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Heirs of the richest Turks are investing fortunes in technology at the riskiest moment

The eldest son of Turkey’s richest man, Yahya Ulker was destined to take over his family’s multi-billion dollar company.

The eldest son of Turkey’s richest man, Yahya Ulker was destined to take over his family’s multi-billion dollar company. But the 29-year-old chose a different path, supporting local startups and venture capitalists.

After earning a business degree and a stint with Credit Suisse Group AG, he began dabbling in venture capital rather than taking on an executive role at Yildiz Holding AS, the world’s third-largest snack manufacturer that has been in its business for 78 years. family. His father, Murat Ulker, owns international brands such as Godiva chocolate and McVities cookies, and has a net worth of $4.7 billion, according to Forbes.

In 2019, Yahya Ulker founded Yildiz Ventures with $50 million to invest directly in startups and venture capital funds. The company has since supported several e-commerce startups, including Istegelsin and VC funds such as Germany’s Earlybird Venture Capital and Turkey’s Revo Capital. He now targets “at least a twofold growth in all investment” – a favorable return in a country where rampant inflation has been at its highest level for more than two decades and a sharply declining currency is affecting deals.

Yildiz Ventures must act in “flexible and courageous manner” as the business environment is “changing rapidly,” Yahya Ulker said in a recent telephone interview. The company “focuses on startups in the e-commerce, retail and food sectors so that we can lay a foundation for creating synergies with Yildiz Holding’s core businesses.”

Private assets

Yahya Ulker is one of several third-generation heirs to some of Turkey’s largest conglomerates who are opting for a less traditional route to spend their fortunes. The emergence of the country’s private wealth as a force in venture capital comes at the right time, as rising interest rates, market upheavals and a global funding slowdown threaten an industry’s prospects after a 2021 boom.

According to CB Insights, global venture capital funding has fallen to $74.5 billion in the past three months, the lowest level in nine quarters. That’s a 34% decline per quarter, the largest in ten years.

By contrast, Turkish startups attracted a record $1.5 billion in investment from venture capital funds, private equity funds and family offices in the first nine months of the year, up from $1.44 billion a year earlier, according to data from startups.watch. .

Turkish venture capital funds, meanwhile, have raised more than three-quarters of last year’s total in the first half of 2022, according to startup data platform Magnitt. The number of corporate or family office-led venture capitalists in the country has more than quadrupled in the past six years.

“The involvement of Turkish holdings and family offices in the venture capital category is booming,” said Cem Kemal Mimaroglu, founder of New York-based ComposeVC. The country’s venture capital ecosystem is a “late follower” due to its “quite conservative and vision-limited corporate culture and unpredictable economy.”

windfall

Deep-pocketed Turkish conglomerates could become a source of financial backing to rival some of the biggest global investors, after a combination of cheap labor, economic growth and consumer spending generated a windfall for the country’s biggest companies they want. to spend. The country’s largest conglomerate, Koc Holding AS, had revenues of $40 billion in 2021, or 5% of Turkey’s gross domestic product, while Yildiz Holding had $5.4 billion.

The increase in VCs is largely due to companies seeking to take advantage of tax breaks by setting up local VC funds investing primarily in Turkey. “As a result, the local VC ecosystem has seen an increased supply of dollars and a relative rise in valuations,” said Mimaroglu.

Koc Holding established the largest CVC fund in the country, Inventram, in 2010 with an investment of $110 million. Hanzade Dogan Boyner, the founder of the Nasdaq-listed online marketplace hepsiburada.com, has set up a $100 million London-based fund D4 Ventures, while Vinci VC has raised $50 million from Inci Holding since its founding in 2018.

“As global valuations and investments are recalibrated in 2022, Turkish startups are sailing on the waves of the previous era,” Mimaroglu said. “Valuations and investment are falling, but at a much slower pace and pace than in Europe and the US. ”

After the mega deals of Getir, Insider and Dream Games at the beginning of the year, funding fell sharply. As a result, Turkish VCs saw the biggest drop in the second quarter of the first three months compared to other emerging risk markets Magnitt covers, according to Philip Bahoshy, chief executive officer of Dubai-based Magnitt.

Despite challenges such as layoffs and falling stock prices, many of Turkey’s startups have secured the support of some of the world’s largest investors.

In the country’s biggest deal yet this year, grocery delivery app Getir raised $768 million from investors including Mubadala Investment Co., Sequoia and Tiger Global Management, giving it a valuation of $11.8 billion. Ecommerce platform Trendyol became Turkey’s largest startup valued at $16.5 billion after receiving $1.5 billion from investors including Softbank Group Corp. and Abu Dhabi’s ADQ.

All these investments translate into deals. Getir is said to be in advanced talks to buy rival Gorillas Technologies GmbH, which would give the Turkish company scale in key European markets, including the UK and Germany. Finberg, a corporate venture capital fund founded by billionaire Husnu Ozyegin’s Fibabanka in 2018, made returns of at least 10 times its initial investment in Getir and Turkish payments startup United Payment in two partial exits, according to Finberg board member Ihsan Elgin.

Whatever the venture capital structure, you have the potential to make the same money in a few years as traditional companies will in decades, according to Serkan Unsal, founder of startups.watch. “This whets the appetite of large conglomerates and family offices.”

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