The Pendulum on Turkey

mars

In my conversations with non-Turkish friends lately, the dominant topic has been what’s going on in Turkey.  This is of course fuelled by the stream of news on the country over the last three years, starting with the Gezi protests: questions on the stability of the government, the sliding lira, the refugees from Syria, the war at our doorstep, the crisis with Russia, the back to back elections, etc.

For us, the most easily-observable impact has been the disappearance of western VC interest from the Turkish tech market.  Attending the annual Startup Turkey event in February, we were surprised at how it was only the local or regional VCs who showed up.  By contrast, just two years ago, the same event had attracted names from a long list of firms from Silicon Valley, New York, London, Berlin and Paris.  Even though many were there on early scouting missions, the sentiment was that Turkey may be “Europe’s China” when it came to tech opportunities.

The truth is it never was.

However, neither is it “the next Syria”, as the sentiment may be today.  The pendulum always swings too far, in both directions.

A great example for this is the recent exit by the local PE firm Actera of its stake in Mars Cinemas at an EV of $800 million.  About a year after the acquisition of YemekSepeti by Delivery Hero for $589 milllion, it comes as a reminder of the size and scope of the Turkish economy, and the fact that you can build large, healthy businesses serving the needs of Turkish consumers.

As investors, it’s critical for us to keep our eyes on data and metrics, and resist getting swayed by fickle public opinion.  That’s how you build value.

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