Online Crowdfunding in Turkey

Bachelor Thesis, 2014

38 Pages, Grade: 1.33


Table of Contents


1. Introduction

2. The Crowdfunding Phenomenon
2.1 Definition of Crowdfunding:
2.2 The Typology of Actors in Crowdfunding:
2.3 Main Drivers of Success: Crowdfunding

3. Profiling Turkey: Economy & Entrepreneurship
3.1 Entrepreneurship in Turkey
3.2 Analyzing Turkish Entrepreneurship with the Legatum Prosperity Index
3.3 Turkish Entrepreneurship in Comparison to G-20

4. Online Crowdfunding in Turkey
4.1 Turkish Crowdfunding Platforms in a Comparative Perspective: Tracing the Babysteps
4.2 Embracability of Crowdfunding in Turkey
4.3 State of Crowdfunding Organs in Turkey: A Lock & Key Assessment of Turkey and Crowdfunding

5. Framework: Three Pillars for the Creation of a Consistent Turkish Crowdfunding Culture

6. Discussion of the Framework:

7. Conclusion




This thesis attempts to shed some light on the international applicability on globally rising crowdfunding phenomenon by placing it into the context of Turkish entrepreneurship. Approaching from an entrepreneurial finance perspective, this paper aims to contribute to the babystepping crowdfunding research and to add value to the Turkish entrepreneurship. In an effort to conduct a fruitful basis regarding the main research question of how crowdfunding may contribute to the development of Turkish entrepreneurship, this paper first reviews the available literature and depicts the crowdfunding phenomenon with its relevant definitions, dynamics and dimensions. Secondly, it lays the fundamentals of Turkish entrepreneurship and employs various measures to exhibit the strengths and weaknesses of the Turkish entrepreneurial scene. Thirdly, it incorporates a global comparison of American, German and Turkish crowdfunding markets. Following this multinational comparison, a new framework is created with respect to the local profile of Turkish entrepreneurship. This framework is then utilized in order to conclude the assessments regarding the embracability of online crowdfunding in Turkey and to make recommendations for the development of Turkish crowdfunding.

1. Introduction

The internet is converting every aspect of human life from the ways people socialize to the ways people capitalize and many more. Entrepreneurship is no exception. With the exponential rise of internet penetration, social networks, and transformation of distinct channels, means of innovation and new ideas have become more digital than ever. Online crowdfunding, in this sense, is a great example of how the online trends are operationalized within the scope of entrepreneurship. The rise of crowdfunding platforms like and created various fundraising and market discovery opportunities to people with great ideas. This growing online trend is getting more and more attention from the entrepreneurial environment and converting the ways great products, non-profit social actions, art and designs are produced. Originated from the United States of America, many questions arise in terms of the international applicability of crowdfunding platforms in different countries and entrepreneurship ecosystems worldwide.

In this case, Turkey with its emerging economy and growing scope will be used as a case to evaluate the benefits of crowdfunding for the development of entrepreneurship while shedding light on the issues about the international applicability of the online crowdfunding. This paper will first provide comprehensive background regarding the crowdfunding phenomenon and the drivers of success in line with available literature about the topic. This will be mainly executed by the conceptualization of the crowdfunding method from the perspective of entrepreneurial finance. Secondly, the economic and entrepreneurial profile of Turkey, the focus case of this paper, will be drawn with respect to the entrepreneurship policies and the Legatum Prosperity Index. Then, inspired by the available literature and methodologies employed by other scholars, this basis will be further developed with a brief comparison of aforementioned American online crowdfunding websites and babystepping Turkish online crowdfunding platforms. After portraying the existing state of crowdfunding in Turkey, the paper will then bring the European Crowdfunding Framework into picture to complete the basis for a healthy discussion for the main research question of how crowdfunding may contribute to the development of Turkish entrepreneurship and what are the necessary steps that need to be taken for a healthy Turkish crowdfunding industry. Finally, a conclusion will then be formulated in accordance with the outcomes of the discussion.

2. The Crowdfunding Phenomenon

2.1 Definition of Crowdfunding:

As a quite recent trend, the epistemological and scholarly backgrounds of crowdfunding are in their babysteps. Giudici et al. (2012) confirm this in their phenomenon-based entrepreneurial finance research about crowdfunding by stating that the crowdfunding has fulfilled the embryonic knowledge state and knowledge about the crowdfunding phenomenon is currently in a growth phase. Parallel to this, the definitions provided to clarify the crowdfunding phenomenon are not that many. Crowdfunding is a term disentangled from the broader concept of crowdsourcing (Hemer 2011, Evers 2012 and Wechsler 2013). Belleflamme et al. (2011) define this phenomenon as: "Crowdfunding involves an open call, essentially through the internet, for the provision of financial resources either in form of donations (without rewards) or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes".

Placing the concept into a simpler context, Larralde and Schwienbacher (2010) define crowdfunding as "financing of a project or a venture by a group of individuals instead of professional parties (like, for instance, banks, venture capitalists or business angels)." Belleflamme et al. (2011) further simplify the concept by underlining the main idea. The main idea is that funds do not come from a small group of professional investors, but from a “crowd” whose each member contributes a small amount of money. The definitional discussions are not part of the scope of this paper. Nevertheless, the given definitions are particularly useful to form a fundamental understanding of the subject matter.

2.2 The Typology of Actors in Crowdfunding:

The definitional background provided above and the way crowdfunding system functions can be better understood with the aid of following diagram.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Crowdfunding actors: Initiators, Crowd and the crowdfunding platform Source: Wechsler, 2013

There are two core actors of the crowdfunding processes. "First, there are the initiators who propose a project, business model or product, and who also seek capital to fund their idea. Then there is the large audience, the crowd that decides to financially support these projects, bearing a risk and expecting a certain payoff" (Wechsler, 2013). The crowdfunding platforms (CFPs) serve as the bridge among these two actors. Initiators usually create publicity for their campaigns in CFPs by using their social capital, social networks, relevant blogs and reaching out to those communities relevant to their product/project ideas. Consequently, the initiators are subject to several financial and non-financial benefits: validation of product features, market segmentation, price (early discrimination) and demand, pre-sales, customer feedback as well as word of mouth marketing (Evers, 2012). Supporters who "back" these projects, on the other hand, eventually receive gifts in accordance with their level of contributions. In this sense, a typical progress curve for a successful crowdfunding project can be observed in Appendix 1.

The study by Larralde and Schwienbacher (2010) indicates that the global crowdfunding market is still very young, as most of the projects took place in the last 3-4 years, with about 60% based in English speaking countries. As it is argued by Mollick (2013), it would be fair to claim that this market has grown significantly and became a global phenomenon since the conclusion of Lambert and Schwienbacher (2010). As it can be interpreted from this typology and its growth, the whole crowdfunding world can be seen as one large growing community of supporters, initiators, CFPs, social media (online and offline) platforms, blogs and individuals surrounding these elements.

2.3 Main Drivers of Success: Crowdfunding

Agrawal et al. (2010) count three features in particular for the success of crowdfunding: (1) the capital shortages due to the recent global crisis which affect the amount of funding available for entrepreneurs; (2) the expansion of Web 2.0 technologies which gave a rise to digital journalism and advanced CFPs in the mean time; (3) the success of companion crowdsourcing phenomenon. In addition, the success of crowdfunding also lays in the differences between crowdfunding and other more established and popular forms of fundraising. Giudici et al. (2011) provide this comparison in a visual form (Appendix 2). De Buysere et al. (2012), on the other hand, cite the better funding rate discovery as the unique selling point of the whole crowdfunding phenomenon. Nevertheless, as it is also argued by Giudici et al. (2011), these factors explain the success of crowdfunding from a macro perspective but do not provide an understanding for the drivers of success for entrepreneurial projects.

There are various ways of conceptualizing the drivers of successful crowdfunding projects. Geri Stengel (2012) from lists 4 tips for success: (1) Prime the pump (truth and trust); (2) Build your network before you need it; (3) Tell an engaging story; (4) Offer something tangible. Stengel offers a refined and an applied account of various other drivers identified by different scholars.

As an "early-bird" of crowdfunding literature, Michael Harms (2007) conducted an experiment regarding the intentions to participate in a crowdfunding project and classified these intentions under 5-value categories: financial, functional, social, epistemic and emotional (Appendix 3). According to Harms (2007), a successful crowdfunding projects needs to be able to fulfill and flourish these value categories.

Agrawal et al. (2010), on the other hand, put the emphasis on physical distance (between initiator and crowd) from a more social capital-based point of view. Gerber et al. (2013) point out that, as a result of a successful project, creators receive funds, validate their markets, establish relationships, replicate success experiences of others and expand awareness about their project through social media whereas funders receive rewards, support creators and causes and engage in a community. In line with Harms (2007), Gerber et al. (2013) also claim that a successful project should be able to complement this "win-win" chain.

Building upon these, there are many other drivers of success identified by scholars and experts in the field. Wechsler (2013) highlights the importance of implementing an appropriate pledge scheme. Corl (2012) encourages initiators to use social media channels effectively in order to increase credibility and create a community. Moreover, Corl (2012) also stretches the importance of providing references (or press/blog coverage) and personal "storytelling" which should ideally be in a form of a video or well-designed graphics. Similarly, Mollick (2013) and Hemer (2013) pinpoint the importance of factors such as using digital journalism and social media, having the right pledge scheme, community management, appealing design and story and credibility. In a nutshell, all of these factors can be considered as important objectives that need to be fulfilled in order to perform a successful crowdfunding campaign.

3. Profiling Turkey: Economy & Entrepreneurship

Turkey, as an historical intercontinental bridge, possesses a mosaic of Eastern and Western approaches almost in all the aspects of social, economic, political and cultural dimensions. This uniqueness renders the country a valuable case study for any globally rising phenomenon. In this sense, after the initial portrayal of Turkish economy and the Turkish entrepreneurship ecosystem, a discussion about the capabilities associated with leveraging crowdfunding in Turkey will be conducted.

As a member of MIST (Mexico, Indonesia, South Korea and Turkey) group, a term agglomerated by Goldman Sachs economist Jim O'Neill, Turkey has a significantly (and relative to the worldwide growth) growing economy (Roughneen, 2011). As the 16th largest economy of the world, Turkey is also a colorful prospect for the further growth of businesses (Bayrasli, 2012). It is also on its way of becoming a hub for multinational companies and foundations as it benefits from its geo-political conjuncture.

Naturally, the growth of Turkish entrepreneurship goes hand-in hand with the overall development of the country and improvement of the business culture. In fact, Bayrasli (2012) confirms this symbiosis further and describes Turkey as a tantalizing market for entrepreneurship. "It is strategically located between key markets in Europe, the Middle East, Russia and Central Asia. It has a young and educated workforce. Nearly half of the country’s 78 million people are on-line, giving it the fifth largest Internet audience in Europe. The Turkish economy, the 16th largest in the world, has grown so fast that the average Turk now earns twice as much (in terms of GDP per capita) as he or she did just a decade ago. The country’s governance, though managed by an authoritarian-prone prime minister, is reliable and steady" (Bayrasli, 2012). Bayrasli's macro-view is insightful for tracing the general relationship between the Turkish entrepreneurship and the economy. Nevertheless, analyzing Turkish Entrepreneurship from a globally comparative perspective may be more helpful in order to create a solid basis for the discussion of online crowdfunding in Turkey.

3.1 Entrepreneurship in Turkey

The President of American Public Forum Institute, Jonathan Ortmans (2012), describes Turkey as a country with huge entrepreneurial potential. He elaborates further on his reasoning by pinpointing various strengths of the country; "Turkey has a diversified industrial base, a relatively stable political and economic environment, a critical mass of willing early adopters, a considerable talent pool, a strong domestic market and underserved neighboring markets " Ortmans (2012). However, the country is rather far away from actualizing its entrepreneurial potential. "Yet, currently only 6 out of 100 people are entrepreneurs – a very low rate given the country’s level of development" (Ortmans, 2012).

This ratio outlines the shortfalls of Turkish entrepreneurship and illustrates the untouchedness of the ecosystem. One may surely perceive this status of the ecosystem as an opportunity to try new entrepreneurial methods. Nevertheless, this immature state of Turkish Entrepreneurship can only be better understood when it is placed into global context.

3.2 Analyzing Turkish Entrepreneurship with the Legatum Prosperity Index

The Legatum Prosperity Index is an annual ranking of 142 countries developed by the Legatum Institute. The ranking is based on a variety of factors including wealth, economic growth and quality of life. The index provides a good understanding of worldwide social capital stocks, trust levels, education, health and many other dimensions. One of these dimensions is "Entrepreneurship & Opportunity" which provides crucial information to understand the positioning of the Turkish entrepreneurship ecosystem in a global frame.


Excerpt out of 38 pages


Online Crowdfunding in Turkey
Jacobs University Bremen gGmbH
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ISBN (Book)
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Turkey, Entrepreneurship, Fundraising, Online Crowdfunding
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Kaan Akkanat (Author), 2014, Online Crowdfunding in Turkey, Munich, GRIN Verlag,


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