Growing investment trend: Turkish startups in seed stage


The entrepreneurial ecosystem doubled its share of Turkey’s national income despite challenges brought on by the coronavirus pandemic in 2021, a year also marked by growing interest in early-stage startups, according to a report by the Turkish division of the auditing and consulting giant KPMG.

The “Turkey Start-up Investments Report”, prepared in cooperation with Istanbul-based venture capital firm 212, highlighted the major trends, opportunities and challenges facing entrepreneurs both globally and in Turkey in 2021. .

The entrepreneurial ecosystem managed to boost its participation and represent close to six per thousand of Turkey’s gross domestic product (GDP) in 2021, doubling the figure of 2020.

The number of investment deals in early-stage startups rose to 229 last year, up from 135 in 2020, according to the report. Transaction volume at this stage reached $91 million, up from $67 million a year earlier.

double magnification

Citing data compiled from ecosystem monitor startups.watch, the report underscored continued interest in digital platforms, a trend that has grown since the outbreak of the pandemic, particularly highlighting the pioneering tech sector.

The startup ecosystem witnessed the highest investment activities in its history both globally and in Turkey, according to the report.

Capital of around $643 billion was poured into startups globally in 2021, an all-time high, the data showed, nearly doubling the $335 billion recorded in 2020.

List of the best cloud computing

The games industry accounted for the most transactions, 51, in fiscal 2021, followed by software as a service with 28 and the fintech sector with 23, the data showed.

E-commerce, delivery and logistics, gaming and software as a service providers, respectively, were the sectors that attracted the most investment in terms of transaction volume.

The number of acquisitions increased from 27 in 2020 to 45 in 2021 while, similarly, the volume of acquisitions also increased compared to the previous year, the data showed.

The Turkish gaming industry continued to grow and became one of the most important sectors for investors. Of the top 10 transactions, three were in the gaming sector and four were in delivery and logistics.

The growing number of transactions and volume are considered an important indicator of how Turkey’s business ecosystem is growing healthily and could achieve more success in the years to come.

investment of $1.4 billion

Gökhan Kaçmaz, M&A Advisory Partner at KPMG Turkey, said that activities in Turkey’s ecosystem of companies developed at record levels in 2021.

“With a total investment of $1.4 billion made by venture capitalists and angel investors in 252 startups, we have witnessed an unprecedented level of investment activity, reaching nearly 10 times the volume of $143 million in 2020,” Kacmaz said.

“In the same period, the volume of acquisitions related to startups was made at the level of $2.4 billion.”

229 seed investment deals

Delving into investments, Özge Ilhan, M&A advisory director at KPMG, said that 2021 was marked by very important milestones in Turkey’s startup ecosystem.

Ilhan cited developments such as e-commerce giant Trendyol becoming Turkey’s first decacorn, a term for startups passing the $10 billion mark, in August last year.

He also touched on the Nasdaq stock listing and $1 billion valuation of another major player in Turkey’s fast-growing e-commerce sector, Hepsiburada, on-demand fast delivery pioneer Getir raising nearly $1 billion through multiple investment rounds and Dream Games becomes the country’s latest unicorn of 2021.

“It should be noted that one of the main reasons for the momentum achieved in 2021 is the result that Turkish startups, whose seeds began to be cast many years ago, have reached a certain maturity and opened up to the public. world,” Ilhan said.

At the same time, the year 2021 was also a record period in terms of seed investments, he noted.

“According to data we received from startups.watch, a total of 229 seed investments were made. Looking at the total number of investment rounds, we see that early investments have a ratio of over 85%.”

“We can say that this factor, which plays a very important role in bringing the Turkish startup ecosystem up to date, has strengthened our positive expectations for the future,” Ilhan said.

Successes to keep the trend

For his part, 212 founding partner Ali Karabey also highlighted the positive developments in Turkey’s startup ecosystem and the increase in seed investments.

“Investments received by startups increased tenfold compared to the previous year. While there were no unicorns in Turkey until 2020, their number has reached six as of today,” Karabey noted.

“One of the issues that stands out in this report is the increase in the number of seed investments. In 2021, the seed investments reached 220, and this figure represents 85% of the total investments”, he added.

“We see that startups that have received early investment have a high probability of creating success stories by growing rapidly with the support of the funds. We believe that the success of Turkish start-ups will continue to increase in the coming period.”

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