“A Multidisciplinary Approach for Startup Success: an Overview of Boulder City and Istanbul”
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“A Multidisciplinary Approach for Startup Success: An Overview of Boulder City and Istanbul” Master Thesis LL.M. International Business Law Batuhan Türkeç ANR 915019 Supervisor: Prof. Erik P.M. Vermeulen 12.06.2017 A Multidisciplinary Approach for Startup Success: An Overview of Boulder City and Istanbul ______________________________________________________________________________ Abstract In the innovation-driven world, startup companies are seen as a solution to the progress of economic development. In order to create an entrepreneurial environment and successful startup companies; it is substantial to understand dynamics of entrepreneurship and startup ecosystems that have developed in the process of time. All over the world, there are some communities which have managed to establish a thriving ecosystem and by that way startup companies achieved success in those regions. One of the successful examples that can be shown is Boulder City in the United States. Developing countries and provinces, such as Turkey and specifically Istanbul, should see advanced ecosystems as an example to foster the entrepreneurship. The question that should be asked is how Boulder become successful in the context of achieving success in startup companies and ecosystem, and what are the other people missing in the Istanbul’s startup ecosystem. Consequently, the main purpose of presented study is to identify the factors that lead startups to success and make suggestions for specific emerging city. This paper revealed the three main challenges against achieving success in startup companies in Turkish startup ecosystem as the deficiency of supportive elements, the hardness of reaching the capital and failure to establish functional boards. 2 A Multidisciplinary Approach for Startup Success: An Overview of Boulder City and Istanbul ______________________________________________________________________________ Table of Contents 1 Introduction .......................................................................................................................4 2 Boulder ...............................................................................................................................6 3 Istanbul ............................................................................................................................. 10 4 Supportive Elements for Thriving Startup Ecosystem ................................................... 13 4.1 Governments ............................................................................................................... 13 4.1.1 Difference between SMEs and Startups ................................................................ 13 4.1.2 Supports of Central Administration ...................................................................... 15 4.1.3 Supports of Local Administration ......................................................................... 20 4.2 Universities ................................................................................................................. 24 4.2.1 Law Faculties and Clinics .................................................................................... 25 4.2.2 Technology Transfer Offices ................................................................................ 26 4.3 Accelerators ................................................................................................................ 28 5 Board as a Game Changer ............................................................................................... 34 5.1 Board of Directors in Turkish Commercial Code ......................................................... 38 5.2 Assessment of the Effect of Board Structure on Capital Raising .................................. 40 6 Raising the Capital ........................................................................................................... 44 6.1 Crowdfunding ............................................................................................................. 45 7 Conclusion ........................................................................................................................ 54 References................................................................................................................................ 59 3 A Multidisciplinary Approach for Startup Success: An Overview of Boulder City and Istanbul ______________________________________________________________________________ 1 Introduction In the rapidly-developing world, entrepreneurship is getting a higher significance for the progress of economies. Companies’ life cycles are getting shorter than the old times and as a result of that, large corporations struggling to achieve creativeness and value creating. Startup companies could be the solution for this problem. Recently, all over the world, lawmakers, decision mechanisms, and entrepreneurs aware of the significance effect of the startup companies. To get a better understanding, first entrepreneurship should be defined. For doing that, it is critical to see that Schumpeter brought innovation into the entrepreneurship definition (Schumpeter, 1965). After the Schumpeter, Hisrich has developed the definition of entrepreneurship, based on the innovation, and brought it closer to the meaning that used today. He determined the entrepreneur as “someone who demonstrates initiative and creative thinking, is able to organize social and economic mechanisms to turn resources and situations to practical account, and accepts risk and failure” (Hisrich, 1990). After that, in a similar manner, Bolton and Thompson stated, “entrepreneur is a person who habitually creates and innovates to build something of recognized value around perceived value” (Bolton & Thompson, 2000), (Eroğlu & Pıçak, 2011). In the light of those definitions of entrepreneurship, Kaufmann Center’s definition is reliable and inclusionary for this paper’s purpose; “Entrepreneurship is the ability to amass the necessary resources to capitalize on new business opportunities. The term is frequently used to refer to the rapid growth of new and innovative businesses and is associated with individuals who create or seize business opportunities and pursue them without regard for resources under their control. They build something from practically nothing and usually reinvest earnings to expand their enterprise or to create new enterprises. Other words that characterize entrepreneurship include innovative, creative, dynamic, risk-tolerant, flexible, and growth-oriented” (Kayne, 1999). Entrepreneurs and startup companies help the economies in various ways. In a tight financial position of states, entrepreneurs can add value to the economy by solving fundamental problems by producing and developing creative products or services, bring a new perspective to existing industries and businesses, and establish new job opportunities (Kayne, 1999). Today, governments and large companies trying to create an entrepreneurial ecosystem all over the world to achieve greater economic development. In the context of economic development, 4 A Multidisciplinary Approach for Startup Success: An Overview of Boulder City and Istanbul ______________________________________________________________________________ startup companies could be able to solve the problem of recession and give dynamism to the markets. Some of the present studies have shown that the significant part of the job creation coming from the new and growing companies and creating a supportive entrepreneurial network, so-called “ecosystem”, have a strategic effect to reaching success (Motoyama & Watkins, 2014). Similarly, almost all net jobs in the United States created by startup companies (Haltiwanger, 2012), (Haltiwanger, Jarmin, & Miranda, 2013). If we think the U.S. without startups, there would be no net job growth in there (Motoyama & Watkins, 2014). Additionally, as reported by Business Dynamics Statistics, startups is the most dominant factor for the job growth (Kane, 2010). According to the data, there is no coincidence that biggest economies in the world have invested to support and develop startup ecosystems. Countries that have a thriving startup ecosystem are able to achieve economic success and higher development rates. As long as startup’s success has a significant effect on the development of countries both local and global levels, it is important to identify key factors that have a high impact on the development of startup ecosystem because obtaining the success with a startup company could be a coercive way. During the companies’ journey, several determinants have an effect on reaching the final goal. In that context, different practices have seen in various regions. As the National Commission on Entrepreneurship stated (Kayne, 1999), regulations, laws, incentives, and programs that are encouraging entrepreneurship have a colossal impact on both creating an entrepreneur ecosystem and chance of gaining success. For creating successful startup ecosystems, all the factors should be assessed and action taken by the people who wants to foster their economy by the innovative, creative, and dynamic startup companies. For this purpose, in this paper, Boulder City has been taken as an example in order to ensure the developments Istanbul. After summarizing the two cities in Chapter 2 and Chapter 3, the main problems of the startup ecosystem in Istanbul were tried to find a solution with the example of Boulder, and some recommendations were made in the Chapters of 4,5 and 6. 5 A Multidisciplinary