R & D activities, and also because of the governments support. Ismail Gulle, the head of Turkeys exporters assembly (TIM), said that Turkeys exports in high-technology sectors continued to grow over the past few years, with increased exports from a number of sectors that had a higher added value. In particular, positive export performances from defense and aviation industries, as well as from ready-to-wear/apparel sectors, contribute significantly to exports of value-added, high-tech products from the country, noted Ismail Gulle.
He highlighted the sectors that exported more in terms of value-added were jewellery, defence and aviation industries, ready-to-wear and apparel, leather and leather products, tobacco, and automobile sectors. Ismail Gulle said while exports worth over $60 a kg were made from defense and aviation sectors, that was worth about $15 from ready-to-wear.
Turkeys defence exports increased almost 40% during the first 11 months of the year, reaching $2.9 billion, and high-technology and engineering sectors accounted for about 35% of Turkeys manufacturing exports. We saw an explosion in investment in the Turkish manufacturing sector, ranging from automobiles to health care, giving Turkey a strategic strength to provide goods and services in Europe, Middle East, and Africa. The US-based Zyngas Turkish gaming company acquisition follows a spectacular string of acquisitions by Turkish-based companies expanding into technology sectors over the past few years.
In early October, American game company Zyngas doubled down on its investments in Turkeys tech sector, buying Istanbul-based Rollic, a casual games developer, for $180 million. In the acquisition of Turkish startup Peak Games by U.S. game company Zyngas, Turkey boasts the highest valuation for Turkish startups, with more than $1 billion.
With its entrepreneurial spirit, already growing economy, robust telecoms infrastructure, and large markets to capitalize on, Turkey is poised to be an international, regional innovation powerhouse. Turkey is ranked among the top 10 countries for startups investments and its place in the Super League, though it has a ways to go before it can reach the Champions League. In 2021, Turkey has attracted a considerable amount of tech investments from all over the world, with new moves being made by domestic companies.
In addition to founding Getir, Trendyols Demet Mutlu was the co-founder of another Turkish unicorn, the gaming company that sold in 2020 to Zynga, which is based in San Francisco. Having started with selling fashion items at Getir, he is been championing the Turkish textile industry. One of the few bits of trivia often repeated about Trendyols Demet Mutlu is that she dropped out of Harvard Business School in order to establish Trendyol in Turkey.