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The power of three Together, governments, entrepreneurs and corporations can spur growth across the G20

The EY G20 Entrepreneurship Barometer 2013

Turkey at a glance

Turkey has embarked on a challenging journey to transform itself into an entrepreneurial society. The country’s ecosystem for entrepreneurs is relatively under developed, but new initiatives are helping Turkey to improve. It is particularly promising to see the private sector playing a bigger role, with established entrepreneurs acting as role models and contributing to accelerator programs that will help the next generation of businesses to break through.

The relative economic stability of the past 10 years has been an important factor in the country’s development, as has the evolution of the financial system. However, as the EY G20 Entrepreneurship Barometer 2013 shows, Turkey continues to lag behind its G20 peers on entrepreneurs’ access to funding. This is despite a sharp increase in bank lending to Turkish entrepreneurial businesses, which more than doubled between 2007 and 2011.1

The Government has made considerable progress at cutting back red tape. The time it takes to set up a business has been reduced to six days, among the lowest in the G20. However, the tax system could be more supportive for entrepreneurs — prohibitive indirect taxes offset a relatively competitive corporate tax structure.

The labor market is an area of weakness that causes numerous problems for entrepreneurs. Rigid regulations deter hiring and have contributed to the development of a large informal sector of small-scale, low-tech businesses. Meanwhile, deficiencies in the education system mean that skills gaps are a brake on slow growth and innovation in the entrepreneurial business sector. There are some big challenges ahead for Turkey — but also huge opportunities for the country to put growth on a firmer footing.

Many areas of the entrepreneurial ecosystem will need improvement if Turkey is to achieve its potential

Key facts

Overall Barometer ranking Quartile 4

Population 76 million

GNI per capita (PPP) US$17,500

GDP growth 2.2%

Exports as % GDP 23.7%Source: The World Bank, 2012

Selim ElhadefCountry Advisory Leader, Government & Public Sector Leader, Turkey, EY

Metin CanoğullarıStrategic Growth Markets Leader and Family Business Leader, Central and Southeast Europe, EY

1 “Financing SMEs and Entrepreneurs 2013: An OECD Scoreboard,” OECD website, oecd.org, accessed 12 June 2013.

2 | The power of three The power of three | 3

Weaknesses• Innovation is hampered by weak protection of intellectual

property rights.

• Start-up support may be increasing, but it is difficult to satisfy the Government criteria attached to it.

• The risk appetite of potential investors remains weak relative to more mature markets.

• Despite sustained double-digit annual research and development (R&D) growth between 2006 and 2011, spending remains well behind other G20 leaders.

Opportunities• Turkey is strategically located between key markets in

Europe, the Middle East, Russia and Central Asia.

• The economy has grown and evolved rapidly, and we see high potential for further growth across numerous industries.

• Entrepreneurship interest outstrips activity. If that energy can be harnessed, then there is room for significant expansion.

Threats• The education system isn’t delivering enough of the skills

needed by an innovative and dynamic entrepreneurial business sector.

• Geography is a benefit in terms of trading links, but Turkey borders significant areas of instability, particularly in Syria at present.

• Signs of a sharp slowdown from recent high rates of economic growth point to a more challenging environment for entrepreneurs.

Strengths• Rapid credit growth across the economy has seen bank

lending to entrepreneurial businesses rise sharply.

• Steady regulatory improvements are making it easier to set up and run a business in Turkey.

• Entrepreneurs report an increase in government programs to support start-up businesses.

SWOT analysis

Turkey’s entrepreneurs still face many hurdles when it comes to growing their businessesTurkey is making progress in improving several aspects of its entrepreneurial ecosystem. Red tape has been reduced, for example, making it easier to start a business. Bank lending is also on the rise, easing the funding shortages that have prevented many young businesses from growing. In several other areas, however, it is clear that Turkey lags behind the G20 average for entrepreneurship. Improved education, stronger innovation incentives and more flexible labor regulations would all help Turkey to boost the number of entrepreneurs who go on to create large and thriving enterprises.

Equal weight scores on five pillars

TurkeyRapid-growth G20 economies average

*annotate as 2007-2009 average

Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re

R&D spend as % of GDP

Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance

Initial public offering (IPO)

Private equity

Public private partnership

Business angels

Public aid/governmnet funding

Venture capital

Crowd funding

Funding instruments to which access improved/deteriorated

Greatly improved

Somewhat improved

Neither improved, nor deteriorated

Somewhat deteriorated

Greatly deteriorated

Don’t know or not applicable

0% 20% 40% 60% 80% 100%

Chambers of commerce

Entrepreneur clubs and associations

Entrepreneurial workshops/support meetings

Industry specific training programs

Educators

Government start-up/other programs

Small business administrations

Other, please specify

Teaming/mentor programs

Business incubators

University incubators

Corporate and non-governmental advisors

Extent to which environment has deteriorated

Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%

Public aid/Governmentfunding

Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding

% of respondents citing improvement in acces to funding




Educators

Industry-specific training programs




Business incubators




% of respondents citing improvement in coordinated support

Government programs providing education,funding and profile raising

Improve tolerance of business failure

Improve communication aroundentrepreneurs' success stories

Promotion of the role of entrepreneursin creating new jobs

Promotion of the high risk/high returndynamics of entrepreneurship

Promote the career opportunitiesoffered by entrepreneurshipG20 focus on and support of

entrepreneurship

Level of impact on entrepreneurship culture

A high impact

A medium impact

A low impact

Don't know or no opinion

Government start-up/other programs,including grants

Loan guarantees

Small business lending schemes


Small business administration support

Government tailored support

Turkey G20 average

Specific programs at universities/business schools

45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%

Turkey’s pillar scores compared to rapid-growth G20 economies average

Source: EY G20 Entrepreneurship Barometer 2013

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What to watch forHow the government is helping

Building up the entrepreneurship ecosystemMuch of Turkey’s economic activity is concentrated in a number of medium-technology manufacturing and service sectors, with large companies (such as automotive multinationals) playing a significant role. Entrepreneurship and entrepreneurial business-level innovation is less established, but there are a number of initiatives underway to help to address this.

Unsurprisingly, the Government has taken a leading role in developing the institutional framework for entrepreneurs, although this shouldn’t overshadow encouraging signs of the private sector getting involved in building the entrepreneurship ecosystem.

Since 2011, a new Ministry of Science, Industry and Technology has been responsible for promoting innovation. To this end, a National Science, Technology and Innovation Strategy covering the 2011–16 period aims to boost R&D spending, strengthen innovation and steer the economy toward high-tech sectors.2 This ought to help reduce the gap in spending on innovation between Turkey and its peers, as the country currently spends about half the G20 average on R&D.

The ministry’s Techno-Entrepreneurship Capital Support Program provides seed capital to young entrepreneurs with innovative businesses, while a Council for Entrepreneurship was set up in 2012 to help entrepreneurs access domestic and foreign financing.3

Efforts are also underway to boost innovation in the education sector. The Technology Transfer Support Program was established in 2011 to encourage entrepreneurial businesses to help commercialize the results of publicly funded research.4 There are also more than 40 technology parks based in Turkey’s universities and public research centers.5 These provide extensive tax breaks to 1,700 companies working in high-tech sectors including ICT, electronics, defense, telecommunications, biomedicine, advanced materials and environmental technology. Also in 2011, the Scientific and Technological Research Council of Turkey, in collaboration with the Higher Education Council, launched an index evaluating universities’ success in fostering entrepreneurship and innovation.6

Technology Transfer Support Program

This program aims to bridge the gap between R&D conducted in Turkey’s universities and its commercial application. It supports programs that bring together researchers and entrepreneurial businesses, with grants covering 75% of eligible costs up to a limit of €150,000 and for a maximum of 18 months.

Launch date: 2011Most relevant pillars: access to funding, entrepreneurship culture

R&D spend (% of GDP)




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%

Source: The World Bank, 2007–09 average

50technology parks provide tax incentives to 1,700 Turkish companies working in high-tech sectors

2 “National science, technology and innovation strategy, 2011-16,” The Scientific and Technological Research Council of Turkey website, tubitak.gov.tr, accessed 1 July 2013.

3 Ibid.4 Organisation for Economic Co-operation and Development,

Science and Innovation: Turkey (OECD, 2012).5 “Technoparks in Turkey: A source of technological

development,” European Commission website, iri.jrc.ec.europa.eu, accessed 3 June 2013.

6 “The Most Entrepreneurial 50 Universities of Turkey Are Announced,” The Scientific and Technological Research Council of Turkey website, tubitak.gov.tr, accessed 2 July 2013.


New Investment Incentives Regime

The Government has overhauled its system of investment incentives to encourage a shift toward high-tech, export-oriented activity. The new regime includes four programs: general, regional, large-scale and strategic. Within each program a range of incentives is available, drawn from the following: exemptions from VAT and customs duties, corporate tax reductions, income tax withholding allowance, social security premium support, interest support, and land allocation.

Launch date: 2012Most relevant pillars: access to funding, tax and regulation, coordinated support

The allowance allocated annually for the Techno-Entrepreneurship Capital Support Program has multiplied by five to more than €19.5m7

Key insight: things are looking up Halil Erdoğmuş, Founder, Ebebek, Turkey

Ebebek is an online distributor of baby products. Founder Halil Erdoğmuş says that while significant progress has been made, Turkey needs to do more to boost entrepreneurship, particularly when it comes to skills shortages.

“Attitudes to entrepreneurship in Turkey have changed in recent years. Before, starting a business meant opening a factory. But there has been a significant shift of perspective and a lot more interest in technology and online business opportunities, particularly among younger people.

“Government support for entrepreneurs has expanded significantly in the last five years. For example, the Ministry of Science, Industry and Technology supports certain sectors with loans and grants. And there are about 50 technology development centers in Turkey, which have proven very popular.

“Of course, there is more that the Government needs to do, particularly when it comes to education. The biggest bottleneck for most entrepreneurs is finding suitably qualified staff. There are skills shortages in key areas, and talent is overpriced.”

Emerging Enterprises Market SME Support Program

This program helps entrepreneurial businesses list their shares on the country’s stock exchange to tap into funds from the capital market. It reimburses the various costs associated with listing shares, including consulting fees, independent audit costs, admission fees for Capital Markets Board registration and the registration fee of the Central Registry Agency.

Launch date: 2010Most relevant pillar: access to funding

7 Republic of Turkey Small and Medium Enterprises Development Organization, Enhancing the Competitiveness of SMEs in Turkey: Country Report (SESRIC, October 2012).


Access to fundingPillar ranking: 17

Bank lending has increased rapidly

The supply of private sector credit has surged in recent years, although much of this ended up fueling consumer imports. Bank lending to entrepreneurial businesses almost doubled between 2007 and 2011, but their share of overall business lending dipped. This suggests that small businesses find it harder than their larger counterparts to secure financing. That problem seems particularly acute for Turkey’s young entrepreneurs: 75% of our respondents under the age of 40 believe it is difficult to access funding in Turkey.

Other aspects of the funding ecosystem are still underdeveloped. According to a World Economic Forum assessment of venture capital conditions internationally, Turkish entrepreneurs find it more difficult than their peers in other G20 rapid-growth countries to win support for innovative but risky businesses. In addition, the total scale of Turkish M&A deals as a percentage of GDP, is just over half the G20 average.

The amount of investment capital raised through stock market flotation is still lower than average. However, more positively, Turkey’s respondents to the EY G20 Entrepreneurship Barometer 2013 survey were much more likely than others to report an improvement in initial public offering (IPO) activity over the past three years. They also pointed to strong improvements in the availability of finance from their customers and suppliers, which points to the continuing significance of non-bank sources of entrepreneurial businesses funding in the country.

Access to funding Turkey G20 average Period

IPO market activity

IPO amount invested (% of GDP)

0.13 0.22 2009-11 average

Access to credit

Domestic credit to private sector (% of GDP)

37.7 99.0 2008-10 average

Venture capital availability (Scale of 1=impossible to 7=very easy)

2.4 3.0 2009-11 average

M&A deal value (% of GDP)

1.8 3.4 2010-12 average

Sources: The World Bank, Dealogic, IMF, World Economic Forum

75%of survey respondents from Turkey under the age of 40 find it hard to access funding

Proportion of entrepreneurs citing improvement in areas of access to funding over the past three years




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%


Domestic credit to the private sector stands at 37.7% of Turkish GDP compared to the G20 average of 99.0% (2008–10 average)


Entrepreneurship culturePillar ranking: 15

Turkey needs to encourage risk-taking and innovation

It has not been that long since Turkey made the rapid transition from an agricultural to an industrial economy. Much of Turkish industry is labor-intensive, and the country has significant progress to make before entrepreneurship and innovation are firmly established.

Turkish respondents to the Entrepreneurship Barometer survey said that the portrayal of entrepreneurship in the media was unusually positive. Elsewhere, however, more needs to be done. In Turkey, 82% of entrepreneurs would welcome more government programs to educate, fund and raise the profile of entrepreneurship. Business failure is often perceived negatively, and being an entrepreneur is seen as a less valid career choice on average than in the G20’s rapid-growth countries. As such, improving tolerance of business failure is also seen as an important step to creating an entrepreneurial culture, according to 78% of entrepreneurs from Turkey.

Turkey’s share of public spending devoted to R&D is around half the G20 average, although this is in line with other rapid-growth economies. The number of scientific and techincal journal articles may have risen sharply over the past 10 years, however, according to the OECD, Turkish R&D is poorly integrated with international research networks.8 A low 7% of Turkish patent applications involve international collaboration. If local ventures are going to move into more sophisticated or high-tech sectors, greater encouragement will be needed from both the private and public sectors on increased engagement.

Entrepreneurship culture

Turkey G20 average Period

R&D spending (% of GDP) 0.8 1.6 2007-09 average

Scientific and technical journal articles (per 10,000 people)

1.2 3.3 2007-09 average

Cost of resolving insolvency (% of estate)

15.0 11.8 2010-12 average

Source: The World Bank

82%of entrepreneurs from Turkey would welcome more government programs to educate, fund and raise the profile of entrepreneurship

Entrepreneurs’ view as to which factors will have the highest impact on entrepreneurship culture




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%


Only 7% of Turkish patent applications involve international collaboration

8 Organisation for Economic Co-operation and Development, Science and Innovation: Turkey, 2012.


Tax and regulationPillar ranking: 11

Setting up a business is easier, but red tape restricts hiring

Turkey’s outlook on tax and regulation is looking a lot more positive. There is still a long way to go, but local respondents to the survey were relatively optimistic about recent improvements to regulations, taxes and innovation incentives, with a majority seeing gains in these and other areas.

The survey demonstrates Turkey’s impressive progress in making it easier to start a business. According to The World Bank, it takes six days to start a business in the country. This is well below the average figure of 22 days for the rest of the G20 countries — although anecdotal evidence suggests that Turkish red tape can still be challenging.

Labor market rigidities are a significant problem. At 95 weeks’ wages, the cost of firing an employee is almost twice the G20 average. This encourages informal business activity, which in turn holds back Turkey’s entrepreneurial potential because it limits access to finance, innovation networks and skilled labor. This should be a clear area for the Government to focus its attention, especially in order to support ventures at an early stage.

Turkey has a relatively favorable direct tax structure, with a more competitive tax rate than the average in either the G20’s mature or rapid-growth countries. Indeed, the total tax rate has trended down over the past seven years — an encouraging sign of progress here. The indirect tax rate is more prohibitive, in part because it is easier for the state to capture indirect taxes than direct ones from the informal sector.

Tax and regulation Turkey G20 average Period

Ease of starting a business

Start-up procedures (number) 6.0 7.6 2010-12 average

Time to start a business (days) 6 22 2010-12 average

Cost to start a business (% of income per capita) 13.0 9.4 2010-12 average

Paid-in minimum capital to start a business (% of income per capita) 8.6 17.9 2010-12 average

Business regulations

Time spent on tax issues (hours) 223 347 2010-12 average

Labor market rigidity

Cost of firing (weeks of wages) 95 50 2007-09 average

Labor and tax contributions (% of commercial profits) 18.8 24.0 2012

Taxation

Total tax rate (taxes and mandatory contributions borne by the business expressed as a share of commercial profit)

41.2 49.7 2012

Indirect tax rate (taxes collected by the company and remitted to the tax authorities)

18.0 14.2 2012


It takes only six days to start a business in Turkey compared to the G20 average of 22 (2010–12 average)

It cost an average of 95 weeks to fire a worker in Turkey, nearly double the G20 average of 50 (2007–09 average)


Education and trainingPillar ranking: 17

Specific education would help boost entrepreneurship

The weakness of Turkey’s educational foundations is a clear barrier to the development of an innovative, high-skills entrepreneurial business sector. Public spending on education is below the G20 average, and the results are most clearly visible at the secondary level. Enrollment rates are below average, and Turkey’s children compare poorly with their peers. In the OECD’s 2009 rankings for reading, mathematics and science at age 15, Turkey ranked 32nd out of 34 countries. More than 40% of students had not reached a basic level of competence in mathematics.9

Nevertheless, there are signs of progress at the tertiary level, with an enrollment rate above the average for rapid-growth countries and a steady increase in the proportion of the labor force with education at this level over the last 10 years.10

Another very positive trend is that entrepreneurship is increasingly prominent on university teaching schedules. A number of private universities include classes on entrepreneurship as part of their MBA programs, while 2012 saw the introduction of the first masters program focusing on entrepreneurship.11 It would be hugely beneficial if this trend were to continue: 9 out of 10 entrepreneurs surveyed from Turkey say specific education is needed to support entrepreneurs.

Education and training Turkey G20 average Period

Public spending on education (% of GDP) 3.5 4.8 2008-10 average

Secondary school enrollment (total enrollment expressed as a percentage of the population of official secondary education age)

81.5 95.0 2008-10 average

Tertiary enrollment (total enrollment expressed as a percentage of the total population of the five-year age group following on from secondary school leaving)

42.7 53.5 2008-10 average


40%of Turkish 15-year-olds do not reach OECD basic competence in mathematics

Proportion of entrepreneurs citing improvements in specific programs at universities/business schools over the past three years




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%


Turkey’s children compare poorly with their peers, with enrollment rates sitting below the G20 average

9 N Blanchy and A Şaşmaz, “PISA 2009: Where does Turkey stand?” Istanbul: Sabanci University (Education Reform Initiative, 2011).

10 “Labor force with tertiary education” (% of total),” The World Bank website, data.worldbank.org, accessed 26 June 2013.

11 “About entrepreneurship in Turkey”, The European Forum for Entrepreneurship Research website, efer.eu, accessed 31 June 2013.

More than


More support needed for business incubators Across the G20, business incubators are seen by entrepreneurs as a key means of support in driving long-term entrepreneurial growth. Unfortunately, this is an area where Turkish respondents to the survey have seen the least overall improvement. On a more positive note, some large Turkish companies are sponsoring early-stage business acceleration programs, but clearly more could be done to bolster and support such efforts.

When asked what kind of tailored government initiatives would be most effective in boosting entrepreneurship locally, entrepreneurs highlighted start-up programs most of all, a category covering cash grants, equity financing, debt financing, tax incentives, as well as advice, networking or mentorship.

Overall, Turkey ranks 7th out of the G20 countries on the coordinated support pillar, in line with a trend for rapid-growth economies to outperform mature economies in this area. This is largely because rankings on this pillar reflect local entrepreneurs’ overall sentiment, rather than the level they have reached. Rapid-growth market countries such as Turkey tend to be starting from a lower base, and so have more scope for improvement.

Coordinated supportPillar ranking: 7

47%of entrepreneurs surveyed from Turkey believe access to government start-up programs has improved in the past three years

Entrepreneurs’ view on the top five factors of Government-tailored support that would be most effective




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%


Proportion of entrepreneurs citing improvement in areas of coordinated support




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%


55% of entrepreneurs in Turkey plan to make use of government start-up programs in the coming three years, ahead of all other forms of support


Rankings table

Ranking Access to funding

Score Entrepreneurship culture

Score Tax and regulation

Score Education and training

Score Coordinated support

Score

1 United States 7.12 United States 7.67 Saudi Arabia 6.40 France 6.58 Russia 6.23

2 United Kingdom 6.86 South Korea 7.53 Canada 6.34 Australia 6.53 Mexico 5.89

3 China 6.75 Canada 7.45 South Korea 6.34 United States 6.50 Brazil 5.87

4 Canada 6.62 Japan 7.28 United Kingdom 6.19 South Korea 6.40 Indonesia 5.84

5 Australia 6.48 Australia 7.18 South Africa 6.10 EU 6.25 India 5.76

6 South Africa 5.95 United Kingdom 7.00 Japan 6.07 United Kingdom 5.98 China 5.75

7 Japan 5.81 Germany 6.88 Germany 5.84 Germany 5.89 Turkey 5.66

8 South Korea 5.75 EU 6.07 Australia 5.75 Argentina 5.85 South Africa 5.65

9 Brazil 5.67 France 5.68 Russia 5.65 Canada 5.81 Argentina 5.64

10 Indonesia 5.53 Russia 5.05 EU 5.48 Brazil 5.78 Germany 5.53

11 India 5.48 India 4.95 Turkey 5.45 South Africa 5.67 France 5.41

12 EU 5.41 Brazil 4.88 Indonesia 5.38 Saudi Arabia 5.66 Saudi Arabia 5.39

13 Saudi Arabia 5.25 Italy 4.67 United States 5.33 Italy 5.47 EU 5.37

14 Germany 5.23 South Africa 4.33 Mexico 5.21 Russia 5.46 South Korea 5.36

15 Russia 5.04 Turkey 4.30 France 5.12 Mexico 5.32 Australia 5.31

16 France 4.74 Argentina 4.06 China 5.07 Japan 4.72 Canada 5.29

17 Turkey 4.57 Mexico 3.96 Brazil 4.83 Turkey 4.39 United Kingdom 5.19

18 Mexico 4.42 China 3.88 Italy 4.76 China 4.35 Japan 5.04

19 Italy 4.03 Indonesia 3.80 India 4.39 Indonesia 3.88 Italy 4.97

20 Argentina 3.27 Saudi Arabia 3.38 Argentina 4.31 India 3.49 United States 4.85




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re


Saud

i Ara

bia

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%




Educatio

n and

training

Coordinated support

Access

to funding

Tax and re

gulation

Entrepreneursh

ip

cultu

re

R&D spend as % of GDPSa

udi A

rabi

a

Japa

n

Sout

h Ko

rea

Turk

ey

Indi

a

Arge

ntin

a

Mex

ico

Indo

nesi

a

US

Germ

any

Aust

ralia

Fran

ceEU

Cana

daUK

Chin

a

Italy

Russ

ia

Braz

il

Sout

h Af

rica

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

G20 average1.6

Customers

Suppliers

Bank loans

Family and friends

Microfinance


Private equity


Business angels


Venture capital

Crowd funding


Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%





Educators





Business incubators




Greatly improved

Somewhat improved





0% 20% 40% 60% 80% 100%


Bank loans

Suppliers

Customers

Family and friends

Microfinance

Business angels

Private equity

Venture capital



Crowdfunding





Educators





Business incubators











entrepreneurship


A high impact

A medium impact

A low impact



Loan guarantees





Turkey G20 average


45%

50%

55%

01234567

57%

56%

56%

56%

46%

45%

42%

40%

39%

36%

36%

29%

63%

62%

61%

57%

57%

55%

46%

43%

30%

14%

13%

47%

24%

21%

13%

12%

8%

24% 45% 21% 10%

26% 50% 19% 5%

27% 48% 21% 4%

29% 51% 14% 6%

41% 38% 16% 5%

43% 35% 16% 6%

53% 29% 11% 7%

About the EY Entrepreneurship Barometer modelThe EY G20 Entrepreneurship Barometer 2013 introduces a model for scoring countries across the five pillars of entrepreneurship.12 The purpose of this model is to help identify areas of relative strength by country and where opportunities for improvement lie.

The model is composed of qualitative information (from our survey of more than 1,500 entrepreneurs) and quantitative data based upon entrepreneurial conditions across the G20 economies. For each pillar, excluding coordinated support, this information is

weighted 50-50 between qualitative and quantitative inputs. For coordinated support, given a lack of quantitative indicators, this is based solely upon the survey responses.

The advantage of integrating both the survey results and quantitative data is the ability to provide an assessment of the current level and the trends in a G20 entrepreneurial ecosystem based upon local sentiment. To this end, official statistics (for example, on the average time taken to start a business or the tax burden) provide a baseline for each member country.

Survey information is an important complement to the baseline picture these statistics provide. Entrepreneurs’ feedback on the pace of improvement or deterioration in conditions in their country’s entrepreneurship ecosystem is incorporated in the model alongside the hard statistics.

Full details of the Barometer’s methodology can be found on page 66 in the main EY G20 Entrepreneurship Barometer 2013 report.

12 Note: As per the G20 membership, this list comprises 19 individual countries and also the European Union (EU), as an additional member. Our rankings show the performance of each country, along with an aggregate performance for the 27 EU Member States.


About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

About EY’s Strategic Growth Markets NetworkEY’s worldwide Strategic Growth Markets Network is dedicated to serving the changing needs of high-growth companies. For more than 30 years, we’ve helped many of the world’s most dynamic and ambitious companies grow into market leaders. Whether working with international mid-cap companies or early-stage venture-backed businesses, our professionals draw upon their extensive experience, insight and global resources to help your business succeed. ey.com/sgm

© 2013 EYGM Limited.All Rights Reserved.

EYG no. CY0588

ED 0715

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

The opinions of third parties set out in this publication are not necessarily the opinions of the global EY organization or its member firms. Moreover, they should be viewed in the context of the time they were expressed.

ey.com

Contacts

Metin CanoğullarıStrategic Growth Markets Leader and Family Business Leader, Central and Southeast Europe, EY+90 212 368 53 [email protected]

Selim ElhadefCountry Advisory Leader, Government & Public Sector Leader, Turkey, EY+90 212 368 51 [email protected]

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