As global funds channel more cash into Turkey’s up-and-coming technology firms, the investments made in less than three months into the new year are approaching those made during 2021 as a whole.
The Turkish startup scene has seen around $1.3 billion (TL 19.28 billion) worth of capital pouring in even before the end of the first quarter, according to startups.watch data, compared to the record $1.5 billion funding that was raised in 2021.
Investment deals were spearheaded by the rapid delivery, game, financial technology and software startups such as Getir, Dream Games, Insider, Spyke and Midas.
What’s more, the number of startups receiving the funding is on the rise, while the government also maintains its role of angel investor.
Addressing the change in the startup ecosystem, one of the prominent names of the industry, Nevzat Aydın, head of the Global Entrepreneurship Network’s Turkey arm, GEN Turkey, put forth 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 had I 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 term as entrepreneurship. I’d say, ’I’m doing my own thing.’ A lot has changed today. There are both domestic and global funds. Now young people prefer to become entrepreneurs than to work in multinational companies,” he told a Ventures60 event, themed “The right time for entrepreneurship.”
“Now there are hundreds of startups that receive support in the entrepreneurship and incubation centers of universities. More importantly, they have role models before them.”
Climbing 5 spots
According to Aydın, the Turkish startup ecosystem has not been able to get the amount of investment it actually deserves.
Turkey has managed to climb five spots since 2020 to rank 44th globally in the StartupBling global ecosystem index, he noted.
“The Turkish enterprise ecosystem achieved significant growth in 2021. However, we can say that the potential it has is higher,” said Aydın.
“It also has successful female entrepreneurs. They have become founders and managers of highly effective enterprises, although perhaps they have not been visible in number. There are inspiring women at Turkey’s unicorn startups Trendyol, Hepsiburada and software startup Insider. I don’t think (there will be) a problem when it comes to this matter for five years.”
The billion-dollar startups such as Peak, Getir, Trendyol, Dream Games, Hepsiburada and Insider are encouraging not only the firms but investors as well.
It is easy to just say “they sold them too early” for founders of startups of Yemeksepeti, sold seven years ago, and Gittigidiyor, sold around 11 years ago.
Yet, they became pioneers and sources of inspiration for many in Turkey. They now appear before us as investors.
It was also rather difficult to even implement the business model that was successful 20 years ago in an exact manner. Today, original ideas such as Getir are becoming global players by securing billion-dollar investments. But every entrepreneur and industry has a learning process.
Self-confidence to do global business
Summarizing the conditions of today’s startup ecosystem, Etiya founding partner and CEO, Aslan Doğan, said Turkey is on the radar of global players nowadays.
“Entrepreneurs have reached a position where they have the luxury of choosing investors. Entrepreneurs have also crossed physical boundaries by doing business on a global scale. The pandemic brought along a universal workforce. The story has become very important. Employees should be part of the dream at startups. Trust is very important, to have fun together, spend time together. It has become so precious to share the success,” Doğan told the Ventures60 event.
He stressed the need for regulation in Turkey in order for the employee to receive a share of growth.
“You don’t want to lose the universal workforce capability. (It is) one of the most important problems on the path to move the company forward. The game sector in Turkey has become the locomotive industry. But the second big wave is coming. New initiatives at the growth stage are coming from the software side that conduct cloud-based business. The number of corporate investment companies whose opening abroad is inevitable will increase,” Doğan explained.
Underlining that high-tech enterprises are formed with patience, he said that the experience created in the venture ecosystem in the long term will also continue to increase.
New unicorns in corporate software
Muhammed Özhan, general manager of TT Ventures, a venture capital affiliate of Turkey’s leading information and communication technologies company Türk Telekom, said good examples have started to emerge among high-tech startups in the health care sector.
“Virasoft startup is opening abroad with its data set that facilitates the diagnosis of cancer. We think that there is significant growth potential in the United States. We also continue to closely monitor opportunities abroad,” Özhan told the Ventures60 event.
He underscored expectations that the next unicorn would come from corporate software.
“Agile startups have a better chance on the corporate software side than the big ones. Again, the growth potential of cybersecurity and data-oriented initiatives has also increased. In this regard, Turkey has significant human resources and experience.”
Investing in right team
Arın Özkula, a business partner and manager of venture capital firm 500 Istanbul, stressed employees at the inspiring institutions are the driver of the growth of the entrepreneurship ecosystem.
Addressing the Ventures60 event, Özkula also elaborated on the matters that investors focus on in the early stage.
“We invest in teams that know how to stay afloat in all circumstances. Currently, there are 3 unicorns in the 500 Istanbul portfolio. Insider is one of them. CarbonHealth’s valuation is going from $3 billion to $5 billion. Their engineering groups are also located in Turkey. Again, although the Firefly venture also does business in Silicon Valley, they also have engineering centers in Turkey,” he noted.