Can a startup have an impact on economy?
Journalism is about finding answers to questions everyone wants to know. Questions in the headlines are only used if they include the answers inside. Something that can’t be imagined a decade ago.
What if I tell you that a startup almost doubles the average distance of exports of a country, empowering women and young entrepreneurs significantly? A Turkey-based startup established six years ago is literally doing that.
The figures are clear. The average traditional export destination between 2015 and 2017 was 2,951 kilometers compared to 3,355 kilometers in e-exports, according to the Effects of Financial Technologies on Turkish Economy report. However, Iyzico, a fintech company providing online and mobile payment services, expands it to 5,292 kilometers, the same report adds, citing Turkish Statistical Institute, TEPAV, Political Analysis Lab (PAL) and the company’s own figures.
Iyzico provides the infrastructure that women and young entrepreneurs need to launch their own businesses and begin to sell their products and services globally.
Power to customers
The main difference between a fintech and a traditional bank or a financial company is the core mentality. Where banks are focused on profitability, fintechs are focused on customers. Banks do have to satisfy their boards and shareholders by posting high profits but startups have to satisfy their customers to stay afloat. That is the primary principle of the startup economy.
Iyzico is among the leading fintech companies in Turkey. It employs 130 people and expects to add at least 40 more before 2020. It has activities in Turkey and has launched in Eastern Europe. Some 30,000 companies and over 350,000 resellers (registered under a marketplace) use its services. It began as a B2B company providing online POS services for small and medium size companies. However, it is now covers individual sellers on Instagram to the largest companies and marketplaces in Turkey.
Reg onal champ on to un corn
It has received $24 million in investments from Turkish and international investors, so far. A recent $4 million investment will help the startup offer services to end users with a B2C application that would enable hedged e-commerce for customers that shy away from online and mobile shopping due to problems of trust.
Iyzico aims to become the payment champion of the region, where Turkey stands in the center, according to Barbaros Ozbugutu, its co-founder and CEO. It is also one of the strongest candidates that could become a unicorn from Turkey. Its peers include the U.S.-based giant PayPal, Stripe and the European Klarna.
Solv ng a problem
Startups also offers a solution to problems that companies or people face in real life. They are born to solve real problems. In a country where 43 percent of people are unbanked and only mere 19 percent of salaries are deposited in banks, fintechs are helping grow the participation of more people in the registered economy.
Iyzico supports the economy in three main area, says the PAL report on the startup. It helps the growth of the economy by facilitating e-commerce growth, increasing the average distance of exports and enhancing the development of critical industries significantly. Second is the support to expand borders of the registered economy by decreasing the scope of the unregistered economy significantly and preventing online trade of fake goods. Third is increasing the participation rate of women in online trade and services, as well as helping regional development and inclusion.
Fast track growth
Iyzico is growing five times faster than e-commerce growth in Turkey. Its monthly run rate reached to TRY 260 million in two years from TRY 17 million in May 2016, the report said. It corresponds to a month-over-month growth of 12.7 percent. The growth of credit card payments on the internet in the same period was a modest growth 2.7 percent, according to Interbank Card Center (BKM) data.
Iyzico also enjoys 7.8 percent month-over-month growth in the number of customers, representing 3.5 times growth since July 2016, the report added.
It’s not only Iyzico who benefits from growth but also its customers. An average user that had a TRY 306,000 turnover in 2016 over Iyzico services increased it to TRY 471,000 in the first seven months of 2018, some 53 percent growth.
Clothing, travel and cosmetics were the top performing sectors on the Iyzico platform. Some 77 percent of transactions conducted on the platform came from clothing, technology, services, home products and the cosmetic sector, the report added. Cosmetics, services and floral segments posted a growth over 600 percent between September 2016 and June 2018. The travel industry recorded the fastest growth at 700 percent.
The number of exporters on the platform also increased by 6 fold to 1,067 in 2018 from 170 in 2016. Foreigners who made payments through its systems also increased by more than 300 percent to 46,000 in the same period. E-export growth on Iyzico platform recorded 20 percent monthly growth (March 2016 – March 2018), exceeding an average country growth of 4 percent, the report said.
Some 95 percent of Iyzico users in Turkey are small sized companies that post below TRY 45,000 turnover. The average turnover for those companies rose to TRY 62,000 in 2018 from TRY 35,000 in 2016. Nine of the top 20 companies with the largest average basket sizes working with Iyzico were established in the last five years,
The main activity came from Istanbul. However, Bursa, Kocaeli, Samsun, Mugla, Kirikkale, Aydin, Tekirdag, Hatay, Bilecik and Rize were also among the other cities conducting e-export through platform. Iyzico helped add TRY 1.2 billion to the registered economy over the last two years, PAL calculated.