Some $111 million (TL 2.91 billion) in capital poured into the Turkish startup ecosystem through 130 investment rounds in the first half of 2023, according to data from an industry monitor. Similarly to the global trend, the investment in Türkiye declined, as venture capital funding worldwide plummeted in the first six months, as wary investors stayed away, coupled with lower demand amid sharply higher interest rates.

Still, the amount and deal counts are eventually expected to surpass the pre-pandemic period. The latest data was shared at an event hosted by startups.watch, gathering investors and entrepreneurs in the startup ecosystem. The event brought together startups and investors who sealed notable investment agreements in the second quarter.

Decline persists globally

In the United Kingdom, the investment amount in the second quarter of 2023 decreased by more than half compared to the same period last year, while a similar decline was observed in Israel.

Although Türkiye performed well in terms of the number of investments in the first six months compared to many countries, it ranked below Norway, Estonia and Greece in terms of amount. However, it surpassed Poland, Portugal and Bulgaria.

In the Middle East, Türkiye ranked below Saudi Arabia and the United Arab Emirates (UAE), but above Egypt in the first half of the year.

Gaming top draw

Despite the ongoing decline in investments, the gaming sector received the highest amount in terms of deal counts in the first half of 2023. Thus, although there was a fall in the total amount, gaming startups became one of the most favored segments.

Cybersecurity continued to be part of many investors' portfolios. Energy, sustainability, financial technology and marketplace were among the other popular segments. The investments received by female-led startups decreased in the second quarter of the year. Out of the 130 investments in the first half of 2023, only 19 included female entrepreneurs.

Corporate appetite grows

Serkan Ünsal, the founder of startups.watch, elaborated on the impact of corporates on startup investments, saying that the number of venture capital investment companies authorized by the Capital Markets Board (SPK) stood at 270, 13 of which have closed.

"Venture capital investment funds were involved in half of the investments in the first half of 2023. Institutions and corporate venture capital funds participated in 39 out of the 130 investment rounds in the first half of 2023," said Ünsal.

"In the first half, approximately one out of every four investments in the seed stage was based on equity crowdfunding. Startups raised a total of $9.3 million in 28 rounds," he added.

Acquisitions abroad

The ecosystem started hearing more about domestic and international startup acquisitions. Startups seem to outperform major holdings in this regard.

In the first quarter of 2023, a short- and medium-term property management company Missafir acquired a startup from Croatia, and in the second quarter, fintech Papara acquired Rebellion from Spain. The biggest acquisition deal within Türkiye occurred when rapid delivery pioneer Getir acquired the remaining shares of the e-commerce platform n11.

Impact of regenerative finance

During the event, Burcu Küçükünal, head of Akbank Digital Design and Innovation Department, emphasized that they would explore the intersection of financial systems and the impact ecosystem in the process designed by Akbank LAB and imece.

"Creating inclusive and sustainable financial systems that focus on social and environmental impact is crucial. We acknowledge that Regenerative Finance (Refi), which prioritizes the examination of untouched, balanced, predictable, healthy and sustainable systems and universal principles in nature, is a practice that should be prioritized in designing a new economy," said Küçükünal.

"To initiate the process of repairing humanity and the world, we will focus on startups utilizing regenerative finance impact through Web 3.0 technologies."