From the seed stage to their first steps on the global stage, Turkish startups have managed to make a name for themselves and achieved success stories that have been prompting new funds to engage in the country’s ecosystem to look for opportunities.

This has been affirmed with the inflow of long-sought capital, in addition to the support from state institutions, the Scientific and Technological Research Council of Turkey (TÜBITAK) and corporate acceleration programs.

This trend has gained significant momentum over a recent couple of years as millions of dollars poured in, attracting the attention of global funds, including from the United States.

It has also brought in a new form of venture capital for some startups: special purpose acquisition companies, also commonly referred to as SPACs.

Turkey's leading mobility app Martı is now set to go public through a merger with Galata Acquisition Corp, a blank-check company listed in New York. The deal marks a Turkish company's first initial public offering (IPO) via SPAC in New York.

SPACs are shell corporations that list on stock exchanges and then merge with an existing company to take that target public without it going through the conventional IPO process.

Such deals have emerged as a form of public market venture capital for some startups that have struggled to raise funds through traditional routes.

Martı and Galata this week announced the execution of a definitive business combination agreement, in a move that could bring along new opportunities for Turkish ventures seeking to expand to the international arena.

Expert in mergers

Galata Acquisition Corp. has been formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, or reorganization or engaging in any other similar business combination with one or more businesses or entities.

While the company may pursue an initial business combination opportunity in any business, industry, sector or geographic region, Galata intends to focus on technology-enabled financial services businesses in emerging markets.

Upon closing the transaction, the combined company will be named Martı Technologies Inc. and helmed by Oğuz Alper Oktem, founder and CEO of Martı. The transaction values the combined company at a pro forma enterprise value of approximately $532 million (TL 9.3 billion).

Galata raised gross proceeds of approximately $147 million in its initial public offering and was listed on the New York Stock Exchange (NYSE) in July last year, with the goal to combine with a technology-enabled business in emerging markets.

It is backed by Callaway Capital Management LLC, a Washington D.C.-based asset manager founded by Daniel Freifeld, who also serves as the SPAC’s chief investment officer.

Set up in 2018

The deal will likely close in the fourth quarter, with the combined company expected to be listed on the NYSE under the ticker symbol "MRT."

Martı is inching closer to becoming a new Turkish unicorn – a term for startups with a valuation of over $1 billion – with the deal that should give it net cash proceeds of around $280 million.

Founded in 2018 by Oğuz Alper Öktem and Sena Öktem, Marti is backed by a diverse investor base with deep knowledge of the mobility sector in emerging markets and operates a fleet of over 46,000 e-mopeds, e-bikes, and e-scooters, serviced by proprietary software systems and IoT infrastructure.

The deal is expected to give Marti resources to strengthen its market-leading position by deploying additional vehicles across existing and new modalities.

Global investment

Elaborating on the development, Serkan Ünsal, founder of ecosystem monitor, startups.watch, said in Turkey, startups’ task to find financing gets more challenging after the Series B round.

"Because there are almost no funds in this area. Therefore, funds from abroad remain the startups’ largest source. It is also quite difficult to convince those funds. Martı has opened a new door for startups in Turkey by finding financing through a SPAC, a method that a Turkish startup is trying for the first time, it has become stronger and is being listed," Ünsal said.

He thinks much more ventures securing financing with a SPAC will be seen in the coming years.

"One thing to note here is Martı’s current investors. The second fund of 212, names such as Hasan Aslanoba and Nevzat Aydın are also Martı investors. This has proved to be a positive development for them as well; an initiative they invested in is going public through SPAC, and I think they will make an exit with enormous gains in the coming years."