While investments in fintech startups declined globally in the first half of 2024, they increased in Turkey. According to the Turkey fintech ecosystem report prepared by Startups.watch, fintech investments broke a record.
Global fintech investments decreased from USD 62.3 billion to USD 51.9 billion in the first half of this year compared to the second half of last year. This was the lowest six-month fintech investment amount since the first half of 2020, according to a KPMG report. In Turkey on the other hand, fintech investments broke a record. Fintech investments, which closed last year with a total of USD 30 million, reached USD 182 million in 6 months of this year.
In the second quarter of this year, the fintech sector had the highest number of transactions, with 7 transactions. According to KPMG’s “Pulse of Fintech” report, which scrutinizes investments in fintech globally, the first half of 2024 was a challenging period for the global fintech market due to geopolitical uncertainty and ongoing concerns about high interest rates.
There are 870 fintech companies in Turkey
The number of fintech startups also increased during this period. As of August, 7 new fintech companies were established. There are 870 fintech companies in Turkey, 700 of which are active. The most common vertical of the Turkish fintech ecosystem is the payments category. In addition, when we look at the acquired fintech companies, 7 fintech companies “exited” for USD 9 million in 8 months of the year. When we look at the investments in which fintech companies participated, it was seen that they were involved in 4 million dollars of investment in 3 separate rounds. When we look at the acquisitions of fintech companies, 6 companies were acquired for a total of USD 52 million in 2024.
3 of the top 10 largest transactions in the fintech sector
In the 2nd quarter of 2024, 3 of the 10 largest transactions in Turkey took place in the fintech sector, with a total transaction volume of USD 150 million with 7 transactions in the same quarter. One of these transactions was iyzico’s acquisition of 100% of Paynet’s shares for USD 87 million, while the other two were early-stage investments in Midas and Sipay. The presence of foreign investors in both early-stage investments in the fintech vertical emphasized the ongoing global appeal of the sector.
Midas, an investment application that offers its users the opportunity to invest with attractive commission rates, received USD 45 million in a Series A investment round led by Canada’s Portage Ventures. International Finance Corporation (IFC), Spark Capital, Earlybird Digital East Fund and Revo Capital also participated in the investment round. Sipay, which provides end-to-end services in the field of financial technologies, received an investment of USD 15 million under the leadership of Anfa VC, with the participation of White VC and Pareto Holdings.
Looking at the first half of the year, Sinem Cantürk, Fintech and Digital Finance Leader at KPMG Turkey, said that fintech investors acted cautiously, adding that while mature, stable markets attracted the largest fintech deals, investors continued to stay away from large deals with very few exceptions. Noting that they expect fintech investments to continue to stagnate in the second half of this year due to the high cost of capital and continued geopolitical uncertainty, Cantürk said, “We think that all attention will be on interest rates and the US presidential elections in the coming period.” Başak Kural, General Manager of eLogo and Logo Payment, said, “With the latest regulatory developments, opportunities in open banking and service banking continue to increase. Especially improving the customer experience and offering centralized APIs on the technology side and directing the workforce to more value-added sides on the fintech side will cause us to see new innovations in 2024.”
“Major developments are on the way”
Stating that Turkey’s investment potential in fintech and technology is gradually increasing, Duygu Eren, CEO of Decacorn Angels, said that the regulations in Turkey are ahead of many countries, leading to the emergence of new initiatives. Recalling that foreign direct investments in Europe have decreased since 2020 due to economic uncertainties, rising inflation and geopolitical problems, Eren stated that such uncertainties increase the risk perception of investors. Still, recent positive developments such as Turkey’s exit from the gray list and the increase in its credit rating have led foreign investors to Turkey again. According to Eren, major developments are on the way in the fintech sector. Stating that especially digital payment systems, blockchain technologies and other financial solutions continue to attract the attention of investors, Eren said, “The renewed interest of foreign investors in Turkey brings new investment opportunities for startups. I predict that these developments will result in more investment news and successful exit examples by the end of the year.” Eren said that the increase in the number of angel investors has revitalized the startup ecosystem.
