Insights from Turkey's ecosystem: Reflecting on MAGNiTT’s H1 2020 Turkey Venture Report
MAGNiTT is continuing on its journey to expand and cover more emerging markets, with the launch of the first-ever H1 2020 Turkey Venture Report. The report deep-dives into the maturing Turkish startup ecosystem and found that only 29 startup investment deals were recorded, which represents a drop of 51% from H1 2019.
As a result of the expansion, we spoke to key Turkish stakeholders in the entrepreneurial ecosystem who provided their views and insights into the developments of this emerging markets evolving startup space, including how the country is benefiting from its young and resilient population, how accelerators, angel network & the government are helping to make a change, the importance of talent, and more.
Hear from them below:
Burak Daglioglu - President, Investment Office of Turkey
“Turkey has attracted prominent PE and VC funds with many having successful exits with high returns... This success proved Turkey’s attractive investment environment where investors can realize a full cycle of investing in and divesting from an enterprise... Billions of dollars of FDI poured into Turkey, and their share in overall investments continues to increase. While the local PE and VC markets are steadily growing in the number of deals, variety of mandates and volume of funds, global LPs and GPs are looking to increase their commitments into Turkey.”
Cenk Bayrakdar - Managing Director, Revo Capital
“Turkey is evolving into a very attractive and dynamic startup ecosystem. We believe the main pillars of this ecosystem are: talent, market, and capital incentives. Turkey benefits from its young and resilient population, strong technical and engineering training, attractive cost structure, dynamic labor market, and broad incentives and tax benefits for research and development initiatives.
"As a result, we have seen an increase in the number of venture capital funds in Turkey and their investment activity over the past years. This creates exciting opportunities for cooperation between local funds and international investors to scale Turkish companies globally. We have experienced this first hand with our portfolio company Getir, a grocery delivery startup which raised $38M... Also, one of our exits, Foriba, was acquired by HG Capital backed Sovos, global leader in tax software.”
Rina Onur Sirinoglu - General Partner, 500 Istanbul
“With its 80 million population and economy that’s expected to be among the top 5 globally by 2030, Turkey has proven the opportunity for businesses targeting the domestic market. With 17% year over year growth in developers and comparatively low costs, Turkey is a great market for early-stage teams to build with great talent even on limited resources. The $3BN liquidity Turkey has experienced between 2018-2020 in the form of technology exits and consolidation is a testament to what’s more to come. The capital efficiency in the market makes it a prime ecosystem for venture capitalists indeed.”
Firat Isbecer - Co-Founder, CEO & Seed Investor, Commencis
“Turkey is by far the most oversold and the most underpriced emerging market in the world right now. Despite the lack of access to global capital, we have the most vibrant and the most innovative start-up ecosystem in Eastern Europe and the Middle East. Recent Peak Games to Zynga transaction is a good example of how big the potential of Turkey is... Now is a good time to invest.”
Ilker Kılıç - Consul General of the Republic of Turkey
"The Turkish ecosystem is the most vibrant in the region and beyond, with an abundance of talent and creativity, complemented with low operating costs and government support. It also possesses unique qualities such as having one of the highest rates of female entrepreneurs in Europe. The increase in FDI into Turkish startups and VCs is a testament to a growing interest and confidence. We were proud to see our first unicorn in 2020, with the exit of Peak Games for 1.8B US Dollars to a US company. We can expect the number and size of Turkish and foreign investors seeking to reap these benefits grow over the coming years, with ample space for more."
Atil Erken - General Partner, Collective Spark
“The startup ecosystem has come a long way in the last six years as reverse brain drain has brought premium talent back to Turkey. The significant progress can be observed on all fronts from accelerators to angel networks, from exited entrepreneurs to increased number of technical founders, from new corporate investors to new VC funds, and the government doing its fair share through grants and direct investments. The strong investment to exit ratio, recent lucrative exits, and increased appetite from larger global funds to lead or co-invest in later-stage rounds are promising signs that show the investment gap already started to close. Turkey is the next hotspot for tech startups and now is the right time!”
Turkey's average deal size was up 250% in H1 2020 to $2.8M, indicating the shift of investors' focus towards later-stage startups. Discover more trends and insights in MAGNiTT's H1 2020 Turkey Venture Investment Report.