It has been a week since the failed military coup attempt in Turkey. I don’t know the situation in other cities, but life has fast returned to normal in Istanbul. Businesses are open and people are going about their daily lives. Heavy traffic is back and that’s probably the best indication of a return to normal in a city like Istanbul.
Another indication that life has fast returned to normal comes from our portfolio. Prior to the coup attempt, 5 of our companies had received term sheets and were in the due diligence phase with investors. Following the coup attempt, 4 of the 5 investments are still proceeding. Only one investor dropped out. That’s a pretty good sign.
I think that the fact that 80% of the investments are still proceeding shows two things.
First, we’re fortunate that the Turkish government acted as swiftly as it did during and following the coup attempt. In the absence of this swift action, if the coup had been successful or if civil order had not been restored following the failed coup attempt, Turkey would have been in a far more precarious state than it is in now.
Although many individuals and foreign governments have criticized the Turkish government for the scale and speed of the post-coup detentions, we need to keep in mind what just happened. Members of the military tried to overthrow a democratically elected government. I can’t speak to the merits of each individual detention. That requires a case-by-case analysis. However, faced with the same threat, most democratic governments would respond in a similar way, and rightly so.
The second conclusion we can draw from the fact that 80% of the planned outside investments in our startups are still proceeding is that local investors as well as those foreign investors who invest in emerging markets like Turkey are resilient. In fact, several of them told me that they and the institutions they represent have done business in countries with much more volatile conditions than those that Turkey faces today.
Ideally, the coup attempt wouldn’t have happened. But, it did. So our assessment of the current situation needs to be grounded in this reality.
If you would have asked me during the coup attempt what Turkey will look like a week later, I would have found it very difficult to paint a picture as positive as today.
This doesn’t mean that the risk of civil unrest has subsided. Although it seems highly unlikely, there is also a risk of further military interventions. But based on what happened a week ago, where we are today is about as good as one could hope for.