As global funds inject more money into Turkey’s emerging tech companies, investments made in less than three months into the new year are approaching those made in all of 2021.
According to startups.watch data, the Turkish startup scene has already received around US$1.3 billion (TL19.28 billion) worth of capital inflows before the end of the first quarter, compared to the record US$1.5 billion funding. Dollars raised in 2021.
Investment deals were led by rapid delivery, gaming, financial technology and software startups such as Getir, Dream Games, Insider, Spyke and Midas.
In addition, the number of start-ups funded is increasing, while the government also maintains its role as an angel investor.
Nevzat Aydın, Head of the Turkish Arm of the Global Entrepreneurship Network, GEN Turkey, addressed the shift in the startup ecosystem and presented his own adventure.
“When I started my entrepreneurial adventure 20 years ago, there was no mentor. I should have sold the company after only three or four years if I had listened to the more experienced people in the business world. However, we had an intrepid spirit,” said Aydın, co-founder and former CEO of Yemeksepeti, one of the leading online food delivery platforms in Turkey.
“There was no such thing as entrepreneurship. I would say, ‘I’m doing my own thing.’ A lot has changed today. There are both national and global funds. Nowadays, young people prefer becoming entrepreneurs to working in multinational companies,” he said at a Ventures60 event on The Right Time to Be Entrepreneurs.
“Now there are hundreds of startups supported in university entrepreneurship and incubation centers. More importantly, they have role models in front of them.”
Climb 5 points
According to Aydın, Turkey’s startup ecosystem has failed to receive the amount of investment it deserves.
Turkey has managed to climb five spots since 2020 and ranks 44th in the world in the StartupBling Global Ecosystem Index, he noted.
“The Turkish business ecosystem has achieved significant growth in 2021. However, we can say that the potential is higher,” said Aydın.
“There are also successful women entrepreneurs. They have become the founders and managers of highly efficient companies, although they may not have been visible in the numbers. There are inspiring women at the Turkish unicorn startups Trendyol, Hepsiburada and the software startup Insider. I don’t think (there will be) a problem in five years when it comes to this matter.”
The multi-billion dollar startups such as Peak, Getir, Trendyol, Dream Games, Hepsiburada and Insider encourage not only the companies but also the investors.
It’s easy to say “they sold them too soon” for the founders of the startups Yemeksepeti, which was sold seven years ago, and Gittigidiyor, which was sold about 11 years ago.
Nevertheless, they became pioneers and sources of inspiration for many in Turkey. They are now appearing before us as investors.
It was also quite difficult to exactly implement the business model that was successful 20 years ago. Today, original ideas like Getir are becoming global players, securing billions of dollars in investments. But every entrepreneur and every industry has a learning curve.
Confidence for global business
Summarizing the conditions of today’s startup ecosystem, Aslan Doğan, founding partner and CEO of Etiya, said Turkey is on the radar of global players nowadays.
“Entrepreneurs have reached a position where they have the luxury of selecting investors. Entrepreneurs have also transcended physical boundaries by doing business on a global scale. The pandemic brought with it a universal workforce. History has become very important. Employees should be part of the dream at startups. Trust is very important to have fun together, to spend time together. Sharing the success has become so valuable,” Doğan told the Ventures60 event.
He stressed the need for regulation in Turkey to allow workers to participate in growth.
“They don’t want to lose the universal workforce skills. (It is) one of the most important problems in moving the company forward. The gaming sector in Turkey has become the locomotive industry. But the second big wave is coming. New growth-stage initiatives are coming from the software side that runs cloud-based businesses. The number of venture capital companies whose opening abroad is inevitable will increase,” said Doğan.
Stressing that high-tech companies are formed with patience, he said the experience created in the long-term venture ecosystem will also continue to grow.
New unicorns in enterprise software
Muhammed Özhan, general manager of TT Ventures, a venture capital subsidiary of Turkey’s leading information and communications technology company Türk Telekom, said good examples are emerging among high-tech startups in the healthcare sector.
“The startup Virasoft opens up abroad with its data set that facilitates the diagnosis of cancer. We believe there is significant growth potential in the United States. We continue to closely monitor opportunities abroad,” Özhan told the Ventures60 event.
He underscored expectations that the next unicorn would come from enterprise software.
“Agile startups have better chances on the business software side than the big ones. Again, the growth potential of cybersecurity and data-driven initiatives has increased. In this regard, Turkey has significant human resources and experience.”
Invest in the right team
Arın Özkula, business partner and manager of venture capital firm 500 Istanbul, emphasized that the engine of the growth of the entrepreneurship ecosystem is the employees of the inspirational institutions.
At the Ventures60 event, Özkula also addressed the issues that early-stage investors are focusing on.
“We invest in teams that know how to stay afloat under all circumstances. There are currently 3 unicorns in the 500 Istanbul portfolio. Insider is one of them. CarbonHealth’s valuation increases from $3 billion to $5 billion. Their engineering groups are also located in Turkey. Again, while the Firefly venture also has stores in Silicon Valley, it also has engineering centers in Turkey,” he noted.