Turkey's young but growing community of corporate investors is hoping to bring prosperity to the country and nervous about the elections.

Photo by Mar Cerdeira on Unsplash

“Entrepreneurs are the angels of democracy,” according to İhsan Elgin, founder of Turkey-based Girişimi Kurumlar Playformi (or GKP, Entrepreneurial Institutions Platform*) for its Corporate Venture Capital Conference.

The sentiment resonated with the 400-strong audience of local investors and startups as the country prepares for its general election on Sunday.

With many analysts expecting a close result, many of the 70-plus corporate venturers in the country described themselves as unable to sleep because they were so nervous about the results. Most are hoping for the end of President Recep Tayyip Erdoğan’s rule, with one investor telling GCV on the sidelines of the conference they would leave the country if the opposition lost.

Kemal Kılıçdaroğlu, head of the combined opposition, has promised (at least in a campaign advert translated by the Financial Times): “When I come into power, democracy will come, money will flow, investments will flow, the currency will appreciate, prosperity will come.”

A young but growing CVC ecosystem

Turkey has seen a handful of global-scale startups emerge in recent years, including grocery delivery company Getir, which was valued at more than $11bn when it raised a series E round last year, and ecommerce marketplace Trendyol, which was bought by Alibaba in 2018. However, neither of these has been backed by domestic investors, it has been the likes of Tiger Global and Sequoia that have fuelled their growth.

However, the scions of family businesses are increasingly interested in setting up CVC units. Tekfen Holdings, one of Turkey’s oldest industrial conglomerates, whose activities span everything from steelmaking to agriculture, was one of the earliest to set up an investment arm in 2017. Tekfen Ventures, based in New York, has invested in companies such as Sight Machine, which has developed a data platform for manufacturing, and Prospera, a precision agriculture company that was acquired for $300m in 2021.

Since Tekfen’s debut, there have been more.

Tupras, Turkey’s largest industrial enterprise, set up a venture arm at the end of 2022, and is starting to do its first deals in the country. Vinci, the corporate investment arm of Inci Holdings, the maker of batteries and wheel rims, is doing deals internationally with a particular interest in large energy storage. Food conglomerate Yildiz is investing in startups, as is Sabanci Ventures, the CVC arm of the financial services and industrial conglomerate. Industrial conglomerate Eczacibasi also has an investment arm, Eczacibasi Momentum, with a €30m fund.

Some 37, or half of Turkey’s CVCs, were set up in 2021 and 2022, so this is still a very young sector.

Battling headwinds

Corporate venture units account for a disproportionately large part of Turkey’s startup funding deals. In the first two months of 2023, there were eight investments that had participation from CVCs, according to GKP’s data. This was 38% of all activity.

The GCV data in the chart below shows slightly different numbers, but still shows the rapid rise in deals in 2021 and 2022.

The current regime has tried to support the ecosystem, with plans to set up a fund-of-funds and co-investment vehicles later this year. There are tax breaks available for venture funds, including CVCs, if at least 90% of their deals are made inside the country.

However, many conference attendees pointed to rule changes, high inflation and currency depreciation which have collectively hampered startups and corporate investors — unless they had been able to diversify overseas and could tap into hard currencies.

Turkey has seen a slowdown in activity this year as the economic headwinds pile up, attendees said.

But the CVC investors and the startups they are backing are hoping to be part of a wave of change. As one young founder, who was born just two years before President Erdogan took power in 2002, said: “I am so excited our generation will change Turkey.”

Disclosure: A delegation of local CVCs curated by GKP is expected at next month’s Global Corporate Venturing Symposium in London and GKP paid for flight, food and accommodation to James Mawson.


James Mawson

James Mawson is founder and chief executive of Global Venturing.