Can AI Developed in Turkey Sell Houses in Spain?
I recently read a report about rapidly growing technology companies emerging from Greece. The report, titled “Greeking Out 2.0”, published by tech publication Sifted, highlights 23 companies. Only 6 of these companies are based in Greece. Ten are in the USA, and four are in the UK. For instance, Instacart, which is showcased as one of the best success stories in Greece’s e-commerce sector, was established in Dubai. However, most of the company’s tech development team is based in Greece.
Lately, during my trips to London or Dubai, I’ve met more frequently with entrepreneur friends who initially founded their businesses in Turkey but later moved to these cities. Some of these friends moved to these cities to grow their businesses faster. Others sold their businesses and decided to establish their next ventures in more globally strategic locations. However, they continue to maintain close ties with Turkey. Many of them still have investments in companies in Turkey, and help them expand globally.
Last week, in collaboration with Akbank, Endeavor Turkey published a report examining entrepreneurship in the Turkish diaspora. According to the report, 53% of our diaspora entrepreneurs around the world mentor entrepreneurs in Turkey, and 69% mentor Turkish entrepreneurs in other countries. So, no one has severed their ties with their homeland.
It is possible to categorize our diaspora entrepreneurs into different layers based on certain characteristics. The first layer consists of children of former migrants, like Özlem Türeci and Uğur Şahin, the founders of Biontech. While there are valuable gems among them, this layer is relatively smaller than the others. The largest layer comprises those who went abroad for education, worked there, and started businesses. These individuals comprise 73% of the sample examined in the Endeavor report, with most living in the US. They maintain close ties with Turkey.
The layer that catches my attention the most includes friends I’ve met in London and Dubai who moved abroad to grow their businesses. These individuals mostly founded their businesses with the experience they gained in Turkey. However, when the Turkish market was insufficient for the company’s growth, or there were no investors left in Turkey to support this growth, they decided to move their businesses to a global hub. Usually, these companies relocate their top management and sometimes their sales and marketing teams abroad. On the other hand, 70% of the companies’ R&D and engineering teams remain in Turkey.
When it comes to technology companies, where you live doesn’t matter. The other day, I recorded a great podcast with Sina Afra. Turkey got to know Sina through Markafoni, one of Turkey’s first e-commerce ventures. Tiko is his latest venture out of the 20 companies he has founded. Initially named EvTiko, it bought houses in Turkey, renovated them, and re-sold them based on prices determined through AI analysis. Sina later expanded the company in Spain and Portugal, and stopped buying and selling houses in Turkey. Tiko has become one of the largest technology startups in Europe in this field, with a business model based on reducing transaction costs in the housing market through digitalization. The company’s field teams are in Spain and Portugal, but the R&D team is still in Turkey. The CFO, however, is in London. Why? Because Sina found the best CFO there.
This shows that companies’ connections with location and nation-states have weakened in the technology era. This situation has tangible implications for the policies Turkey should follow: Firstly, some of the regulations we make sometimes only increase transaction costs. For example, the Capital Markets Board (SPK) restriction on venture capital investment funds (GSYF) established in Turkey to invest in Turkey. Now, this restriction is being relaxed for foreign investors. However, the only result is that Turks will take their money abroad and return it. So, in order to comply with our law, a lawyer in Luxembourg will take a bit more of our money. Similar arguments can be made for tax legislation and other areas.
Secondly, we need to reframe our foreign economic relations strategy around technology. You can sell chocolates abroad with trade fair support but can’t globalize a tech business through trade fairs. Since the technology business requires out-of-the-box thinking, it progresses entirely through human relationship networks. Experience transfer and finding finance are easier through these networks. For instance, Indians founded the “Indus Entrepreneurs Network” (TEİ) in 1992 to unite their diaspora in the technology sector. This completely civilian initiative has over 12,000 members in 60 cities. Many successful new ventures have emerged through this network. Considering such examples worldwide, it would benefit us to rethink tech businesses from a similar perspective.
This article is a translated version of “Türkiye’de yapılan yapay zeka ile İspanya’da ev satılır mı?”which was initially published in Economic Daily (Nasıl Bir Ekonomi Gazetesi) on June 28, 2024.
