In 2020, a total of $178 million was invested in the Turkish entrepreneurial ecosystem. By 2021, the total investment amount exceeded $1.5 billion, driven by a few start-ups that received mega investments. This trend continued in 2022, with a total investment of $1.6 billion. However, there were concerns about how the global economic and political climate would affect tech start-ups. In the first quarter of 2023, 77 start-ups received $61 million in investments. While the number of funded start-ups remained similar to previous years, the total investment amount was lower, mainly due to a lack of high-value investments. The tech start-ups received investments in various sectors, including blockchain ($15.2 million), gaming ($9.7 million), and travel ($6.5 million). There were also investments made in eight gaming start-ups, six finance start-ups, six AI & machine learning start-ups, six health start-ups, and six digital marketing & sales start-ups. Economic uncertainties and global crises negatively affected tech start-ups' access to investments toward the end of 2022, leading to a significant decrease in high-value investments. This trend appears to continue in 2023.
After the rapid rise in previous
years, investments have slightly slowed down in this quarter. There has been a
significant decrease in investments of over $10 million, with only one
investment taking place in the first quarter of the year. However, the number
of investments below $1 million and between $1 million and $10 million is
almost at the same level as the first quarter of the previous year. This
indicates that there is still interest in tech start-ups. The decline in
high-value investments may pose challenges for tech start-ups seeking funding.
We mentioned earlier that start-ups
in Türkiye received a total investment of $61 million in the first quarter of
2023. This is the quarter with the least amount of investment since 2021. From
2021 onwards, multiple investments in the range of $10 million to $100 million
were made in each quarter, raising questions about the sustainability of these
investments in the ecosystem in 2023. Particularly, the reduced interest from
foreign investors has affected high-value investments as well. In summary,
while the number of investments in 2023 is similar to previous years, the same
cannot be said for the investment amount. The decline in high-value investments
may pose challenges for tech start-ups seeking funding. However, the continuation
of low-value investments can provide opportunities for entrepreneurs to pursue
sustainable growth strategies.
Out of the 77 technology start-ups
that received investments in the first quarter of the year, 60 were based in Türkiye.
These start-ups collectively obtained investments amounting to $39.4 million.
The investment details of 31 out of these 60 start-ups were verified through
the Turkish Trade Registry Gazette. The information for the remaining 29 start-ups,
including crowdfunding investments, was partially confirmed through the Trade
Registry Gazette. These data demonstrate the continued interest in technology start-ups
in Türkiye.
Analyzing the distribution of investment-receiving start-ups across cities, Istanbul remains in the first place. The 59 start-ups in Istanbul received approximately $50 million in investments. In Ankara, 8 start-ups obtained a total investment of $2 million. In Izmir, 6 start-ups secured a combined investment of $9.8 million. Moreover, cities such as Kayseri, Kocaeli, Konya, and Sakarya consistently have a few start-ups receiving investments each year. Additionally, Erzurum, which is making its first appearance on the list this year, received investment from For Physician, a consulting platform catering to general practitioners, with an approximate valuation of 7.5 million Turkish liras.
Foreign-based Start-ups:
17 start-ups conducted operations
in Türkiye but had their headquarters located abroad, receiving a total
investment of $21.2 million. Among these 17 start-ups, 6 registered the
relocation of their headquarters abroad in 2023. Out of the start-ups with
foreign headquarters, 10 are based in Delaware (USA), 3 in London (UK), 3 in
Tallinn (Estonia), and 1 in Düsseldorf (Germany). These data indicate that Türkiye
is an attractive market for technology start-ups and that foreign start-ups
also prefer Türkiye as their destination.
The sectors that received the
highest investments in 2023 remained largely unchanged compared to the previous
year. The gaming, artificial intelligence and machine learning, finance, and
healthcare sectors once again attracted the most investments. In 2022, there
was a rising trend of interest in blockchain start-ups in Türkiye, and this
interest seems to continue in 2023. Four blockchain start-ups received a total
investment of $15.2 million. Out of these four start-ups, two were gaming start-ups,
while the other two were focused on building the blockchain ecosystem with
their products. The travel sector followed the gaming sector in terms of
investment.
Although the first quarter of
2023 was a somewhat challenging period for technology start-ups in Türkiye, the
continuation of low-value investments and the support for domestic start-ups
can be considered positive signs. Investors need to recognize the potential of
low-value investments and support start-ups that have the potential for
significant success in the future.
Resource: Startupcentrum.com/EN_Q1'2023
Turkish Startup Ecosystem Investment Report
