Turkey: Establishing A Tech Startup In Turkey

Last Updated: 23 August 2013
Article by Gur Law Firm

What is a 'Startup' and its difference from 'enterprise'?

Entrepreneurship is the new worldwide trend – similarly in Turkey- and the 'startup' is one of the most commonly used words in the ecosystem of enterprising, which defines the companies launching a new enterprise. A startup addresses to big market, however, initially, it tries to prove its business model by realizing its prototype with the first customers and service users. At this stage, generally, the customer or service user formalizes the product or service which the startup presents.

Thereafter, the startup would try to catch up a rapid rate of growth by increasing the customer group in the big market it addresses. Accordingly, 'enterprise' word does not replace 'startup'. For instance, a restaurant may be an enterprise nevertheless, cannot be deemed as startup since the restricted group it addresses and the extent it would reach are certain. In other words, the onset companies which can address big market group and seek for the rapid growth rate shall be deemed as 'startup'.

Startup companies can come up in all types and forms. A 'tech startup' is one of the startup types and being used to define the technology and internet startup companies established by a few entrepreneurs with very small capital. Some of them render portal, e-commerce and digital marketing services in the internet and some invest in works aimed at infrastructure. To be deemed as a tech startup; the company shall fulfil the requirements as follows: to be established with a small capital and independent from the large groups, to introduce innovation to the technology and service field, to develop an original but reliable business model. Giving examples of the tech startups in Turkey; 'Yemek Sepeti' is the first and biggest online food delivery portal of Turkey. The website is based on a portal enabling the customers to order food online by cooperating with more than 7,000 of the most popular restaurants across the country. 'Markafoni', a Turkish private shopping site, is another biggest startup which has been growing gradually with its rich infrastructure and content.

Need-to-know in incorporation phase regarding the intellectual property rights in Turkey

If a company's value is based on its technology, it is often important for the business owners to obtain intellectual property protection for their idea. Often, 100% of a small startup company's value is based on its intellectual property. As such, it is important for technology oriented startup companies to develop a strategy for protecting their intellectual capital as early as possible.

It is essential to protect the intellectual property in a tech startup, or the company run the risk that third persons could steal or copy the idea, trademark or product after investing in it. If the startup company fails to assert the rights to the intellectual property, the company may inadvertently surrender the claim to essential components of the business's success. Besides that could be the end of the startup. The most important thing for a startup in growth is branding. Along with its substantial assets, its intellectual property covers a significant part of the company's estate. Therefore, when investing in a tech startup, first thing to do is being aware of the necessity of protection of the rights and take essential steps in order to strengthen the company's market's presence.

A trademark is a symbol that distinguishes and identifies the startup's product. It can be acquired trademark rights through the consistent use of a mark even if that trademark is not registered. However, when it is needed to enforce the trademark rights, it is helpful to have that mark registered with the Turkish Patent Institute (TPI) by filing an application before this Institute.

Copyrights protect written works, database, software, code and apply with registration. To help protect the rights of the copyright, it can also be registered before Directorate General of Copyrights affiliated with The Ministry of Culture and Tourism. A tech startup company's engine is its software, data, computer programs and codes (if available). In the event that someone infringes on these cited rights, the registration can provide protection and any remedy can be sought before the Civil Courts for Intellectual and Industrial Property Rights.

Trade secrets are the business's proprietary practices and/or knowledge, and they can be highly valuable. We can think of Coca-Cola's secret formula. The company has successfully kept it under wraps for more than a century, and the startup should strive to take the same care with the company's trade secrets. It is actually fairly straightforward to get legal protections for the company's trade secrets. The first step is to ask anyone who has access to the proprietary knowledge to sign non-compete and non-disclosure agreements before revealing anything.

Patents must be applied for, and although the process may take several years, it can be generally noted "patent pending" to communicate to others that a patent has been applied for. It is also smart to include provisions in employment agreements that specify who owns any patents developed using company resources.

To sum up; when incorporating a tech startup, if it addresses to big market, the work or project or business models have to be smart and achieve the best of times. Thus, this can only be achieved by building a company and a product with not neglecting the legal basics.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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