VC Exit Environment Shows Signs of Improvement
A new analysis suggests a global uptick in VC activity and private market exits, with emerging markets including Turkey receiving increased attention from international investors. Trade sales, cross-border M&A, and acqui-hires reportedly remain the most common path to liquidity for startups in the region, rather than IPOs.
- After a sharp 50% drop in venture capital funding in the first quarter of 2025, the Turkish startup ecosystem saw a significant rebound in the second quarter, attracting $857.9 million across 46 deals. This surge was largely driven by Uber's $700 million acquisition of an 85% stake in Trendyol Go, highlighting the growing global competitiveness of Turkish startups. Foreign investors played a dominant role in deal volume, contributing 97% of the total investment in Q2 2025. - Merger and acquisition activity in Turkey reached a record high in 2025, with a total volume of $11.81 billion. Foreign investors were significant contributors, completing 55 M&A deals valued at $7 billion. Notable transactions included the $1.72 billion acquisition of vehicle inspection stations by the MOI Joint Venture consortium and Apollo Global Management's $1 billion purchase of a stake in the TANAP natural gas pipeline. - Despite a broader market slowdown in 2025 that saw total startup investment fall to $589 million, certain sectors demonstrated resilience. Fintech and gaming together captured 68% of all capital deployed, with fintech reaching a record funding level. Artificial intelligence startups accounted for a quarter of all investment deals, indicating strong investor interest in the sector. - A persistent challenge for the Turkish ecosystem is the "Series A crunch," with difficulties in transitioning from seed to later-stage funding rounds. In 2025, no Series C or later-stage investments were recorded, and the conversion rate from seed to early-stage was approximately 13%, significantly lower than in major European ecosystems. This often leads many Turkish startups to relocate abroad after initial funding to access larger capital pools. - To foster deeptech innovation, initiatives like the De-TECH Venture Builder are emerging to connect university research with market opportunities. This program, funded by the European Union's EIT Higher Education Initiative, aims to transform universities into self-sustaining innovation hubs by supporting researchers, PhD students, and graduates in commercializing their work. Technology transfer offices at universities like ODTÜ and Koç are also actively working to commercialize inventions through licensing and spin-offs. - For technical founders in the deeptech space, a key piece of advice is to prioritize commercial expertise early on. Building a strong go-to-market strategy from the beginning and hiring a commercial lead sooner rather than later can be critical for securing investment and successfully navigating the long research and development cycles typical of deeptech ventures. - The macroeconomic environment in Turkey, characterized by high inflation and interest rates, has impacted investor confidence and startup funding. The central bank's key lending rate was raised to 46% in March 2025 to curb inflation, which has cooled investment activity. Economic volatility and unpredictable policies are cited by venture capital firms as major challenges for the ecosystem. - Startups founded by the Turkish diaspora are playing an increasingly significant role, raising $1.1 billion across 41 deals in 2025 and producing three new unicorns. These diaspora companies have also been prominent in high-value exits through IPOs, mergers, and secondary transactions, indicating strong international connections and market access.
