For the past couple of days I’ve been in Turkey, absorbing the tech scene in Istanbul (tomorrow I’m in Munich, Germany, for DLD). I was invited over by the Nubridge Venture Summit which brought together a panoply of European VCs to listen to Turkish tech companies set out their wares. What emerged is a picture of a country in high growth, as this economy and its entrepreneurs latch on to the possibilities offered by the Internet and mobile platforms.

But first, let me tell you a story. Two years ago I contacted Turkey’s pre-eminent “Web 2.0” blogger, Arda Kutsal of Webrazzi. I said let’s do a TechCrunch Europe meetup in Istanbul. Duly, a few weeks later I took a flight out, got to the hotel he mentioned and figured Arda had organised the meetup in the bar. No, said the receptionist, “It’s in the Grand Ballroom.” I headed down the hall to find about 400 people. That was the kind of thing that was going on then.

Two years on, with a packed room full of European VCs and private equity people hearing pitches from a wide range of Turkish technology companies, it’s clear the investment community is keenly interested in this market.

This was an event that probably couldn’t have happened two years ago. Even though Turkey is going through a period of high growth, it took the perfect storm of wider internet adoption and social networking (particularly the rise of Facebook here) to turn Turkey into an emerging startup market. As I said to about 30 journalists from the Turkish press on day two of the event – you don’t actually see all these investors in one room very often, unless it’s at something like TechCrunch 50, or events like Le Web. Something has happened to Turkey in those two years. So here’s some context.

Turkey is now the third largest country on Facebook according to ComScore (see illustrations).

It’s a few million behind the UK, and with 75 million people in Turkey (26.5m of whom are online) it’s likely to become the second biggest behind the US fairly soon.

How on earth did that happen? I’ve spoken to Facebook and people here in Istanbul and what emerged was the story of a campaign by early adopters in Turkey to get Facebook to release them the tools to translate it into Turkish. After that the site exploded in use. There was no local social networking clone with the same functionality, and the young popuation (over half of Turkey is under 30 years old) made Facebook look like the hip Western site to “be seen” on. See below:

It also helped that there is a large ex-pat Turkish population in Germany, with Facebook increasingly acting as a networking bridge between families spread across the two countries. On journalist here told me that many people don’t even have normal email addresses – they just use Facebook email.

Furthermore, last year ComScore released a report showing Turkey has the third most engaged online audience in the world, with 30 hours spent online each month – that’s actually behind the US and Canada. See below:

The EU average is 29 hours. Turkey is also home to the world’s 12th largest Internet market and has 6th largest internet use in Europe user base with 38% penetration. In 2012 it is forecast to grow to 35.8 million users (which will make it the 5th largest internet population in Europe).

In other words, the internet is insanely popular here, where entertainment alternatives like the relatively tame content on state-regulated TV just doesn’t cut it amongst the youth. As you might expect, Google and Microsoft sites dominate, followed by Facebook, but then local content sites kick in:

There is also widespread credit card availability (with 44m+ credit cards in use) unlike some parts of Europe (Germany being the quintessential anti-credit card example). It’s actually the number two market after the UK for Visa credit use, according to Visa.

Key e-commerce verticals such as travel, electronics, and private shopping are exploding and online gaming – both casual and MMOs – is widespread. Colleges and internet cafes remain an important part of the access landscape, especially in gaming (PCs and Internet access at home is still just slightly too expensive for the average person), but the cafes are widespread and cheap to access.

As well as it’s fascination with Facebook, Turkish people have latched onto Microblogging in droves. But it’s not Twitter they turned to first. It turns out FriendFeed is the platform of choice. A simple check on Alexa confirms that Turkey is the biggest user of FriendFeed on the planet.

That is going to please Facebook, since it now owns FirendFeed. But Twitter, whether by accident or design, is being used increasingly more by celebrities in Turkish society (film stars etc). That should help its position, gradually.

The iPhone, which launched in Turkey in September 2008, is also gradually making headway. It was facinating to see my taxi driver from the airport get an iPhone out to answer a call.

There remain of course hurdles in the Turkish tech market. YouTube was been famously banned by a court in Stanbul after someone uploaded a critical video of the nation’s modern founder Atatürk.

However, outside impressions can be deceptive. In reality I had no trouble accessing YouTube from the hotel, and when I asked around absolutely everyone told me that the ban was considered a joke. Knowledge of changing your DNS to avoid the ban is now so mainstream that even some street corner shops regularly post DNS numbers people can use to get around the ban.

As with a lot of European markets, there are of course the copycat/clone startups, many of which are owned by almost family-run conglomerates of sites which have grown up from the early Internet scene since the 1990s. These have ended up hoovering-up small startups, which makes the exit market a rather small business sized affair. The problem is a lack of capital (hey, remember all the VCs who turned up this week?) to let new startups grow, so they tend to exit to a mid-stage player which then locks them in to a regional play rather than thinking globally.

Having said this, it is also fair to say that Turkey has a very healthy combination of local Internet giants and some innovative players… which I’ll be writing more about in a later post. Stay tuned.