Towards the end of 2022, as global
economic crisis concerns grew, there was a general perception that 2023 would
be a challenging year for technology startups. Worldwide, there was a significant
decline in investments, especially in deals exceeding $100 million.
In Turkey, in addition to global
uncertainties, the country had suffered deep psychological and economic wounds
due to the earthquakes on February 6th. These earthquakes claimed the lives of
thousands and directly affected nearly 15 million people, bringing the
country's life to a standstill. During this period, investments in technology
startups significantly slowed down. Efforts were focused on healing the wounds
caused by the earthquakes.
Just three months later, in May,
Turkey held its general elections. Foreign investors, in particular, awaited
the election results, which further slowed down investments in the country.
In the first half of 2023, 162 tech startups received a total of $218 million in investments. The median investment value was $350,000.
The distribution of investment
amounts by sectors is as follows: ·
$118 million for the Artificial Intelligence & Machine
Learning sector ·
$113 million for the Digital Marketing & Sales sector ·
$21 million for the Gaming sector Additionally, there were a total of
24 startups in the Artificial Intelligence & Machine Learning sector, 17 in
the Gaming sector, and 14 in the Finance sector that received investments. In
the first half of 2023, a total of 164 investment rounds took place. When
looking at the overall figures, it appears that the investment amount reached
the levels of the first half of 2022. However, a closer look reveals a
different picture. Firstly, there are 29 investment rounds in which the
investment amounts were not disclosed, as indicated in the graph. In these 29
rounds, two had valuations between $10-20 million, while the rest had
valuations below $5 million. This suggests that the majority of the investment
amounts were below $1 million. Therefore, assuming that the undisclosed
investment rounds were also below $1 million, it can be observed that out of
the 164 investments made in the first half of 2023, 129 of them (78%) were
below $1 million. In the first half of 2022, 118 out of 166 investments (71%)
were below $1 million. The increase in the number of investments below $1
million in the past half-year was primarily due to crowdfunding investments. In
2023, there were 32 crowdfunding investments, with 29 of them being below $1
million. Another significant difference when
comparing the 1st half of 2022 to the 1st half of 2023 was the absence of any
investments in the range of $10-100 million in 2023. These investments,
predominantly involving foreign investors, indicate a decline in foreign
interest in the ecosystem for this year. Despite these discouraging numbers, it
should not go unnoticed that there were 34 investments in the range of $1-10
million, marking the second-highest number of investments in this range on a
semi-annual basis in the history of the ecosystem.
While the first half of 2023 paints a
somewhat challenging picture, there is no immediate cause for concern in the
short term. However, concerns arise for the medium and long term, especially
regarding the emission premium tax imposed on startups that receive investments
in Turkey, which might lead these startups to move their headquarters abroad.
Additionally, the migration of talents to foreign countries to work for foreign
companies remotely could have adverse effects on the quality of startups.
Receiving salaries in foreign currency might also become increasingly
challenging for startups. For 2023, taking into account factors
such as the global decrease in technology startup investments, it can be stated
that the ecosystem had a favourable period in terms of investments. In the
first half of 2023, the total investment amount was $218 million, with $105
million of this amount coming from a type of investment known as Convertible
Note, received by the company named Insider. This period is noteworthy as it
marks the lowest investment amount achieved in the past two years. The scarcity
of investments in the range of $10-100 million is particularly noticeable and
suggests a decrease in foreign interest in the ecosystem. However, it's
important to highlight those 34 investments in the range of $1-10 million took
place in the first half of 2023, marking the second-highest number of
investments in this range on a semi-annual basis in the ecosystem's history. When looking at the cities where
startups are based in Turkey, Istanbul remains the city that received the
highest amount of investments. 126 startups in Istanbul received approximately
$190 million in investments. Among these Istanbul-based startups, 21 received
investments through crowdfunding. In Ankara, 14 startups received a total of
$9.2 million in investments. Notably, startups in Ankara that received over $1
million in investments include Frantic Games ($2.4 million), Hipporello, which
operates from the United States but also has operations in Ankara ($1.8
million), and Beam Teknoloji ($1.5 million). In Izmir, 10 startups received a
total of $12.5 million in investments. The majority of this $12.5 million, $6.5
million, belongs to HotelRunner, a travel startup headquartered in the UK but
operating from Izmir. Other notable startups include Paxie Games ($3 million)
and FileOrbis ($2 million). Kocaeli received a $3.3 million
investment, with the majority of this investment, $3 million, going to Saha Robotik.
Additionally, the city of Erzurum, appearing on the list for the first time,
received an investment of approximately 7.5 million Turkish Liras for For
Physician, a platform guiding general practitioners located in Erzurum.
In 2023, the sectors receiving the
most investments are consistent with previous years. These sectors include
Artificial Intelligence & Machine Learning, Gaming, Finance, and Health.
Additionally, there has been a notable increase in investments in the Digital
Marketing & Sales sector, particularly in Software as a Service (SaaS)
startups.
In the first half of 2023,
startups operating in the field of Artificial Intelligence and Machine Learning
received approximately $118 million in investments, while startups in the
Digital Marketing and Sales sector received around $113 million in investments.
It's worth noting that Insider, which received a $105 million investment, is
active in both of these sectors. Investments in the Gaming sector were lower
compared to 2021 and 2022. However, one of the noteworthy sectors in 2023 is
Digital Transformation. Six startups in the digital transformation and
documentation digitization sector received a total of $8.95 million in
investments. Another standout sector is Waste Management, with four startups in
this field receiving a total of $6.5 million in investments.
Resource: Startupcentrum.com/EN_S1'2023 Turkish Startup Ecosystem Investment Report
Photo by Daria Nepriakhina 🇺🇦 on Unsplash
