Turkish startups have seen a surge in investment over the last three years, surpassing many of their European rivals in terms of drawing capital into the country’s entrepreneurial sector, according to an Anadolu Agency (AA) report Thursday.

Last year, Türkiye ranked 12th in Europe in terms of startup investments, while Istanbul secured the sixth spot among European cities.

Moreover, Istanbul clinched the second position in the gaming industry across Europe, closely trailing only behind London.

"In five years, our vision is quite ambitious," said Ali Kocer, managing partner and co-founder of Bottobo Robotics.

"We want to grab at least 2% of the market share from the robotics industry, which is valued at around $20 billion."

Ahmet Burak Daglioglu, head of the Turkish Presidential Investment Office, noted that technology companies in Türkiye have attracted around $3.5 billion in investments over the past three years, with a significant portion originating from overseas.

Last year saw 277 startup deals in Türkiye, as reported by the accounting firm KPMG’s Turkish Startup Investments Review 2022, marking an increase from 255 deals in 2021.

The total value of these deals surged to $1.84 billion (TL 53.2 billion) from $1.4 billion over the two years. Türkiye’s startup landscape started to take off in 2017, when seasoned venture capitalists contributed to launching global successes, such as the delivery company Getir.

Developments on the investor side and legislative changes have also helped the country reach new heights.

Investor-side developments and legislative changes have played a pivotal role in propelling the country to new heights.

Six unicorns in three years

While Türkiye had not previously produced a "unicorn" – a startup valued at over $1 billion – that changed in 2020 with the emergence of six such companies, including Getir, Dream Games, Hepsiburada, Trendyol, Peak Games and Insider.

The COVID-19 pandemic accelerated the digital transformation in all sectors, leading to a $2 billion investment in Turkish entrepreneurs, according to Serkan Ünsal, founder of the investment analytics platform Startups.

"This year, there is a shortage of funds in terms of investment all over the world, including Türkiye," he noted. "Turkish startups secured $154 million in a nine-month investment round in 2023. However, a few large investments in the remaining three months could see yearly investment reach $800 million in 2023," Unsal added, making Türkiye the lead country in Southeast Europe.

"If you look at the Turkish entrepreneurial ecosystem for the past two decades, you will see that initially it was only local success stories in the first decade, and then the global success stories emerged," said Enis Hulli, general partner at 500 Emerging Europe.

"This is a country where there were zero unicorns in 2019. And now we have six unicorns that we’ve produced over the past three years," added Hulli.

In 2022, gaming, artificial intelligence, machine learning and FinTech verticals were Türkiye’s top sectors.

"We have brilliant minds, really great support from the government as well, with lots of different tax intensive," Kocer said.

According to Ünsal, an average of 600 startups are established in Türkiye every year. "We are in a good position compared to countries that have no unicorns," he added.

Türkiye’s Investment Office has been working on technology entrepreneurship since 2015 and trying to raise interest among international investors in this field.

"One of the most important topics is to increase our exports, particularly in the field of technology," Dağlıoğlu said.

"Otherwise, as the world is digitalizing, it will be impossible to achieve those ambitious goals through traditional means alone. There is a lot of competition there."

Slush, a technology and startup investor exhibition, also assists with investment by "creating an enabling environment directly between companies and their target audiences to accelerate our technology exports," he added.

Investment Office fosters investment in Turkish tech startups and supports global expansion by providing access to major international innovation events.

This year, Slush drew in an attendance of 13,000 visitors from more than 100 countries.

Showcasing innovations in digital finance services, augmented reality, virtual reality, digital health services and smart medical devices, Turkish startups had the opportunity to meet with potential investors and expand their visibility on the international market.

Led by the Investment Office, more than a dozen promising startups recently participated in Slush in Helsinki, Finland’s capital.

Türkiye’s demographic potential

Türkiye has a sizable youthful and urbanized population. According to last year’s data, nearly 77% of the 85.27 million people live in towns and cities.

While the average age is 33.5, nearly 13 million are 15 to 24 or 15% of the total population – a larger youth population than most EU countries.

As young people are more likely to adopt new technologies, Türkiye’s population provides startups with a solid domestic customer base.

Its large economy, tech-savvy population, and deep talent pool also serve as a breeding ground for ambitious tech startups aiming to go global or expand into regional markets.

"Türkiye has a lot of good talent and skill sets," Hulli said. "Turkish engineers now are well-equipped with the culture, skill sets and connections to build for more Western-developed technology markets."

‘Home to most female-founded unicorns in Europe’

Four of Türkiye’s six unicorns, including major online sales platforms Hepsiburada and Trendyol, were founded by women, indicating a growing trend for female involvement.

Trendyol Group’s International Trade Director Burcu Yaşar stated that women comprised 58% of the company’s 2,000 employees. "Not only our employees but also 28% of the more than 300,000 sellers on the platform are women," she added.

"Promoting gender equality and supporting female entrepreneurs is a key focus," Dağlıoğlu said. "Türkiye leads many of its competitors in this regard."

In addition to its sizeable population, Türkiye’s geographical location provides entrepreneurs with easy access to Europe, the Middle East, North Africa and Central Asia.

"It is very easy to start a venture, develop a product, test it, and scale it in Türkiye," he said.

"As the Investment Office, we assist startups in accessing capital. We have witnessed a growing number of tech startup funds in Türkiye over time, and we maintain close collaboration with all of them. We advise that if startups have good ideas, they should fiercely pursue them."