destination for early stage investments - turkey
TRANSCRIPT
March 2022
TürkiyeDestination for
Early Stage
Investments
What makes Türkiye an attractive country for
early stage investments?
• A supportive ecosystem
• Investments and successful exits
• New investment opportunities
Supportive
Ecosystem
Turkish Startup Ecosystem in 2022
Source: Startups.Watch
Turkish Startup Ecosystem in 2010
Source: Startups.Watch
LOCAL INVESTORS & VCsACCELERATOR FUNDS TECH ACCLRTR FUNDS FI/DFI
CORPORATE INVESTORS FOREIGN VCs FOREIGN GEs & PEs
ACCELERATORS (RUN BY BANKS) LIVING LABS
ACCELERATORS (PRIVATELY HELD) MENTOR TRAINERS MEDIA (ENGLISH)
NGOs & ORGANIZATIONS DEAL ROOMS / INVESTMENT PLATFORMSGOVERNMENT
MENTOR
MOVEMENT
TECHNOPARKSINVESTOR
ANALYTICS
TOP 3 STARTUP
FRIENDLY COMPANIES
COMMUNITY
CENTERS
ACCELERATORS (RUN BY UNIVERSITIES, TTO, TECHNOPARKS, NGOs)
CORPORATE INVESTORS & GE & PE
BUSINESS ANGEL NETWORKS BUSINESS ANGELS CROWDFUNDING FFs/GRANTS LOCAL GE & PEs
Issuance
of the
first
mutual
fund
Establishment
of the
Istanbul Stock
Exchange
Introduction
of VC Funds
by the Capital
Markets
Board
Tax Incentive
Program for
Angel
Investors
Tübitak 1514 Tech-InvesTR
“Venture Capital Funding
Program” V.1
Tax Incentive
Program for
Companies
investing in
VC Funds
Establishment
of the Türkiye
Wealth Fund
Tübitak 1514
Tech-InvesTR
“Venture Capital
Funding
Program” V2
The Law on
Supporting
R&D Activities
updated
Technology
Development
Foundation of
Türkiye
Ongoing Reform Process in Türkiye
Crowdfunding
legislation was
passed
Establishment
of the Capital
Markets
Board
The Law on
Technology
Development
Zones
(L.No:4487)
Foreign Direct
Investment
Law
(L.No:4875)
First angel
investor network
“Metutech-Ban”
First fund of the
funds in Türkiye
“IVCI”
Establishment
of Invest in
Türkiye
Agency
(L.No:5523)
The Law on
Supporting
R&D
Activities
(L.No:5746)
New
Investment
Incentive
Scheme
New Capital
Markets Law
(L.No:6362)
New
Commercial
Law
(L.No:6102)
Law on
Industrial
Property
Rights went
into force
(L.No:6769)
The first
venture
capital trust
offered to
the public
20181982 1985 1987 1991 2000 2001 2003 2006 2007 2008 2009 2011 2012 2013 2014 2016 2017
Capital
Markets Law
(L.No:2499)
202020191981
Growth and
Innovation Fund
established by
Development
Investment Bank
of Türkiye (TGIF)
Techno-
Investment
Fund
established
by
Development
Investment
Bank of
Türkiye
Establishment of
the Competition
Board
(L.No:4054)
1994
January 24 Decisions in 1980
Türkiye switched to free market
economy. Liberalization
process of the Turkish
economy through structural
reforms started.
1980
New
Obligations
Law
(L.No:6098)
New Labor
Law
(L.No:4857)
Establishment
of Istanbul
Arbitration
Center
2015
250 $M
Tech Fund by
Türkiye
Wealth Fund
2021
Government is the main supporter of startups in the
idea stage
Idea StageSeed & Early
VC Stage
616 ideas received
$5M government
grant in 2021
through Tubitak Bigg
Program
1,533 Startups received
$59M worth of
government grant in
2021 through Tubitak
1501 and 1507 Programs
In the idea
stage,
government
grant is the
most active
financing
solution in
Türkiye.
Source: Startups.Watch
When invested through
venture capital and
private equity funds in
Türkiye, instead of
investing directly into the
companies
1: Turkish Tax Law, Article:325/A - Up to %10 of the total corporate income tax base. - On exit from the fund, same amount must be invested in similar venture capital funds within maximum 6 months after exit, otherwise exempted tax
amount will be paid. Even in this case, it can be considered as a tax postponing.
2: Can be obtained from the Turkish Treasury
3: Shares must be held by the angel investor for at least 2 years. - In cases where the angel investment is made in companies that have research, development, and innovations projects that are supported by the Ministry of Industry and
Technology, Scientific and Technological Research Council of Türkiye (TUBITAK) and Small and Medium Industry Development and Support Organization (KOSGEB) within the last 5 years, deduction amount will be %100 instead of %75.
%0• Withholding tax for the
distributed dividends
• Withholding tax on exit
When invested in the
Turkish Venture Capital
Investment Trusts and
Funds by corporations
The investment amount
can be deducted from
the corporate income tax
base1
When invested in
startups by individuals
with a Business Angel
Certificate2
75% of the investment
amount can be deducted
from the angel investor’s
personal tax base3
Government supports the early stage investors
Large and young population with high tech penetration rates
Average Daily
Time Spent Using
the Internet
8h 00m
Average Daily
Time Spent Using
Social Media
2h 59m
Average Daily TV
Viewing Time
3h 31m
Average Daily Time
Spent Listening to
Streaming Music
1h 46m
Cellular Mobile
Connections
%92
78 Million People
Internet
Users
%82
70 Million People
Active Social
Media Users
%81
69 Million People
6th Largest User
Base for
7th Largest User
Base for TWITTER
14th Largest
User Base for
14th Largest
User Base for
Source: Council of Higher Education. Associate Degree Programs, Bachelor’s Degree Programs and Graduate
Programs are included.
One of the Largest Talent
Pools in Europe and MENA
Region
Number of graduates
from universities during
the 2019-2020 academic
year in Türkiye
1,112,747
75,073university graduates
from
Engineering and
Engineering Trades
21,006university graduates
from
Information and
Communication
Technologies (ICT)
Investments and
Successful Exits
Early Stage Investments in Türkiye since 2010
Source: Startups.watch Only disclosed equity fundings are counted. Non-Equity, Secondary and Post-IPO transactions, Grants and convertible debts are excluded.
In 2021, 294 startups raised a total of $1,6B from angels and VCs, setting
a new record for the ecosystem.
1326 30
7767
99
154
186
138125
200
294
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Number of Early Stage Funding Rounds
2038 28
79
3769 57
11483
103
148
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Early Stage Investments ($M)
1 Billion $ mark
1,552
1 Billion $ mark
Source: Startups.Watch
In 2021, Türkiye was the 10th country in Europe, for early stage investments;
2nd country in the MENA region;
Source: Startups.Watch
Top 5 funded verticals in Türkiye in 2021
984
265
66 64 39
Grocery
Delivery
Game Proptech Fintech Blockchain
Top 5 funded verticals by deal value ($M)
52
3531 29
22
Game AI Deeptech Fintech Healthtech
Top 5 funded verticals by deal count
• In 2021, startups in grocery delivery, gaming,
proptech, fintech and blockchain raised the most
capital. In the grocery delivery vertical, 3 of the 4
deals belonged to Getir; in the gaming vertical,
$205M of the total $265M invested belonged to
Dream Games.
• In terms of number of deals, 2021 was led by
gaming, artificial intelligence, deeptech, fintech and
healthtech.
• With 52 deals totaling $265M in capital raised, the
gaming vertical took center stage. Gaming-focused
funds WePlay Ventures, with 8 investments, and
Ludus, with 5 investments in Turkiye, played a
prominent role in raising the profile of the sector.
• Deeptech-focused fund DCP closed their second
fund in 2021, increasing activity with the deeptech
sector.
37 6
16
52
2017 2018 2019 2020 2021
Gaming deals by deal count
Source: Startups.Watch
Gaming Sector in Türkiye in 2021
• In 2021, gaming startups raised $265M across 52
deals, breaking its all-time record.
• In 2021, Dream Games alone raised $205M, the
largest ever funding deal for a gaming startup, while
also becoming the fastest startup to reach unicorn
status.
• Actera Group, despite being a private equity fund,
made three investments into gaming startups in 2021
(Libra Softworks, Ace Games, Brew Games)
• In 2021, gaming-focused funds Ludus (8) and WePlay
Ventures (8), were, including overseas gaming
investments, the most active gaming startup
investors.
1 1 8 14
265Gaming deals by deal value ($M)
Major VC Backed Exits in the Last Decade
Source: Startups.watch, Pitchbook
2015
EXITED: Endeavor Catalyst,
General Atlantic, Earlybird
Venture Capital, European
Founders Fund, MENA
Venture Investments
ACQUIRED: Delivery Hero
(Germany)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $589M
EXITED: Earlybird Venture
Capital, Access Türkiye Capital
Group
ACQUIRED: Ebay (US)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $235M
2011
EXITED: Hummingbird
Ventures, Winston Venture
Capital, FJ Labs
ACQUIRED: Zynga (US)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $250M
2018
EXITED: Battery Ventures
ACQUIRED: Atlassian
(Australia)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $295M
2018
EXITED: Tiger Global
ACQUIRED: Alibaba (China)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $728M
2018
EXITED: Draper Esprit,
Earlybird Venture Capital,
Endeavor Catalyst,
Hummingbird Ventures
ACQUIRED: Zynga (US)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $1800M
2020
EXITED: Amadeus Capital
Partners, Innovatic Group, IFC,
VEF
ACQUIRED: PayU
(Netherlands)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: $165M
2019
EXITED: Endeavor Catalyst, IFC,
Revo Capital
ACQUIRED: Sovos (US)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: N/A
20192019
EXITED: Bullpen Capital, DCVC,
DG ventures, Rainfall Ventures,
Khosla Ventures, Start Fund,
Heavybit, Streamlined
Ventures, SV Angel, Trinity
Ventures, Tsingyuan Ventures,
TSVC, Y Combinator
ACQUIRED: Microsoft (US)
EXIT TYPE: Strategic
Acquisition
DEAL SIZE: N/A
1 Decacorn, 3 Unicorns since 2020
Turkish mobile game developer Peak
Games was established by Sidar Sahin
in Istanbul, Türkiye in 2010.
Peak was acquired by the US-based
interactive entertainment company
Zynga for $1.8B, in 2020.
Earlybird, Hummingbird Ventures and
Endeavor Global were among the
Peak’s early stage investors.
Turkish grocery delivery company
Getir was established by Nazim Salur
in Istanbul in 2015.
Getir received $983M of investment
in it’s 3 investments rounds (Series-
B,C,D) in 2021.
In the last round finalized in June
2021, Getir’s valuation reached $7.5B.
Sequoia Capital, Tiger Global, Silver
lake, Mubadala Investment Company
were among the investors of Getir.
Getir began operations also in the
UK, the Netherlands, Germany,
France, Spain, Italy, Portugal and USA.
Turkish e-commerce platform
Trendyol was established by Demet
Mutlu in Istanbul, Türkiye in 2010.
Alibaba of China acquired %82 stake
of Trendyol for $782M in 2018.
In March 2021, Alibaba invested
$350M in Trendyol in a corporate
round and that transaction carried
Trendyol’s valuation to $9350M.
In August 2021, a group of Private
Equity investors (ADQ, General
Atlantic, Princeville Capital, QIA,
Softbank) acquired %9,09 of Trendyol
for $1.5B and that transaction carried
Trendyol’s value to $16.5B and it
became Türkiye’s first decacorn.
Source: Startups.watch, Pitchbook
Turkish mobile puzzle games
developer Dream Games was
established by Soner Aydemir in
Istanbul, Türkiye in 2019.
2021, Dream Games raised $205M in
its 2 investment rounds which carried
the startup’s value to $1B.
In January 2022, Dream raised
another $255M in a Series-C funding
round and startup’s value reached
$2.75B.
Dream GamesGetirPeak Games Trendyol
New Investment
Opportunities
State Supported VC Funds in Türkiye
Total Size:
~ TL 1 Billion
Direct Investment in
technology startups
Ministry of Treasury and Finance
TUBITAK - Scientific and
Technological Research Council
of Türkiye
Universities
LIMITED PARTNERS
GENERAL PARTNERS
FUND SIZE
INVESTMENT MODEL
LIMITED PARTNERS
GENERAL PARTNERS
FUND SIZE
INVESTMENT MODEL
LIMITED PARTNERS
GENERAL PARTNERS
FUND SIZE
INVESTMENT MODEL
LIMITED PARTNERS
GENERAL PARTNERS
FUND SIZE
INVESTMENT MODEL
LIMITED PARTNERS
GENERAL PARTNERS
FUND SIZE
INVESTMENT MODEL
Ministry of
Industry and Technology
Investment in VC funds who
invests in technology startups,
Co-Investment in Series-C level
technology startups
TL 350 Million
Istanbul Development Agency
Due diligence is ongoing with 17
VC Funds as of January 2022
TL 400 Million
Investment in VC funds who
invests in technology startups
Vakif Katilim
Albaraka
TL 100 Million
Direct Investment in technology
startups
Türkiye Wealth Fund
TL 250 Million
DETAILS WILL BE
ANNOUNCED IN 2022
VC Fundraising Activity in Türkiye
35
75 75
129
73
9
122142
398
178
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Capital raised and reserved for Türkiye ($M)
The total amount of new funds
raised equaled $178M in 2021.
The total fund size in the last;
• 2 years: $576M
• 3 years: $718M,
• 4 years: $841M,
These amounts represent the
total capital available to Türkiye
via closed funds.
Source: Startups.watch
Corporate Venture Capital (CVC) Participation
11 14 11
33
222
2017 2018 2019 2020 2021
Amount of deals participated by CVCs ($M)
29
37
29
69
87
2017 2018 2019 2020 2021
Number of deals participated by CVCs
Source: Startups.watch Only disclosed equity fundings are counted. Non-Equity, Secondary and Post-IPO transactions, Grants and convertible debts are excluded.
CVCs participated in 87 angel and VC deals in 2021. The total amount of investment reached all time high
$222M. Alesta Investments, APY Ventures (Albaraka Türk), Bilişim Vadisi GSYF, Ak Portfolio and Türk
Telekom Ventures were the most active CVCs in 2021, participating in a total of 39 deals.
Why Invest in Turkish Startups?
• Mature ecosystem supported by ever
expanding reforms
• Large and young population with high tech
penetration rates, ideal for product testing
• Affordable and competent developer pool
• Ever increasing investment trend with
increasing VC and CVC involvement
• Successful exits to global companies
• 1 decacorn, 3 unicorns in the last 2 years
• Co-investment opportunities with the
Turkish VC funds to benefit from the next
successful exit round
invest.gov.tr