Tag Archives: Turkey

Middle East Venture Partners’ new fund

Middle East Venture Partners (MEVP) yesterday announced their $250M VC fund focused on investing in startups in MENA and Turkey. This makes it the region’s largest non-corporate VC fund and second largest VC fund following Saudi Telecom’s $500M venture fund ST Ventures.

The large fund size is enabled by MEVP’s partnership at the general partner level with Mohammed Alabbar, chairman of Emaar Properties, in May of this year.

Given the large fund size, MEVP is likely to focus on larger transactions beyond the seed and series A stages, and increasingly in the Series B and C stages. In Turkey specifically, the availability of capital in the latter stages is lower than that in the former stages, so this move makes strategic sense for investments in Turkey. I imagine that the same holds true for the MENA region.

I had the opportunity to work with the MEVP team following their co-investments in Turkish female fashion marketplace Modacruz and Istanbul’s inner city ridesharing app Volt, and congratulate the team on their new fund.

Amazon entering Turkey

There have been rumors that Amazon will enter Turkey for quite some time. Although Amazon currently delivers to Turkey from abroad, it doesn’t have a local operation.

Based on the rumors, Amazon’s planned entry date into Turkey ranged from late 2017 to mid 2018. And the closer you asked to the source, the earlier the planned entry date became.

Now that Amazon has established a company in Turkey, which is owned by Amazon Europe, it’s likely that the late 2017 entry date communicated by sources close to the company will turn out to be correct.

Given the proximity of the date, it seems likely that the entrance will be done organically rather than through acquisition. However, given the large value at stake, the strength of local competitors, and the tendency of important negotiations to be settled at the last minute, there could be a surprise.

Amazon’s know-how in 3 areas, including how to ensure the quality of the supply side of a marketplace, IT, and logistics, will be important contributors to improving the e-commerce customer experience and growing e-commerce penetration in Turkey.

Welcome to Turkey Amazon.

Victory Day

Today is the 30th of August, which is Victory Day in Turkey.

The day commemorates Turkey’s victory in the Battle of Dumlupinar in 1922, which paved the way for Turkey’s independence in 1923.

The sacrifices made not only on Victory Day but also throughout Turkey’s War of Independence from 1919 to 1923 are the reason why Turkey exists today.

Thank you to all those who sacrificed and continue to sacrifice themselves to make Turkey possible.

Unemployment and economic inactivity in Turkey

Turkey’s most recent unemployment rate among people aged 15-64 is 12.2%. In light of the 6.5% unemployment rate across all OECD (Organization for Economic Cooperation and Development) countries, this is a high figure.

However, this figure is even more concerning when you consider that 43% of Turkey’s population aged 15-64 is economically inactive. This is the highest percentage in Europe.

In order to be considered unemployed, you have to be willing and able to work, and therefore economically active, but not working. In other words, Turkey’s unemployment rate doesn’t take into account its economically inactive population, many of which are unable to work but even more of which are not looking for work. The total percentage of people aged 15-64 in the country who aren’t working is actually 12.2% + 43% = 55.2%.

This figure is likely biased upwards by Turkey’s large informal economy. However, despite the presence of the informal economy, 55.2% remains a concerningly high figure which needs to be addressed.

The technology sector, which is what I’m familiar with, is already contributing to the solution, and has the potential to make an even greater contribution. In addition to direct employment by technology companies, online marketplaces which give internet users in general and smartphone owners in particular access to work by fulfilling the supply-side of these marketplaces already exist.

Drivers serving car hailing marketplaces, couriers delivering goods on urban logistics marketplaces, and sellers active on preowned clothing marketplaces are great examples of this behavior. However, each of these employment examples can be further promoted by better marketing the availability of these new jobs and updating regulations to reflect the economic reality and opportunity presented by these jobs which did not exist prior to the internet and smartphones.

In addition, other sectors can contribute with their own sector-specific solutions to increase both economic activity and employment.

We have a lot of work to do.

The state of entrepreneurship and technology commercialization in Turkey

The European Investment Fund’s (EIF) Technology Transfer Accelerator (TTA) recently published a 40 page report on the state of entrepreneurship and technology commercialization in Turkey.

Following a brief overview of the global state of entrepreneurship, the report dives into the Turkish ecosystem by sharing statistics pertaining to the technology sector, startup formation, and startup investment in the country.

The report also provides an overview of the different players in the local startup ecosystem including accelerators, angel investors, VC funds, corporate VC’s, governmental organizations, universities, corporations, non-governmental organizations, and the media.

The report concludes with an overview of the regulatory landscape around technology startups and recommendations to further promote tech entrepreneurship in the country.

You can read the full report here.

Turkey and MENA startup funding in 2016

In a post from October, I shared how the Turkish startup ecosystem is on track to receive north of $65M in funding in 2016. According to startups.watch, the actual figure turned out to be around $63M. This doesn’t include a very large round which has yet to be announced. If included, the figure rises to around $80M.

In comparison, the Middle East and North Africa’s (MENA) leading tech news website Wamda recently shared that startups from the MENA region received over $815M of funding in 2016. This is over 10X the funding received by Turkish startups.

However, MENA consists of 20 countries rather than 1 so a direct comparison isn’t correct.

A better way to look at the difference is in terms of population. 424 million people live in MENA, in contrast to 79 million in Turkey. This factor of 5.4X is much smaller than the greater than 10X difference in the funding received by MENA startups relative to those in Turkey.

Another way to compare MENA and Turkey’s startup funding levels is as a share of each region’s GDP. $80M is ~0.011% of Turkey’s $718B GDP while $815M is 0.026% of MENA’s $3.141T GDP.

In other words, no matter how you look at it, MENA startup funding in 2016 was well ahead of that of Turkey.

How Turkey can become an integral part of the MENA region

I participated in a panel entitled “How Turkey can become an integral part of the MENA region” at the Step conference in Dubai a few months ago. The panel was hosted by Khaled Talhouni from Wamda Capital, and the other panelists were Kerim Ture from Modanisa, Hande Cilingir from Insider, and Numan Numan from 212.

In the half hour session, we cover a wide range of topics including:

  1. How MENA funds can invest in Turkish startups and vice versa
  2. The challenges faced by Turkish startups when expanding to MENA
  3. The similarities and differences between the MENA and Turkey startup ecosystems

You can watch the full video below.