On Entrepreneurship in Turkey
Ziya G. Boyacigiller
This presentation was created and given by Ziya Boyacigiller who was leading Angel Investor and a loved mentor to many young entrepreneurs in Turkey. We have shared it on the web for everyone’s benefit. It is free to use but please cite Ziya Boyacigiller as the source when you use any part of this presentation. For more about Ziya Boyacigiller’s contributions to the start-up Ecosystem of Turkey, please go to www.ziyaboyacigiller.com
Entrepreneurship in Turkey?
Entrepreneurship / Intrapreneurship circa 2008
Ziya G. BoyacıgillerSabanci University
Ziya G. Boyacigiller (c) 2005 EMBA 4
Entrepreneurship won’t work in Turkey… Whatever works in USA won’t work here… No one will invest here in a new business… Holdings will destroy you once your business becomes
significant enough… There is no legal protection, intellectual property rights… They will copy you, all your efforts will go to waste… Government will back their supporters, will damage you if
you don’t work with them… You can’t overcome the government bureaucracy… When there is corruption, the mafia you can’t be in
business honestly… If you are a minority partner, they will cheat you… etc…
Ziya G. Boyacigiller (c) 2005 EMBA 5
A Question? How did the following companies start
and become successful in Turkey? Hedef Alliance? Dizayn Group? Mavi Jeans? Logo Yazilim? Gantek? Artesis? AirTies ….
Ziya G. Boyacigiller (c) 2005 EMBA 7
Spin-Off Companies… In 2000, there were 454 spinoffs, within all American academic
institutions, pp57
In 2000, average was 4.2% spinoffs-to-disclosures ratio within 26 selected universities (~37% of total with spinoffs) in USA. Pp68
During 1980-1996, MIT spinoffs = 134, went public = 24, 18% public “spin-off ratio, pp19 & pp30
Using 4.2% and 18%, we get 0.3%. This means only 3 spinoffs
for each 1,000 disclosures succeed to go public (IPO). (Note that this ratio is for MIT and is much higher than non-academic success rates. However, the rate for VC backed companies is 100 times worse!)
Moreover, during 1980-1996, average years to IPO for 24 MIT spinoffs equaled 4.5 pp30
Why does one become an
entrepreneur?
money
excitement
power
fame
work
social contribution
knowledge
competition
Ziya G. Boyacigiller (c) 2005 EMBA 9
Top 10 US BillionairesName Age Worth Company
Bill Gates 48 $48B Microsoft
Warren Buffet 74 $41B Berkshire Hathaway
Paul Allen 51 $20B Microsoft
Alice Walton 55 $18B Wal-Mart
Helen Walton 85 $18B Wal-Mart
Jim Walton 56 $18B Wal-Mart
John Walton 58 $18B Wal-Mart
S. Robson Walton 60 $18B Wal-Mart
Michael Dell 39 $14B Dell
Larry Allison 60 $14B Oracle
Source: 2004 Forbes 400
Ziya G. Boyacigiller (c) 2005 EMBA 11
Example for Good VC Investments:
KP’s star companies: Google 240x Netscape: 80x @home: 87x Amazon.com: 44x Exite: 73x Rambus: 51x Citrix : 40x
Ziya G. Boyacigiller (c) 2005 EMBA 12
Returns of VC Companies
Kleiner Perkins Caufield & Byers
IRR Sequoia IRR Matrix Partners
IRR
1992 fund 39%/y 1992 fund 110%/y 1995 fund 223%/y
1994 fund 122%/y 1995 fund 175%/y 1997 fund 516%/y
1996 fund 287%/y 1998 fund 93%/y 2000 fund -30%/y
1999 fund -21%/y 1999 fund -5%/y 2001 fund -39%/y
2000 fund -16%/y 2000 fund -25%/y
Source: Venture Scoreboard
Ziya G. Boyacigiller (c) 2005 EMBA 13
Global VC Investments 1998-2002Region Invest Funds Raised Not-
Committed
$ Billion $ Billion $ Billion
Global 660 788 128
North America 466 554 89
Western Europe 123 154 31
Asia Pacific 46 55 8
Middle East & Africa 11 12 1
Mid and South America 12 10 -3
Eastern Europe 2 3 1
Source: pwcmoneytree.com 2004
Ziya G. Boyacigiller (c) 2005 EMBA 14
Favored Industries?
Source: pwcmoneytree.com 2004
VC Yatirimlari ve Endustrilerin Dagilimi 2004
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
Mil
lio
n $
0
2
4
6
8
10
12
14
16
18
20
22
242000
2001
2002
2003
2004
2000/2003
Ziya G. Boyacigiller (c) 2005 EMBA 15
10 Top Countries Region Investment
2000 2002
US $105B $62.7B
UK $9.6B
France $1.1B $5.5B
Italy $2.5B
Japan $2.9B $2.4B
Germany $1.2B $2.4B
South Korea $0.1B $2.0B
Netherlands $1.6B
Canada $1.6B
Sweden $0.6B $1.4B
India $0.3B $1.1B
China $0.1B $0.35B
Source: UN Human Development Report, 2001
2003: US $18.2BEurope $3.0B
Source: pwcmoneytree.com 2004
Ziya G. Boyacigiller (c) 2005 EMBA 16
How can China run? What has changed in China… In the last 5 years IDG Technology
Venture Investing invested $170Mio with %43 IRR.
In 2004 record 253 companies received $1.3 billion.
Selecting investments fit for China’s economy and markets…
Ziya G. Boyacigiller (c) 2005 EMBA 17
What is changing in Turkey? EU forcing structural changes Economic reforms (IMF) Government encouraging
entrepreneurship EU supporting entrepreneurship Turkic and ex-soviet markets EU and USA have difficulty working in
Middle East EU market opening up (customs union)
Ziya G. Boyacigiller (c) 2005 EMBA 18
Entrepreneurship is a Strong Driver of Economy Approximately 4% of US labor force is
involved in starting a new company every year.
Business owners in US is 13% of nonagricultural labor force.
All this, despite the odds – 40% of new businesses started in US live over a year, only 25% survive for 8 years.
Why is Nigeria the most entrepreneurial country?
Ziya G. Boyacigiller (c) 2005 EMBA 19
Additionally “creative destruction” is at work; very few Fortune 500 companies stay on the list for more than a decade or two.
Corporate Entrepreneurship
Ziya G. Boyacigiller (c) 2005 EMBA 25
Dr. Edward Demings’Famous Beads Experiment
The output of a process produces both random and systematic deviations. By replacing people or putting a gun at people’s heads it is not possible to reduce or eliminate either. Instead, you need to understand and eliminate the root-causes of the deviations.
Ziya G. Boyacigiller (c) 2005 EMBA 33
Obviously, something separates successful entrepreneurs (inside or outside companies) from the masses of others…