Entrepreneurship Ecosystem And Participation Finance Sector

COVER SUBJECT 07.04.2022, 14:42
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Entrepreneurship Ecosystem And Participation Finance Sector

According to the StartupMarket 2021 Ecosystem Evaluation Report, in 2021, 297 start-ups received an investment of $3.48 billion from 479 investors in the Turkish start-up ecosystem. This figure, which is shown as a record level for entrepreneurship investments in TÜRKİYE, looks promising for the future potential of the ecosystem. The prominence of gaming, SaaS (Software as a Service), artificial intelligence, fintech and health technologies, among the sectors that receive the most investment, indicates that technological development and digitalization play a key role in start-up investments.

GLOBAL START-UP OUTLOOK

The entrepreneurship ecosystem has achieved a global rapid growth momentum. With the increasing awareness of the ecosystem and the emergence of new investment models, the interest in start-ups is increasing, while the size of investments draws a graph that is rising simultaneously. This situation also offers a motivational view for entrepreneurs with ideas. With this motivation, entrepreneurs tend to enter the market with more confidence, while incentives are provided for the amount of capital that investors direct to the ecosystem.

When we examine the data on the general outlook of the world, the growth momentum is evident. We can say that the ecosystem is in a remarkable breakthrough period, especially when comparing the 2020 and 2021 data. The amount of investment for start-ups, which was 335 billion dollars in 2020, showed a growth of 91 percent in 2021, with a volume of 643 billion dollars. Again, when we observe the early-stage startups in 2021, we see an investment level of 201 billion dollars, an increase of 100 billion dollars compared to 2020. For startups at the seed investment stage, a total of $29.4 billion in 2021 stands out. This figure shows that 10 billion dollars additional funds were collected than the previous year. Among the start-ups, those in the late-stage and scale-up phase raised $196 billion more than last year. The amount of investment collected by the start-ups in the following stages is 413 billion dollars. The number of start-ups called “Unicorns”, with a valuation of at least 1 billion dollars, reached 959 in 2021. 5 of these unicorns are in TÜRKİYE.

2021: A THRESHOLD FOR TÜRKİYE

2021 has been an important year for TÜRKİYE's entrepreneurship ecosystem. Many new ideas turned into initiatives during this period, which is also defined as a threshold by market actors. It has been observed that investors who tend to evaluate their assets in startups join the ecosystem with angel investment, corporate investment or fund models. With the use of instruments such as technoparks, incubation centres, corporate acceleration programs and in-house entrepreneurship projects, a structure in which the targets grow has emerged. Thanks to their global success, unicorns from TÜRKİYE stand in a valuable place for the ecosystem as they set an example for future investments. In particular, startups that received significant assets such as Getir, Dream Games, and Trendyol impacted the world agenda.

According to StartupMarket data, a total of 297 start-ups received investment from TÜRKİYE in 2021. The total size of these investments, whose assets were evaluated by 479 investors, was 3.48 billion dollars. These figures, which are recorded as an all-time record, draw a promising graphic regarding TÜRKİYE's potential. This leap in 2021 is thought to be an indicator for domestic and foreign investors in 2022. TÜRKİYE has recently become an appealing place in terms of labour costs, which has led to an increase in interest, especially from foreign investors. Although this situation has disadvantages for domestic investors, low cost is the advantage of the Turkish start-up ecosystem against international competitors.

COVID-19 EFFECT

The wind of change caused by COVID-19 worldwide had dire adverse effects, especially on the supply chain. Hopes had risen that a positive course could be achieved with the outcome of the recent increase in vaccination and normalisation steps, but it still does not seem to have recovered. There are signs that the expectation that the food, beverage, hospitality, civil aviation, accommodation and entertainment sectors, which have been hit the hardest during the pandemic, will start to recover in 2022. With this effect, the momentum gained in 2021 is expected to continue to grow in 2022.

THE PARTICIPATION FINANCE SECTOR

The participation finance sector, by its principles, is a sector based on labour/capital partnership, acting in accordance with the risk-sharing model. Based on this understanding, participation banks and other sector stakeholders have inherent predispositions to the entrepreneurship ecosystem. The entrepreneurship ecosystem can also take an essential place in the context of the target of increasing the active share in the Turkish banking sector to 15 percent, which is stated in the Strategy Document published by the Participation Banks Association of TÜRKİYE (TKBB). In this context, participation banks continue to support digitalization and technology-oriented start-ups, which have become the entrepreneurship ecosystem's critical area. Participating in the entrepreneurship ecosystem with platforms such as Kuveyt Türk Lonca and Albaraka Garage, the participation finance sector also supports entrepreneurs in terms of financing, experience sharing and mentoring. If we look at the position of the participation finance sector in the ecosystem, we see that projects that will respond well to world trends such as fintech, payment systems, digital financial solutions and digital banking are supported. If we consider the developments in the world, it is possible to say that the Islamic fintech field has become an important market and creates an ecosystem with high growth potential in the future. We expect the Turkish participation finance industry's approach and strategies towards the entrepreneurship ecosystem to continue to take steps that will follow the trends for the upcoming period and carry the start-up potential of our country forward.

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