The global crisis we are currently experiencing once again proves how important a strong economy is. The research conducted by the Global Entrepreneurship Monitor (GEM) has revealed a statistically significant positive relationship between national economic growth and the level of entrepreneurship in the country. The importance of entrepreneurial activities for national economies is increasing every day, and giving the necessary importance to entrepreneurship activities is of great significance for the country's development.
Tech entrepreneurs are the key force driving economic growth. Technology entrepreneurship is a tool that facilitates prosperity for individuals, firms, regions, and nations. Therefore, the studies conducted in the field of technology entrepreneurship provide significant functions beyond intellectual curiosity (Bailetti, 2012, p.5). Even within the same country, the reason some regions are ahead of others lies in the successful utilization of new technologies and the encouragement of technological entrepreneurship (Roja and Năstase, 2014, p.108).
After a decade in digital innovation, deep technologies, which will be at the center of the next wave of industrial and information revolutions, are what both companies and investors seek as the "next big thing." (The Dawn of the Deep Tech Ecosystem, 2019, p.7).
As one of the major economies in the transition phase to an innovation-based economic development stage, it is always an element that should be kept in mind when discussing entrepreneurship and businesses in Turkey. Transitioning to an innovation-based stage can be seen as an indicator that the country will need different types of ventures and entrepreneurs than in the past. The size of the economy is an element that should be considered in determining the strategies and actions that will enhance the country’s entrepreneurial potential. In this context, the topic of innovative entrepreneurship has been treated as a separate intervention area and has also been evaluated as a topic that intersects with all intervention areas. In this framework, the support for rapidly growing and globally born companies should be prioritized.
The Investment "World" of Deep Technology Entrepreneurship
In the report titled “The Dawn of the Deep Tech Ecosystem” published in 2019 by Boston Consulting Group and Hello Tomorrow, it is observed that the total global private investment in deep technology categories increased by more than 20% per year, reaching $18 billion from 2015 to 2018. Investors and companies have already begun to pivot towards deep technology. In 2016, the total financing in biotechnology reached $7.9 billion compared to $1.7 billion in 2011. Capital financing for augmented and virtual reality, space, and drone companies reached $3.5 billion in 2015, compared to $104 million in 2011.
The US and China accounted for approximately 81% of global private investments in deep technology companies from 2015 to 2018, with each country receiving about $32.8 billion and $14.6 billion in investment respectively.
China has become one of the largest driving forces in deep technology investment by providing annual funding that increased by more than 80% from 2015 to 2018. Investments in US companies increased by 10% during this period.
According to the same report, there are approximately 8,700 deep technology companies (those benefiting from technological breakthroughs that require intensive R&D) across nearly 70 markets.
Deep Technology Entrepreneurship in Turkey
According to TÜİK data and research conducted, the deficit in the production and export of high-tech products in the last 5 years has reached $107.6 million. In 2018, Turkey broke export records in the Republic's history with $168 billion, while the share of high-tech products in exports decreased to 3.3%, the lowest level in the last 5 years.
The share of high-tech products in exports was 3.4% in 2014, 3.6% in 2015, 3.5% in 2016, 3.4% in 2017, and 3.3% in 2018.
On the other hand, while the number of ventures and entrepreneurs is increasing every day in Turkey, because deep technology entrepreneurs, academicians, and scientists do not receive the necessary importance and support compared to global standards, we cannot speak of the same increase in success and investment rates for entrepreneurs operating in deep technology fields.
According to data published by TÜİK in 2016, there are 3.65 million ventures. A quarter of the entrepreneurs in Turkey, totaling 883,000, are located in Istanbul.
According to the figures from Startups.watch, among the 440 ventures that received investment in Turkey from 2010 to 2018, only 33 of them are deep technology ventures. While total venture investments amount to $607,343,347, only $38,597,600 covers deep technology venture investments.
When examining the Turkish entrepreneurship ecosystem, particularly deep technology and high-tech ventures, it became apparent that the situation is not very encouraging concerning high-tech manufacturing. According to the official statistics presented in the Eleventh Five-Year Plan, the share of high-tech products in industrial exports is stated as 3.2%. It is targeted to raise this ratio to 5.8% by 2023.
However, in the Tenth Plan, it was also aimed to increase this ratio from 3.7% in 2012 to 5.5%, but there has been no improvement over the past 7 years. According to official statistics, this ratio was well below the global average of 24%. This ratio was higher in the majority of developing countries than in Turkey.
Turkey had made progress in the export of medium-high technology products over the last 10 years, but without a breakthrough in high technology, it would be challenging to permanently reduce the current account deficit and achieve a stable growth environment.
To improve all these issues and support high-tech ventures, the Eleventh Presidential Development Plan has decided to improve and support the following issues.
311.3. An institutional capacity and system will be created to ensure that local firms with special high technological skills are monitored based on their needs, and policies regarding the measures to be taken in terms of economic security will be developed.
327. Incentive programs will be implemented to increase international direct investments in the production of high-tech containing products in Turkey.
327.2 The matching of domestic companies that operate in high-tech sectors and have high growth potential with international investors will be facilitated, and investments based on technology transfer for these companies will be supported.
351.1 Within the framework of the Industrial Innovation Network Mechanism Program, special attention will be given to priority sectors, and the high-tech product development and commercialization of company consortia will be supported.
364. Necessary ecosystems will be created in our country regarding R&D, production, qualified human resources, and regulations, especially in areas requiring high technology such as biotechnological drugs.
Additionally, the Ministry of Industry and Technology has launched an intensive program for deep technology ventures in the “Technology-Oriented Industrial Initiative” Program aimed at producing high value-added products with local resources and capabilities. The relevant main headings and topics are as follows;
The share of medium and high-tech products in exports was 36.4% in 2018, with a 3.2% growth. The goal for 2023 is to reach a level of 44.2%, achieving a 5.8% growth target.
The size of technology-based investments was around $60 million in 2018, while it is targeted to reach 5 billion TL by 2023.
The number of Turkish ventures exceeding a value of $1 billion is targeted to be 10 Turcorns by 2023.
The share of medium and high-tech products in exports will increase from 39% to 50%.
In summary; although we are starting from behind, we are in a concentrated effort and endeavor within the country. We have great ventures and entrepreneurs. To become more successful; we need to think deeply, using all the dynamics of science, and work tirelessly with contemporary methods. It is up to us to create deep technology ventures shaped by the dynamics of management science. With the wish of being more in the foreground with great ventures by integrating more with the world and introducing ourselves better..
Gürol ÜZENÇ - Senior Incubation Manager, Cube Incubation
SOURCES
Bailetti, T. (2012). Technology entrepreneurship: Overview, definition, and distinctive aspects. Technology Innovation Management Review, February 2012, 5-12.
Boston Consulting Group and Hello Tomorrow (2019). The Dawn of the Deep Tech Ecosystem.
Boston Consulting Group and Hello Tomorrow (2018). From Tech to Deep Tech.
Isenberg, D. (2008). "The Global Entrepreneur - A New Breed of Entrepreneur is Thinking Across Borders From One Day", Harvard Business Review, pp. 107-111.
Roja, A. and Năstase, M. (2014). Technology entrepreneurship and entrepreneurial strategies. Proceedings of the 8th International Management Conference “Management Challenges For Sustainable Development, Bucharest, Romania, 107-117.
