KPMG Turkey &212: Startup Investments in Turkey Tripled by Deal Count in Q3 2024

Forex - KPMG Turkey and 212's "Turkey Startup Investments" report has been published.
Startup investments in Turkey nearly tripled in terms of the number of transactions in the 3rd quarter of 2024 compared to the same period last year.
According to the "Turkey Startup Investments" report prepared by KPMG Turkey's M&A and 212 teams, the number of transactions in investments made in Turkey's startup ecosystem reached 146 in the 3rd quarter of 2024, approximately three times higher than the previous quarter. However, the transaction volume decreased compared to the previous quarter, reaching $305 million. In the 3rd quarter, startup acquisitions accounted for 83% of the total transaction volume, with 22 transactions in biotechnology being the most attractive sector.
The results of the "Turkey Startup Investments" report, prepared in collaboration with KPMG Turkey's M&A Consulting Services and 212, reveal the main trends, opportunities, and challenges facing the venture capital market in Turkey.

According to the report, global startup investments reached a five-quarter high of $94.3 billion in transaction volume in the 2nd quarter of 2024; however, this figure dropped to $70.1 billion in the 3rd quarter of 2024. The Americas contributed $41.4 billion with 3,100 transactions, Europe contributed $12.5 billion with 1,700 transactions, and Asia contributed $15.6 billion with 2,200 transactions. Globally, two companies received investments of over $1 billion in the 3rd quarter of 2024, compared to nine companies in the 2nd quarter of 2024. As substantial investments in artificial intelligence (AI) continue, we also observe investments in defense technology highlighted this quarter. The largest investments in the 3rd quarter took place in areas related to AI, defense technology, or a combination of the two across America, Asia, and Europe. Consequently, applying AI to various industry solutions has become one of the main agenda items, with AI-supported defense technologies, health technologies, and biotechnology solutions attracting significant investor interest worldwide.

In Turkey's startup ecosystem, the number of transactions in the 3rd quarter of 2024 increased nearly threefold compared to the previous quarter, reaching 146, while the transaction volume was recorded at $305 million. This transaction volume indicates an increase compared to $157.9 million recorded in the 3rd quarter of last year, despite being lower than the $558.8 million recorded in the 2nd quarter of 2024.

Özge İlhan Acar, Partner in M&A Advisory Services at KPMG Turkey, stated: “In the 3rd quarter of 2024, global startup investments significantly focused on verticals such as artificial intelligence, defense technology, and biotechnology. In line with the global trend, notable investments in Turkey's startup ecosystem this quarter included 22 transactions in biotechnology, 12 in artificial intelligence, and 12 in health technologies. The total transaction volume recorded in the 3rd quarter of 2024 was $305 million, reflecting an increase compared to the $157.9 million recorded in the same period of 2023. Seed-stage investments continued to lead in terms of the number of transactions, while acquisitions made up the vast majority of the transaction volume. The number of transactions in Turkey's venture capital ecosystem increased in the 3rd quarter of 2024, although there was a decline in the number of early and late-stage investments. Foreign investors accounted for 87% of the total transaction volume while contributing 7% to the number of transactions. This slowdown can be attributed to global and local investors becoming more selective and a decrease in large-scale investments, highlighting the trend of local capital continuing to gravitate toward relatively small-scale seed-stage transactions. Nevertheless, strong foundations are present for positive expectations in the future. The increase in the number of transactions in artificial intelligence, biotechnology, and health technologies indicates that Turkey closely follows global trends and can gain a competitive advantage in these sectors. Particularly, the 22 transactions in the biotechnology vertical demonstrate Turkey's growing interest in innovative ventures. This trend, alongside the expansion of global investor interest and the local talent pool, could support the long-term development of the ecosystem.”

Ali Karabey, Founding Partner of 212, remarked in his statement: “The 3rd quarter of the year in the global startup ecosystem was marked by a general slowdown in investment volumes. However, we continue to see that strategic areas such as artificial intelligence, defense technologies, and biotechnology remain in the focus of investors during this period. The applicability of artificial intelligence across different sectors especially continues to transform and expand the ecosystem. Looking at the Turkish ecosystem, although there has been a decrease in investment volume, foreign investor interest has significantly increased. This indicates an elevation in the visibility and strength of the ecosystem in the international arena. Fields such as health technologies, biotechnology, and fintech stand out in terms of both transaction volume and strategic importance. These data reveal that despite temporary fluctuations, the ecosystem carries sustainable growth potential in the long term and demonstrate the importance of focusing on the right strategic areas. Steps taken toward Turkey becoming a global game-changer play a critical role in increasing the share of domestic ventures in global investments.”

Acquisitions constituted the largest share

In the 3rd quarter of 2024, startup acquisitions represented 83% of the total transaction volume, while seed-stage investments accounted for a 16% share. Seed-stage investments had the highest transaction volume with 139 transactions, followed by startup acquisitions with six transactions. No late-stage investments occurred in the 3rd quarter of 2024. The number of early-stage investment transactions decreased from five in the 2nd quarter of 2024 to one in the 3rd quarter. Additionally, foreign investors led the transactions in the 3rd quarter of 2024, constituting 87% of the total transaction volume with a total investment of $266.1 million.

The highest number of transactions took place in the biotechnology vertical

In the 3rd quarter of 2024, the highest number of transactions occurred in the biotechnology vertical with 22, followed by health technology and artificial intelligence (AI) with 12 transactions each. In addition, fintech, SaaS, and biotechnology were the most attractive verticals in terms of transaction volume during the 3rd quarter of 2024.

Five of the top 10 transactions were seed-stage investments

Among the top 10 transactions that occurred in the 3rd quarter of 2024, four were acquisitions, one was early-stage, and five were seed-stage investments. Topping the list was an $11 million seed-stage investment made in Livzym Biotechnologies, an industrial enzyme developer, by Lallemand, Evyap Holding, Türk Telekom Ventures, and Startupİst Ventures. This investment aims to support innovation in Turkey's biotechnology sector and enhance its global competitiveness.

Support from Koç Holding for the development of the biotechnology sector

Koç Holding, which purchased a 65% stake in StemBio, a company working on new methods for stem cell therapies, continues to channel its expertise in healthcare into new investments while aiming to empower its mission of developing innovative products that will shape the biotechnology field, which it believes will further evolve in the future.

The gaming sector maintains its appeal

Another noteworthy transaction occurred in the gaming sector. Cypher Games received a $10 million seed investment led by The Raine Group, with participation from Play Ventures, 500 Emerging Europe, and individual investors. Notable individual investors in this funding round included Riccardo Zacconi, the creator of Candy Crush, former Activision Blizzard Vice Chairman Humam Sakhnini, Tripledot Studios founder Akın Babayiğit, and former Light & Wonder CEO Barry Cottle. This participation stands out as a development reinforcing international confidence in Turkey's gaming ecosystem.

The ten largest transactions in Turkey's venture capital ecosystem in the 3rd quarter of 2024:

Rank	Target Company	Sector	Investor	Country	Stake (%)	Transaction Value ($m)	Investment Stage
1	Tam Finans	Fintech	MNT Investments B.V.	Egypt	100	200	Acquisition
2	Bulutistan	SaaS	DxBV	Netherlands	65	39	Acquisition
3	Livzym Biotechnologies	Biotechnology	Lallemand, Evyap Holding, Türk Telekom Ventures, Startupİst Ventures	Canada	18.3	11	Seed Stage
4	Cypher Games	Gaming	The Raine Group, Play Ventures, 500 Emerging Europe, Hüsnü Akın Babayiğit, Riccardo Zacconi, Humam Sakhnini, Barry Cottle	USA, Singapore, Italy, Turkey	N/A	10	Seed Stage
5	n11.com	Marketplace	Borancılı Teknoloji	Turkey	100	10	Acquisition
6	Teamsec	Fintech	Deniz Ventures	Turkey	7	5.1	Early Stage
7	ACTIO	Mobility	Preo GSYF	Turkey	N/A	3.6	Seed Stage
8	Grand Games	Gaming	Earlybird Digital East, Laton Ventures	Germany, Netherlands	N/A	3	Seed Stage
9	Stembio	Biotechnology	Koç Holding	Turkey	65	2	Acquisition
10	Qubitrium	Deeptech	ACT Venture Partners	Netherlands	N/A	1.7	Seed Stage