Turkish Ecosystem Overview and Trends

In this article, we will go a deep dive into the burgeoning world of Turkey's investment and startup landscape—a core market for us at ScaleX Ventures. With Turkey's investment scene gaining momentum, we're excited to unravel the dynamics and opportunities within this vibrant ecosystem for you.

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Turkish Startup and VC Ecosystem at a Glance

Since launching its first investment funds in 2011—two decades after Poland began similar initiatives in the 1990s, and even later compared to Germany's efforts in the 1980s and Silicon Valley's pioneering with Fairchild in the 1950s—Turkey's investment and startup ecosystem has embarked on an extraordinary journey, despite its relative youth of just a decade. Faced with a decade of internal and external challenges, including civil unrest, economic turmoil, natural disasters, and geopolitical tensions, Turkey has demonstrated remarkable resilience. Despite these obstacles, the market has not only persevered but also achieved significant success, giving rise to a decacorn and multiple unicorns, showcasing the enduring spirit and innovative prowess of Turkish entrepreneurs.

Turkish Ecosystem Milestones

Turkish Ecosystem at a Snapshot

Today, the Turkish ecosystem currently boasts 278 venture capital (VC) funds of various sizes, many of which have been established in recent years. This signals that the ecosystem is still in its early stages, yet iconsiderable potential for growth.

Over the past decade, this vibrant landscape has seen the rise of one decacorn and five unicorns, underscoring the rapid pace of innovation and success within the region.

Remarkably, Dream Games, the fastest unicorn achieved its status in just 23 months, while the quickest exit, Rollic Games, valued at over $100 million, took place within only 21 months. Such achievements stand out, even when compared to the benchmarks of the world's most seasoned VC markets, highlighting the Turkish ecosystem's dynamic growth and its potential to shape the future of global tech innovation.

Turkish Ecosystem at a Snapshot

Turkey stands at the forefront of Eastern Europe and the Middle East as one of the largest market by both population and GDP.

The country’s commitment to research and development is not only evident in its investment and educational emphasis but also in its strategic advantage of being within a 2-3 hour flight radius to numerous key markets. This geographic positioning, combined with its dynamic and youthful energy, solidifies Turkey's status as a fertile ground for technological progress and innovation. With substantial investments in these areas, Turkey is uniquely poised to continue leading the region in tech advancements and economic development, leveraging its distinctive blend of accessibility, vibrant talent pool, and innovative drive.

Turkey's startup ecosystem shines as the region's most dynamic and energetic hub, driven by a young, tech-savvy population where nearly half are under 30. With over 100,000 engineering graduates fueling its talent pool annually, the country offers a blend of skill and cost-effectiveness, making it a hotspot for tech innovation and a magnet for startups looking for growth and opportunity.

Deal Activity in Turkey

Despite the record investment and deal numbers during the pandemic, the same downturn like global trends seen a decrease - it's notably interesting that Turkey’s levels of investment have almost quadrupled compared to 2020 while every other region around the world is either down or slightly increased over the same period.

In 2023, the Turkish market has seen a total of 325 deals, translating into a significant investment amount of $722 million, showcasing the country's robust and thriving investment environment even post-pandemic. Despite the record investment and deal numbers during the pandemic, the same downturn like global trends seen a decrease Turkey's venture capital activity has shown remarkable resilience and growth, with a striking 380% increase in investments in 2023 compared to 2020.

Yearly Angel & VC Deals in Türkiye

In the post-pandemic climate, while the European Union and the United States have seen their deal counts decrease by 20% and 18% respectively, Turkey has demonstrated exceptional resilience. From 2020 to 2023, the Turkish market experienced a significant 60% increase in seed stage deal count.

This robust performance cements Turkey's position as a fast growing market for early-stage startup investments, with a minimal decrease of 0.9% in deal count over the same period—a stark contrast to the declines seen in the US (31%) and the EU (14%).

The Turkish startup ecosystem is ripe with opportunities, especially for those seeking early-stage VC investment. This trend, coupled with an increasing volume of early-stage investments, points to a promising rise in later-stage startups and success stories expected to emerge in the coming years, sustaining a positive trajectory in the Turkish venture capital sector.

Türkiye Yearly Deal Numbers

In the last five years, the pre-money valuations for Seed stage startups in Turkey have consistently been lower than their European counterparts by approximately 22%, and even more so compared to the US, at around 61% lower.

When these startups reach the Series A stage, the gap narrows significantly, with Turkish startups' valuations nearly aligning with the EU, trailing by just 3%, and remaining 30% lower than those in the US.

This suggests that Turkish startups are considerably undervalued at the Seed stage. Yet, as they progress to Series A, their valuations become nearly on par with their EU counterparts, though still slightly behind those in the US. This trend highlights a significant opportunity for investing in Turkish startups at the Seed stage. By doing so, investors can support these startups in reaching a global stage and raising Series A funds from international VCs.

Seed and Series A Valuations in Türkiye

Thanks to companies like Getir, grocery delivery is now a key investment area. But Turkey's startup scene is also strong in sectors like SaaS, AI, and gaming.

The country is a recognized gaming hub, drawing the attention of many global VCs interested in gaming firms. Recently, there's been a noticeable shift towards developing enterprise software and AI startups. This trend is emerging at the early stages, and we expect more late-stage VCs to increasingly invest in these sectors in Turkey.

Beyond the potential we've discussed, Turkey's startup ecosystem has already chalked up numerous global success stories.

Since 2013, startups in Turkey have generated more than $7 billion in value through exits, showcasing the country's vibrant ecosystem. This achievement includes gaming unicorns like Dream Games and Peak Games, consumer products giants such as Getir and Papara, and B2B SaaS leaders like Insider. Remarkably, the combined value created by Turkey’s top startups has now surpassed $30 billion, highlighting the significant and growing impact of the Turkish startup scene on the global market.

Looking ahead, we expect the emergence of even more unicorns in the next five years. Our analysis indicates that there are nearly 10 additional companies that are positioned to achieve valuations surpassing $500M.

VC Fundraising Activity in Turkey

The success stories we have experienced have generated significant interest among private investors, resulting in a noticeable increase in the number of created funds. In 2023 alone, the Assets Under Management (AUM) for newly formed funds surpassed $360 million, accompanied by the establishment of 80 fresh funds.

This surge is attributed to both our success stories and government incentives. Large enterprises now enjoy tax advantages when they invest in VCs, especially those focused on Turkey.

We have confidence that this trend will continue to grow, as global family offices, funds of funds, and development finance institutions increasingly recognize the potential in Turkey.

VC Fundraising Activity In Türkiye

Comparing M&A activities between 2023 and 2020, Turkey stands out with a remarkable 45% growth, marking the highest increase among several major economies.

The United States follows with a 24% increase, while the United Kingdom shows a 25% growth. India also demonstrates significant expansion, experiencing a 40% increase in M&A activities during this period.

Recently, there has been a rise in IPOs and SPACs in the region, with companies like Hepsiburada, Ebebek, and Martı leading the way. Alongside the growing interest from international companies in M&A opportunities, we expect IPOs and SPACs to become significant channels for liquidity in the local startup ecosystem.

Acquisitions & Sec. Transactions in Türkiye

Opportunity in Turkish Nexus

In addition to the thriving local ecosystem and the growing number of local success stories, we strongly believe in the immense potential of the Turkish diaspora within global ecosystems. The Turkish diaspora consists of approximately 6.5 million Turkish people living abroad, with a significant concentration in Western Europe and the USA. This diaspora represents a vast network of talented individuals who have the capacity to contribute significantly to the global startup scene. As ScaleX, we have actively invested in over 10 early-stage startups founded by members of our diaspora, recognizing their unique perspectives and innovative ideas. It is truly exciting to witness the increasing number of startups being established by Turks living abroad, showcasing their ambition and entrepreneurial spirit on a global scale.

Specifically, we're proud to shine a light on 11 inspiring success stories of startups with Turkish roots making waves globally, from medical marvels like Biontech to education pioneers like Udemy. These companies are a testament to the talent and drive of Turkish entrepreneurs.

Here at ScaleX, we're deeply connected to five of these success stories. Our involvement ranges from the ground up—helping to build and run companies—to strategic investments that help them grow. For example, our Managing Partner, Dilek, played a crucial role in providing early funding for Insider, while our partner Alper contributed his expertise as COO to Peak Games. Additionally, Berkay co-founded Opsgenie. We are also closely collaborating with the founder of Invicti Security and have made investments in Ubicloud, the latest venture by the founders of Citus Data.

These connections reflect our commitment to supporting Turkish entrepreneurs as they build successful, globally recognized companies.

Also, we would like to emphasize the remarkable capital efficiency of Turkish startups by providing a few illustrative examples. It is worth noting that many of these startups have managed to achieve exit values that are more than ten times the amount of their initial funding.

For instance, let's take a look at Opsgenie, which successfully raised $10M in funding and was subsequently acquired for an astonishing amount of nearly $300M. Another notable example is Peak Games, which secured an $18M investment and was later acquired for a staggering $1.9B. These remarkable success stories demonstrate the ability of Turkish startups to not only attract global customers but also establish international offices, all while operating with minimal funding.

Furthermore, recent research conducted by Cowboy Ventures reveals that in the United States, the average exit value tends to be around 2-3 times the initial funding amount. In the past, SaaS companies were generally regarded as more efficient than consumer startups in terms of capital utilization. However, it is interesting to observe that this gap is now narrowing. In fact, Turkish startups have proven to be in the top quartile for capital efficiency when compared to the global benchmark.

These examples serve as a testament to the remarkable achievements and potential of Turkish startups, showcasing their ability to generate substantial returns and compete on a global scale.

Thanks to the success stories from the past decade, we're at an inflection point with spillovers

The success of Turkey's tech scene has created a highly dynamic and thriving environment for knowledge sharing, which has played a significant role in fostering the growth and development of local entrepreneurs who aspire to make a global impact. According to a research conducted in 2022, it was found that Peak alumni have successfully established 65 startups. However, considering the rapid pace of growth and innovation in the Turkish tech ecosystem, it is highly likely that this number has increased significantly since then. In fact, we estimate that there are now more than 80 startups that have been founded by former Peak employees, showcasing the far-reaching impact of this spillover effect. This is just one example among many that highlight the positive outcomes and opportunities that have emerged as a result of the thriving tech scene in Turkey.


As we wrap up our overview of Turkey's venture capital and startup ecosystem, it becomes apparent that we are observing a period of significant transformation. This transformation is not just about the achievements already made but also about the unfolding opportunities that promise a substantial future. From the early days of establishing investment funds to fostering decacorns and unicorns in the face of diverse challenges, the resilience and innovative capacity of Turkish entrepreneurs have been noteworthy. The ecosystem, with its growing venture capital presence and strategic emphasis on key sectors, stands on the verge of defining its role in the global tech powerhouse.

Central to this vibrant landscape is Turkey's strategic position, its commitment to research and development, and a population that is both young and eager to learn. Turkey not only boasts the largest talent pool in its region but also offers skilled and affordable tech talent, making it an unmatched startup hub. This potent combination of factors contributes to the dynamic growth of the ecosystem, highlighting its vast potential.

Looking ahead, the expected rise of new unicorns and the steady flow of investments suggest that the Turkish VC and startup ecosystem is gearing up for an expanded role.  ScaleX Ventures remains at the forefront, actively supporting and investing in the next generation of Turkish startups, driven by the belief in their potential to achieve global success and innovation. As we move forward, the promise of continued growth and impact positions Turkey as a beacon of technological advancement on the global stage.

You can download the full report from this link.

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