Turkey has left many European countries behind in investment in the entrepreneurial economy and has entered the league of billion-dollar investments. In the first half of 2021, $1.3 billion was invested in 129 Turkish startups. After Getir and Dream Games, 10 more unicorns are set to enter the ecosystem. In our previous article, we have evaluated the Turkish startups’ current situation in the Turkish economy.
In 2021, Turkey set a record for investments in the entrepreneurial ecosystem. The amount of investments made in the last 10 years was reached in a single quarter this year. While an investment of $736 million was received in the last 10 years, 63 startups received a total investment of $746 million in the second quarter of the year.
Outperforming European countries
Turkey ranked 8th in Europe and 2nd in the Middle East and North Africa in the second quarter in angel and venture capital investments. Turkey received more investments from many European countries such as Finland, Norway, Austria, Denmark, Ireland, Italy, Belgium, and Poland compared to the first quarter. In second place with an investment of USD 29 million in the second quarter of last year, Turkey has risen to the top position this year.
Looking at angel and venture capital investments per capita, USD 8.8 was invested in the second quarter of 2021. With this statistic, Turkey has overtaken countries like Italy, Greece, Portugal, Russia and Poland.
The figures that put Turkey in the billion-dollar investment category were announced at the Turkey Startup Ecosystem 2021 2nd Quarter event organized by Startups.watch. The share of investments above $50 million in the total amount of the second quarter was 3%.
The startups that received the most investments were: Getir, Dream Games, Martı, Ace Games, Ödeal, Appsilon Diamond, Trio Mobil, Veloxia, Tarentum, EasyCep.
In the second quarter, 12 startups with female founders received $6 million in investment. Dream Games has a valuation of $1 billion with a Series B investment of $155 million, while Getir, with a valuation of $7.5 billion, has also attracted the attention of the US market. The most significant development of the year was Hepsiburada, which has reached a valuation of $4.2 billion to date, following its initial public offering in New York. Thus, including Trendyol, Hepsiburada and PeakGames, the number of unicorns in Turkey now stands at 5.
Most investments in Istanbul
Istanbul has continued to be a golden age for investment in the entrepreneurial ecosystem. 49 of the 63 Turkish startups that received investments in the second quarter of the year were in Istanbul.
In terms of investment amounts, Istanbul was followed by Ankara with $1 million and Bursa with $700,000. In terms of game studios, Istanbul continues to rank second in Europe, behind London.
In the second quarter of the year, 14 games startups received investments. In the first half of 2021, 29 games startups received investments. After gaming, the most invested areas were fintech, SaaS, artificial intelligence, health technology, marketplace, mobility and e-commerce. In 2021, 5 new funds worth $91 million were created in Turkey.
Startups.watch founder Serkan Ünsal said that 10 other startups growing in value in Turkey are on their way to becoming unicorns. According to Ünsal, “The Turkish ecosystem is now aiming to achieve more ambitious goals. With a few exceptions, most entrepreneurs now want to become unicorns. They don’t want $200-300 million exits. We also specialize in games; many people know how to sell games in other countries now.”
Autumn will be fruitful
Altan Küçükçınar, vice chairman of the TOBB Turkey Venture Capital Council and managing partner of DCP-Diffusion Capital Partners, said that the number of active funds in Turkey has grown rapidly over the past year, but that Turkey is still far below its potential. Asserting that venture capital is on the right track and can close this year with record investments, Küçükçınar added: “We expect the coming autumn months to be even more productive in terms of investment as the effect of the pandemic, one of the macroeconomic indicators, diminishes. We expect the investment appetite in the ecosystem to increase with the effect of investment rounds that have reached high valuations in recent months. We expect various public fundraising initiatives to be completed during these months.”
Küçükçınar said that one of the most important items on the ecosystem’s agenda is to conclude various legal arrangements that will improve the investment environment, and said, “We will work hard with all stakeholders to regulate issues such as convertible debt, employee stock options, and the guarantee of fund assets.
The investments of the last 10 years will be obtained in less than 2 years
Serkan Bağçe, founding partner and CEO of StartupMarket and the participatory funding platform, said that many Turkish startups with a valuation of more than $1 billion are not called unicorns because they have not yet entered the investment process, and said, “Our startups will appear in this list soon. Dream Games managed to reach a billion-dollar valuation in about two years. It took Peak Games 10 years to break the ice, which is a significant milestone for our ecosystem.”
Stating that the total investment made over the past 10 years will be reached in the next 2 years, Bağçe said, “We expect this acceleration to continue. Indeed, the total volume of 46 mutual funds exceeds $1 billion. Foreign-based funds also support large mutual funds. We expect there to be a backlog of $10 billion in investments in the near term.”
“Series B investments need to increase.”
Stating that new unicorns are expected in the mobile games sector, Duygu Eren, managing director of Keiretsu Forum Turkey – Angel Investor Network, said, “Unicorn prospects are being considered for casual mobile games companies founded by managers who have left Peak Games. Our country is a fintech paradise, and I believe a unicorn will emerge in this sector. By the end of the year, more unicorns could emerge,” he said.
Noting that there are still new investments on the agenda this year, Eren said, “For Series B and beyond, overseas expansion and investment from abroad seems mandatory. There is only one TÜBİTAK-BIG grant programme for the pre-seed phase, which is currently active.
- Good Job Games
- Fugo Games
- Ace Games
What is a unicorn?
In Gaelic and Scottish mythology, the unicorn is a mystical unicorn animal, symbolising virility and power. To qualify as a unicorn, a start-up must reach a valuation of at least one billion dollars.
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