Golden year: Record capital flows into Turkish fintech
Turkey’s startup ecosystem continues to attract new capital despite headwinds, including a global slowdown in funding that threatens the industry’s prospects.
As has been the case in gaming, the ventures engaged in financial technology (fintech) have managed to attract a record amount of funding so far in 2022, a report showed, with still two months left until the end of the year.
The report, compiled by industry monitor startups.watch and backed by the Presidency Finance Office, said around $88 million (TL 1.6 billion) was poured into 30 Turkish fintech startups from January to October 26.
In contrast, around USD 68 million was raised by 40 startups throughout 2021.
This year, most of the capital went to ventures engaged in payment technology, banking, blockchain and cryptocurrency. The influx stems from last year’s digital banking regulations, which have increased interest in the Turkish fintech industry.
The number of new startups increased rapidly in 2021, based on payment system companies founded by businesses operating in multiple industries, from telecommunications to energy. This led to a growing interest in the Turkish startup ecosystem.
The impact of the regulation
The emergence of various players in digital banking and payment systems in Türkiye has made it easier for consumers to find different options. The regulations are expected to pave the way for more fintech initiatives.
“Fintech investments in Türkiye reached $88 million with the latest investment received by Arf and thus reached an all-time high,” said startups.watch founder Serkan Ünsal.
A cross-border settlement banking platform, Arf announced this week that it had raised $13 million in a seed funding round.
“Five or six years ago, the entire venture ecosystem received this much investment per year, and the fact that the fintech vertical alone has now reached this amount in just 10 months is the biggest proof of how mobile the fintech ecosystem in Türkiye is,” Ünsal said.
Global champion
There are around 602 active financial technology ventures in Türkiye at the moment, he noted.
“With the recent regulatory developments, this number will increase even more, especially in banking technology,” Ünsal said.
“If you ask me what is missing in the fintech ecosystem, we don’t have regional or global champions. Most startups grow in the local market. If we can achieve this, fintech can become a vertical that receives $500 million in investment alone every year and produces many global champions.”
Arf collects 13 million dollars
While banking regulations have led to the creation of a new generation of banking and payment technology companies, they have also paved the way for fintech initiatives.
Arf marks the latest example, as the Financial Services Standard Association-regulated global settlement banking platform using Web3 technologies raised $13 million in equity and debt financing in a seed round this week.
The round was joined by Circle Ventures, Stellar Development Foundation (SDF), United Overseas Bank (UOB) Venture Management, Signum Capital, Hard Yaka, NGC Ventures, Blockchain Founders Fund and 500 Emerging Europe.
Co-founded by Berhan Kongel, Ali Erhat Nalbant, Kazım Rıfat Özyılmaz and Ahmet Özcan, Arf offers digital asset-based working capital and settlement services with native on-boarding and off-boarding capabilities to licensed money services companies and financial institutions.
The firm said it looks to use the capital to further develop its blockchain-based technology to provide global treasury management and working capital credit lines for both financial institutions and licensed money services businesses operating in the cross-border payments industry.
