Time for a Reality Check: Where Does Turkey Really Stand in AI?
Setting Targets Is the Easy Part
The world is in the middle of a massive battle for computing power and capital in AI. In a landscape dominated by models that OpenAI, Google, Anthropic, and xAI train at billion-dollar costs, building a direct competitor to large frontier models becomes harder every day. In an environment where Amazon has invested $50 billion in OpenAI, competition is no longer purely technological, it has become a financial barrier that is nearly impossible to overcome.
China’s success with DeepSeek is one of the rare signs that the rules of the game can change. It proved that smart algorithms and efficient use can make a real difference, even without massive budgets. Rather than training large language models from scratch, moving forward by distilling existing models or building on open-source infrastructure is a far more practical path for teams with limited resources. The ethics of distillation remain debated, of course. But for countries like Turkey, the real opportunity lies not in building giant platforms, but in the vertical solutions, software development tools, and agentic systems that run on top of those platforms.
Turkey’s AI Ecosystem: A 2025 Overview
Turkey’s technological maturity in AI has gained momentum in recent years. But the picture needs to be read honestly, even harshly.
According to the “2025 Turkish AI Ecosystem and Global Impact Report” prepared by Yapay Zekâ Fabrikası (within İş Bankası), Startups.watch, and Endeavor Turkey, there are 1,188 active AI startups based in Turkey. Including 274 Turkish-founded ventures abroad, the total ecosystem exceeds 1,400. Some 70% of these startups were founded after 2020, which means the ecosystem is still largely in its testing phase. Indeed, only 180 of the 1,188 startups received early-stage investment during 2024–2025. The vast majority are trying to survive without a proven business model.
A blunt comparison: according to a joint report by Google and RISE Israel, Israel has more than 2,300 active AI startups nearly twice as many as Turkey. Moreover, just the 342 generative AI startups in Israel have collectively raised $20 billion. In the U.S., that number stands at approximately 6,956. Turkey shows up in this picture with 1,188 startups but when it comes to impact, the answer is rather quiet.
Looking beyond the numbers, the picture becomes even sharper. In 2021, Turkey announced a five-year AI strategy under the National Technology Initiative. The goals were clear: 50,000 jobs, 10,000 graduate-level graduates, a 5% AI contribution to GDP, and a top-20 ranking in international indexes all by end of 2025. That period has now closed. In Oxford Insights’ 2025 Government AI Readiness Index, Turkey ranked 48th out of 195 countries, exactly 28 places short of its top-20 target. No official data on employment or graduate targets has been released by the government to date. That silence is itself an answer. Setting targets is the easy part.
The Diaspora Difference
Turkey can claim two AI unicorns today, but both are diaspora ventures, meaning companies founded by Turks living abroad: Fal.ai, focused on visual generation in generative AI, and Periodic Labs in data modeling. One of the report’s most striking findings puts this disconnect into numbers: while the investment median for Turkey-based startups remains around $100,000, that figure rises to $2.4 million for diaspora startups. That single line says enough about how difficult it is for the domestic ecosystem to access global capital.
From Defense Industry to Startup Agility
Turkey’s most concrete AI achievements have so far come from the defense industry, led by giants like Baykar, Aselsan, and HAVELSAN. With R&D budgets reaching $3.3 billion, these companies are setting world standards in autonomous air, land, and sea platforms. This is a genuinely remarkable achievement. However, the value that AI will create in the civilian space, particularly in B2B software and the application economy is far too broad to rest on the shoulders of these large structures alone.
This bottleneck at the institutional level is frustrating, if not surprising. One of the biggest barriers facing the ecosystem is a shortage of qualified talent (40%) and a cautious distance that institutions maintain from domestic startups. While more than half of institutions report having an AI strategy, only 6.25% are actually collaborating with local startups. The only realistic way to break this barrier is to make startups the preferred choice not because they are local, but because they offer the best tools by global standards.
It’s Not Too Late
As AI enters its “agentic era,” an existential crisis is approaching in the software sector. But this crisis also opens a major window of opportunity for those building software development tools. There is still no global standard for agent systems that automate software processes, oversee code writing, or manage business workflows end-to-end. This gap is not a missed opportunity, it is perfectly timed for someone arriving right now.
The Turkish diaspora’s existing focus on agentic AI solutions is encouraging. The domestic ecosystem’s predominantly B2B structure (75%) also signals a natural fit for this transformation. The Ministry of Industry and Technology’s grant support of up to 50 million TL for Turkish-language large language models clearly won’t be enough for frontier model development. But these resources could be critical fuel for domestic infrastructure that forms the foundation of vertical solutions, if directed wisely.
What Peak Games and Dream Games achieved in the gaming sector, AI startups now need to replicate. Startups that move fast, are unafraid to fail, and focus on niche areas doing what the large defense giants cannot could open a real playing field for us in the global application economy.
Turkey should position AI not merely as a technology, but as a key to economic independence. Rather than entering a computing power race against the U.S. and China in frontier models, the path forward is to empower the teams that use the infrastructure these giants provide in the smartest possible way and the entrepreneurs building tools that make that infrastructure run more efficiently, more quickly, and more profitably.
We have always watched past industrial revolutions from the sidelines. This time the stage is different the technological threshold has never been lower, the cost of entry never more accessible. The day we become owners of the tools that make the giants’ platforms run efficiently rather than tenants on those platforms is the day we achieve true digital sovereignty. The famous “doing what was said to be impossible” spirit of the defense industry is now waiting to be carried into the vision of a three-person startup writing agentic code in an apartment.
Sources
Yapay Zekâ Fabrikası, Startups.watch & Endeavor Turkey — 2025 Turkish AI Ecosystem and Global Impact Report, February 2026. yapayzekafabrikasi.com.tr
Oxford Insights — Government AI Readiness Index 2025, December 2025. oxfordinsights.com
Google Israel & RISE Israel — AI Industry in Israel: Challenges and Opportunities, May 2024. cloud.google.com