The Turkish startup ecosystem has advanced to a new level since 2017 with the introduction of a slew of regulations supporting the ecosystem, continuous improvement of ecosystem stakeholders, VCs gaining experience by establishing their second funds, and success stories coming one after another. Türkiye's startup ecosystem has entered a new era in which the number of global startups has soared. And with the wealth of experience it has amassed, it has started to push for a place in the top echelons among emerging markets.
Quick History
A fully functional startup ecosystem in Türkiye, supported by acceleration programs, incubation centers, angel networks and VCs, has been in place as far back as the early 2010s. At this juncture, startups began to receive investments, local champions emerged, and newly established local VCs started to invest for the first time. This nascent period of the Turkish startup ecosystem was known as the "Learning Era”. The most prominent feature of this era was that startups struggled to reach the metrics to raise large investment rounds due to a lack of experience in globalization. This resulted in the total amount of investment in the entire ecosystem being less than 100 million dollars per year.
The biggest motivation for entrepreneurs in this period was to become local champions because the biggest success stories they had seen up to that point had come from local champions. During this era, incubation centers, acceleration programs and co-working spaces were opened one after another. Venture capital funds were established for the first time, angel networks were established for the first time.
The number of accelerator programs increased nearly 4 times from 2010 to 2016 and reached 29. The number of incubation centers increased by 5.5 times to 51. The number of coworking spaces increased 11 times to 23. During this period, there was a dream of globalization, and many methods were being tried (international accelerator programs, Silicon Valley tours, sales-oriented programs, etc.) but there was not a very prominent story.
Profitable Years
The Turkish startup ecosystem, which had been progressing during the learning period, has entered a different era “Experienced Era” since the beginning of 2017. One of the most important factors that led to the breakthrough in this period was the fact that Getir raised big amount of money with the motto that the startup game can only be won if it is played big.
Although 2017 was the year in which the annual investment of 100 million dollars was exceeded, 2017 and 2018 were spent with the efforts of VC funds to establish their second funds. Therefore, the leap in the amount of investment gained momentum from 2020, albeit with a slight delay. In 2020, with the good news coming from the gaming industry, Türkiye's startup ecosystem owned an industry that produced global champions for the first time and started to educate all other industries in a sense.
This year, both Peak's becoming the first Turkish startup to break the $1 billion threshold and exit for $1.8 billion, and Rollic's sale of 80% of its shares for $180 million 21 months after it was founded took the entire ecosystem to another level. In 2021, Dream Games, also from the gaming industry, became the fastest Turkish startup to become a unicorn just 23 months after its establishment.
Experienced funds that established their second fund, success stories, and newly established funds thanks to many regulations pushed the Turkish startup ecosystem to over a billion dollars in 2021 in terms of investment. Getir alone raised $983 million in 2021 and an additional $768 million in the first nine months of 2022. Even when these amounts are subtracted, the investment amounts in 2021 and 2022 are more than 4 times higher compared to 2020.
Excluding Getir deals, investments amounted to $651 million in 2021 and $727 million in the first 9 months of 2022. Despite the economic contraction all over the world and the decrease in investments, this growth in startup investment is the most solid proof that the ecosystem has taken a major step forward.
Turkish Startup Ecosystem
The Turkish government is a very active and strong supporter of the startup cosystem in Türkiye, offering a variety of programs and policies to enable the establishment and growth of startups. Beginning in 2012, governmental agencies enabled and supported the development of local startup mentors, accelerator programs, angel networks, business internationalization programs, venture capital funds, and crowdfunding platforms.
The Scientific and Technological Research Council of Türkiye (TÜBITAK) has been providing grants via its TUBITAK BiGG Program to idea-stage startups since 2012. In 2021, 268 idea-stage startups received grants of 200,000 Turkish Liras each; in 2022, 178 such startups received grants of 450,000 Turkish Liras each.
Post-Pandemic Era of Turkish Startup Ecosystem
Especially during the pandemic, the digitalization wave, which teleported 3-4 years ahead, made some verticals in Türkiye the hot verticals and continued to accelerate after the pandemic. At the top of these verticals is the marketplace, ecommerce, which has gained momentum with Trendyol becoming a decacorn. The demand explosion in this vertical is accompanied by the logistics and fullfillment vertical, which has been energized by solutions such as same-day delivery.
Again, due to the pandemic, there have been good developments in Türkiye in the field of deeptech and biotech, the number of funds has increased, and new laboratories have been opened for entrepreneurs to use. Although this vertical is a vertical that requires a lot of patience compared to all other verticals, there are hints that this vertical will also be a vertical that will push upwards in the coming years.
Finally, the mobility vertical has also gained momentum, especially with the success story created by Martı, and with the support of regulators, an environment that will pave the way for many innovations has started to emerge. This makes it possible to say that this vertical is also one of Türkiye's hot topics.
Source:
“The State Of Turkish Startup Ecosystem” An In-Depth Analysis and Evaluation. Startups Watch. Istanbul, Türkiye (October 20, 2022)
