KPMG Turkey, one of the leading investment firms in the country, has published the fourth Turkey Startup Investments Report, prepared in collaboration with the company 212.

The report, which includes quarterly reviews covering the second quarter of 2021, reveals key trends, opportunities and challenges facing the venture capital market globally and in Turkey.

Speaking about the report, KPMG Turkey Mergers and Acquisitions Advisory Leader Gökhan Kaçmaz said: "With the vaccination, the global macroeconomic situation started stabilizing and this created a positive atmosphere around the world. While uncertainty about the future decreased compared to previous periods, the global venture market broke a new record by surpassing the record investment volume in the first quarter of 2021. Therefore, we can say that the second quarter of 2021 is a period of recovery and optimism."

Record broken

Regarding startup investments, Ali Karabey, co-founder of 212, said: "The total investment of 57 startups in the second quarter of 2021 reached $727 million (TL 6.2 billion), breaking the all-time record. With respect to angel investments and venture capital investments per capita, $8.8 per capita was invested in Turkey in the second quarter of 2021. This figure was at the level of $1 two years ago. The addition of five new $91 million funds established in 2021 indicates that investments will continue to accelerate. We anticipate that the success of startups in Turkey will increase exponentially in the coming period."

Upward trend

Stating that Turkey's startup ecosystem is following the upward trend seen in the world, KPMG Turkey Mergers and Acquisitions Consultancy Senior Manager Özge Ilhan said, "The volume of venture investments in Turkey increased by 43% compared to the first quarter of 2021, reaching a total transaction volume of $727 million with a total of 57 transactions, breaking a record on a quarterly basis."

"In the second quarter of 2021, there were two mega-transactions that accounted for 97% of the total investment volume and whose investment amount exceeded $100 million," Ilhan added.

"The first of these was Getir, which is one step closer to becoming a 'decacorn' with an investment of $550 million and a valuation of $7.5 billion, while the second was Dream Games, Turkey's third unicorn, which received a $155 million investment with a $1 billion valuation. Excluding the investment rounds completed by Getir and Dream Games, a total of 55 startups received an investment of $22 million in the second quarter of 2021."

A unique first-half performance

Noting that Turkey produced two unicorns, Getir and Dream Games, in the first half of 2021, Ilhan said considering that the total number of unicorns born in Turkey hit three as of June 2021, the first half of 2021 was an exceptional period.

"Getir raised $550 million in its Series D round in June 2021 and nearly tripled its valuation to $7.5 billion, including new capital, just three months after the last funding round," Ilhan further stressed.

"While Sequoia Capital and Tiger Global, which took part in the last investment round, continued their investments in Getir, Silver Lake, DisruptAD and Mubadala Investment Company became the new minority partners of Getir. After becoming a unicorn in the first quarter of 2021, Getir took a fast and huge step toward becoming a decacorn in the second quarter, accelerating its international activities," she said.

Recalling that Dream Games raised $150 million in Series B investment in June 2021 led by United Kingdom-based investment firm Makers Fund and United States-based investment firm Index Ventures, Ilhan said Dream Games was the third startup to reach a valuation of $1 billion in Turkey, and it was the second startup after Peak Games, the unicorn in the field of gaming.

Increase in global investment figures

In addition to the record investment volume of $153 billion in the second quarter of 2021, global venture investments also broke a new record with the number of new unicorns reaching 136 in the same period.

The sector that attracted the most investment by transaction volume was fast delivery and logistics followed by the gaming, marketplace and fintech sectors. In terms of the number of transactions, the gaming industry led the way, as in the first quarter, followed by fintech, health care technologies and SaaS (software as a service).

Turkey's startups in the gaming industry continued to grow and remained popular with investor interest. Three of the top 10 transactions in the second quarter were Dream Games, Uncosoft and Veloxia transactions in the gaming industry.

Five of the top 10 transactions in the second quarter of 2021 were acquisitions and the rest were investments. The two most prominent acquisitions were the acquisition of GarajSepeti by Mexican Kavak Intermediate Holdings for $25 million and the gaming company Uncosoft by Rollic Games for $20 million.

TL 6 million investment in agricultural technologies

Re Pie Portfolio Management Inc. invested TL 6 million ($702,984) in HST Tarım, one of the new generation entrepreneurs, under the umbrella of the First Mixed Technology Venture Capital Investment Fund, which was established to invest in startups with high growth potential.

Agricultural technology investments are gaining momentum. Investors are taking interest in technology and innovation-oriented business models. Seeing the trend, Re-Pie, Turkey's first alternative investment fund management company to have an operating license, has invested in agriculture and livestock. With the investment support it provides, HST Tarım will expand its base of small-scale farmers and animal breeders and accelerate its use of necessary technology.

Re-Pie continues to grow with new investments in different fields. Increasing its total portfolio volume to TL 3.6 billion, the company continues to invest in technology and innovation-oriented business models.

HST Tarım enables small-scale producers engaged in farming and animal husbandry activities to access agricultural and livestock inputs such as seeds, feed and fertilizer at affordable prices at harvest with payment alternatives for purchase of animal or other products. It integrates technological solutions and machine-learning-based infrastructure into agriculture, which many manufacturers are unaware of or find expensive. At the same time, it increases the productivity of agricultural and animal products through agricultural and animal consultancy, fertilizer and seed recommendations according to soil analysis, feed recommendations suitable for animal type and breed, satellite images, meteorological data and data analysis from precipitation radars.

With the First Mixed Technology Venture Capital Fund provided by Re-Pie Portfolio Management, HST Tarım will be stronger in the Turkish market. With the investment support it provides, HST Tarım will expand its base of small-scale farmers and animal breeders and accelerate the necessary technology investments.

Re-Pie, which plans to invest in nearly 20 startups in areas with growth potential such as Fintech, Internet of Things (IoT), education and construction technologies, aims to play an important role in the development of the Turkish startup ecosystem.

Digital transformation starts in real estate

Within the scope of the project implemented with Turkish telecommunications giant Türk Telekom and real estate marketing services provider Hepsiemlak, the numbers of those calling through the website are forwarded to real estate agents to their personal numbers. This

Türk Telekom's Mobile and Fixed Voice Integrated Call Management increases the sales efficiency and business volume of real estate offices that are members of the platform. Thus, through the software located in Türk Telekom Data Center, opportunity tracking is provided to the real estate sector with detailed reports containing information such as the number of calls and duration of forwarded calls.

Türk Telekom Strategic Customers Sales Director Ahmet Çalık said: "With the mission to lead Turkey's digital transformation, we continue to offer companies the most innovative technology solutions. In this context, we have implemented a platform that includes the integration of fixed and mobile networks for the first time in Turkey, within the framework of our cooperation with Hepsiemlak. The detailed reporting provided by this platform unveils data that will increase sales efficiency and volume. We foresee that this project, which will provide great added value to the productivity of the real estate sector, will rapidly become widespread in the coming period."

Zeynep Tandoğan, general manager of Hepsiemlak, said: "As a brand that leads the digital transformation of the real estate industry, we observe that our real estate offices increase their transaction volumes with our Smart Line product, with detailed reporting. In this way, call miss rates are reset. This means faster transactions and profits. As Hepsiemlak, we will continue our technology investments in the upcoming period with our vision based on speed, quality and trust."