NEXT PEAK?
MOBILE GAMING COMPANY PEAK’S ACQUISITION BY ZYNGA SHINES SPOTLIGHTON TURKISH STARTUP ECOSYSTEM AND UPCOMING POTENTIAL UNICORNS
ALMOST a year ago, Peak Games arranged a press conference in the fancy Soho House in Istanbul’s Beyoglu district. The meeting began at the extraordinary time of 8pm with dinner. An hour later, dozens of plasma screens lit up simultaneously with TV ads from the Turkish mobile gaming company.
The company announced that it was taking out “Games” from its name and was making to bold move to become a fulshort ly-fledged tech company. Its Strategy Manager, •mer Inonu, claimed that the company had become a unicorn, with a valuation over one billion dollars. Many journalists present didn’t believe what he said. If he was right, Peak would have the same valuation as some well-established banks in Turkey.
More than a year later, the company was acquired for a consideration of $1.8 billion by its Nasdaq listed competitor, Zynga. The company officially became a unicorn through the exit.
Zynga will pay $900 million in cash and $900 million in shares. Previously, the company had acquired another Turkish gaming company, Gram Games, for a consideration of $250 million in 2018.
European VC’s with a focus on Eastern Europe and Turkey, Earlybird and Hummingbird Ventures and the nonprofit Endeavor Global that invests via its Endeavor Catalyst fund were the investors in the company, alongside private individual investors. The company had only received a mere $25 million until now, which is considered quite low compared with peers.
OTHER JEWELS IN THE BASKET
For a country of 82 million people, Peak’s exit can be a late signal of the potential in Turkey, which has been underperforming in bringing out a unicorn. There are a handful of tech companies with valuations over one billion dollars in the country, but the majority of them are owned by international companies. But there are several startups that can become unicorns in a time frame.
Sahibinden.com, the classified company, is seen as the largest technology firm in Turkey with valuations well over one billion USD. The bootstrapped company was established by Aksoy Group, which has investments in tourism, real estate and internet technologies. Sahibinden.com is the largest advertising and shopping website in Turkey that features product listings in real-estate, automobiles, consumer electronics and other products and services.
Trendyol, the largest mobile e-commerce platform in Turkey, sold a 75 percent stake to Alibaba for a consideration over $700 million in 2018. The company is one of the biggest in the Middle East and North Africa (MENA) region and has since surpassed a one billion USD valuation.
The first landmark deal and exit in the ecosystem was the sale of Yemek-Sepeti, the online food ordering platform, to Delivery Hero for a consideration of $589 million in 2015. It also marked one of the largest acquisitions ever made in the online food ordering sector. The company is rumoured to have grown four-fold since then and is regarded as one of the top tech companies in the country.
Hepsiburada.com, one of the largest and oldest e-commerce stores in Turkey, was established in 1998 by Dogan Holding. Abraaj, the private equity firm, acquired 25 percent stake in the company for $400 million in 2015. The online retailer has followed a strong growth trajectory since then but has experienced a significant depreciation in Turkish currency, like its domestic peers, which is keeping its valuation lower when compared
with its global peers. However, its valuation is generally accepted to be over one billion dollars.
N11.com, another e-commerce platform, a joint venture of Dogus Holding in Turkey and South Korean SK Group, was launched in 2012. It has quickly become one of the largest online retailing platforms, surpassing e-Bay’s GittiGidiyor.
UNICORN CANDIDATES
There are more than 400 unicorns globally as of June 2020, according to CB Insights, with a cumulative valuation exceeding $1,393 billion. A unicorn startup or unicorn company is a private company with a valuation over one billion dollars, CB Insight remarks. Variants include a decacorn, valued at over $10 billion, and a hectocorn, valued at over $100 billion, it adds. Turkey that has a one percent share in global trade and according to a reasonable estimation, it should have three to four unicorns. Below are the potential unicorn candidates that startup founders and VC execs listed for Executive TR Monitor:
Getir, the online fast food delivery startup, which raised $38 million earlier this year, is seen as the most important candidate to become the first unicorn coming out of Turkey. The company, has disclosed plans to raise $100 million later this year to finance its globalization effort. It doubled in size during the C•VID-19 crisis and could become a unicorn in 6 to 12 months, a company executive who requested anonymity, said.
Modanisa, the online conservative fashion retailer, is one of the largest companies in this global niche sector. It received dozens of millions of dollars in investments from Goldman Sachs, Wamda Capital and EBRD in 2019, raising its valuation to over $200 million. It aims to list in an international stock exchange in a few years, with the goal of becoming a unicorn.
Insider, a startup providing online conversion and optimisation services, has received a $32 million investment from Riverwood Capital, Sequoia Capital and Endeavor Catalyst with a valuation over $200 million, according to Webrazzi, a Turkish tech news portal. Total investments reached $46 million. The startup moved its headquarters to Singapore and also aims to list in an international stock exchange.
Hazelcast, an in-memory computing platform, also recently raised $50 million in a Series D round in February this year. C5 Capital, Bain Capital Ventures, Earlybird Venture Capital and Capital •ne Growth Ventures were among its investors. If it sustains the current growth trajectory, the startup has the potential to become a unicorn in a few years, a VC executive said.
Nesine.com, an online sports betting and national lottery website, part of Dogan Holding, is another large-size company in the tech space. The company exploits growth opportunities in the sports betting business as the biggest player in the country.
Good Job Games, an Istanbul-based mobile gaming company is another fast growing startup, with projected valuations between $200 million and $250 million. Turkpara, an electronic payment startup, is evaluated to have a valuation at those levels, too.
Another fintech company that has exponential growth prospects is Odeal, which provides mobile P•S services through smart phones.
Istegelsin, an online supermarket, is grew quickly during the coronavirus crisis, increasing its local footprint outside Istanbul in a bold move. •ne of the co-founders and investor in the startup is a member of Ulker family (Yildiz Holding), with deep pockets. The company thus has the potential to continue its fast growth trajectory.