Türkiye breaks record in seed stage investments, ranks 2nd in Europe
The 158 investment deals in the seed stage from January through March positioned Türkiye as the second most invested in Europe in this stage, trailing behind the U.K., which closed 247 agreements
startup ecosystem demonstrated robust growth in the first quarter of 2024, driven by record investments in seed-stage startups and significant contributions from government-backed funds.
While challenges persist, particularly in private investment activity and crowdfunding, the ecosystem’s potential remains promising, buoyed by diverse sectors and strategic acquisitions.
The 158 investment deals in the seed stage from January through March positioned Türkiye as the second most invested in Europe in this stage, trailing behind the U.K., which closed 247 agreements, according to data by the industry monitor, startups.watch.
Overall, Turkish startups attracted $111 million across 161 rounds in seed, early and advanced stages, which saw a notable contribution from the Scientific and Technological Research Institution of Türkiye’s (TÜBİTAK) BiGG Fund, formerly a grant and now transformed into a pre-seed fund.
The state backing, notably through the BiGG Fund, played a pivotal role in the first-quarter results, with 107 out of 161 investments originating from this fund. It marked the highest first-quarter investment count ever made by a state institution.
Excluding government initiatives, the total investment count reduces to 54, marking the lowest private investment activity in the past 15 quarters. Despite this, Türkiye’s position as the second most invested country in seed-stage investments in Europe underscores the growing significance of its startup ecosystem. The January-March period of 2024 became the quarter with the highest investment ever.
Türkiye rose to the top rank in the Middle East and North Africa (MENA) region in terms of the number of investments in the seed stage.
LEADING IN PRE-SEED
As for pre-seed investments, Türkiye emerged as the leader in both Europe and the MENA region with 112 deals, again influenced by the BiGG Fund.
Government support played a significant role in both pre-seed and seed-stage investments. Fifteen out of 161 investments involved either a company or corporate venture capital among the investors. Corporate venture capital participation in investments reached 28% in the first quarter, excluding BiGG Fund transactions.
FOCUS ON GAMING
The data also highlighted the growing influence of the gaming sector within Türkiye’sentrepreneurial landscape.
Gaming ventures secured $3.9 million with nine investment rounds, the startups. watch said. This placed Türkiye seventh in Europe in terms of deals’ size and second in terms of the number of gaming investments.
In the MENA region, the country ranked second in terms of size and first in terms of the number of agreements. Particularly noteworthy is the country’s strength in mobile gaming startups, signaling the emergence of new stars in the sector, albeit with increasing challenges in achieving previous valuations.
CROWDFUNDING DISAPPOINTMENT
Additionally, the establishment of 350 venture capital investment funds, more than half of which were founded after 2022, contributed to 4% of the investments in the first quarter, the data showed. Fourteen of the funds are currently not active.
However, the impact of crowdfunding platforms seems limited. Despite the growth in crowdfunding platforms, only eight campaigns were successful out of 24 launched across 11 active platforms.
The data underscored BiGG Fund’s impact on the entrepreneurial ecosystem, with investments primarily directed toward biotechnology, artificial intelligence and healthcare technologies. The fund’s influence was evident in the overall increase in biotechnology investments.
Notable acquisitions during the first quarter include Re-Pie’s acquisition of Modanisa, one of Türkiye’s leading e-commerce companies, and Papara’s acquisition of T-Bank.