destination for early stage investments - turkey

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


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.


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

INSTAGRAM

7th Largest User

Base for TWITTER

14th Largest

User Base for

FACEBOOK

14th Largest

User Base for

LINKEDIN

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


In 2021, Türkiye was the 10th country in Europe, for early stage investments;

2nd country in the MENA region;


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


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)


Acquisition

DEAL SIZE: $235M

2011

EXITED: Hummingbird

Ventures, Winston Venture

Capital, FJ Labs

ACQUIRED: Zynga (US)


Acquisition

DEAL SIZE: $250M

2018

EXITED: Battery Ventures

ACQUIRED: Atlassian

(Australia)


Acquisition

DEAL SIZE: $295M

2018

EXITED: Tiger Global

ACQUIRED: Alibaba (China)


Acquisition

DEAL SIZE: $728M

2018

EXITED: Draper Esprit,

Earlybird Venture Capital,

Endeavor Catalyst,

Hummingbird Ventures

ACQUIRED: Zynga (US)


Acquisition

DEAL SIZE: $1800M

2020

EXITED: Amadeus Capital

Partners, Innovatic Group, IFC,

VEF

ACQUIRED: PayU

(Netherlands)


Acquisition

DEAL SIZE: $165M

2019

EXITED: Endeavor Catalyst, IFC,

Revo Capital

ACQUIRED: Sovos (US)


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)


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

destination for early stage investments - turkey

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