2017 Predictions

2016 was a difficult year. From where I sit in Istanbul, this is what I saw: stifling emerging market growth; a plummeting Turkish Lira (20% decline); terrorist attacks in Turkey and Europe; a worsening refugee crisis; a coup attempt.

Any one of these would dissuade even the most ambitious entrepreneur in the West from launching a business. Not here. Entrepreneurs in EMEA are tough. I am in awe of the resilience the entrepreneurs demonstrated throughout the year. They did not just survive; they evolved, grew stronger and entered new markets. As you can see here:

  • FinTech firm iyziCo had five times more payment transactions than the year prior
  • Hotelrunner is now powering more than 26,000 hotels across 127 countries
  • 5 of the top 10 online businesses in APAC chose Insider’s predictive technology to boost sales
  • Parcadeposu enabled 12,000 service stations across Turkey get access to 15 million car parts across 30 brands
  • Solvoyo won an innovation shark tank on next gen supply chain platform for a USD65bn multi-national company and is moving onto global roll-out

A few of our friends in the region passed us their thoughts regarding 2017 as well.

Cankut Durgun at Aslanoba Capital told us that “Turkey’s startups are on track to receive a record amount of funding in 2016.”

In the first 9 months of 2016, Turkey’s startups received $49.1M of funding. If everything stays on course, Turkish startups will close “north of $65M in total investment. This compares to $31.1M in 2014 and $55.7M in 2015, Durgun says.

Stats are even more promising in the Arab speaking Middle East. Beco Capital’s CEO Dany Farha projects the region to have “mega exists” starting in 2019, well over $500 million. “We will export a pioneering innovation to the world,” he says.

“If you think about it, there is no reason why technology could not start from anywhere, specifically from MENA,” says Hala Fadel from Leap Ventures. She agrees that given the enormous challenges and obstacles to being an entrepreneur in this region, that the chances of a big innovation coming from MENA is real.

On the other side of the Aegean, our friends in Greece are positive too. Despite all the crises in Athens, Nikos Antoniou from PJ Tech Catalyst Fund, notes that “the European Investment Fund and the Greek government have recently announced plans for an injection of €260 venture funding – matched by another €100 million in private investments – for Greece-based startups.” Compare that to €70 million four years ago.

Sure, I’m prone to optimism. I’m a VC . 2017 holds promise. The fact that we are here, in Istanbul, and so are the many companies that we’ve invested in – not to mention those startups popping up each week shows our belief in the future.

Here are our friends’ in depth forecasts:
Cankut Durgun at Aslanoba Capital:
“Think of a country that experienced a failed military coup attempt, its first quarter of negative year-on-year GDP growth in 7 years, and a 20% decline in the value of its currency relative to the US Dollar. Turkey experienced each of these in 2016.

Yet, despite the political and economic challenges, Turkey’s startups are on track to receive a record amount of funding in 2016. In the first 9 months of 2016, Turkey’s startups received $49.1M of funding. Assuming the investment activity we saw during the first 9 months of the year has continued at the same pace during the final 3 months of the year, the year will close with north of $65M in total investment. This compares to $31.1M in 2014 and $55.7M in 2015. Despite the political and economic challenges, the directional trend of Turkey’s startups is clear.

I don’t know what the future holds. Turkey could experience a better or worse 2017 than 2016. But I do know two things.
First, the probability of 2017 being a worse year for Turkey than 2016 is low. 2016 was a very tough year for Turkey no matter how you look at it.
Second, even if 2017 turns out to be no different than or even worse than 2016, Turkey’s startups have proven their resilience in the face of political and economic challenges.
So, no matter what Turkey’s political or economic future holds, I believe that, just like in 2015 and 2016, 2017 is going to be another year in which Turkey’s startups build on last year’s performance. And that’s how startup ecosystems develop.”

 
Nikos Antoniou of PJ Tech Catalyst Fund:
“We, at PJ Tech Catalyst fund, had a very busy and productive 2016. As our investment period was coming to end in September 2016, we pushed hard with new tech investments and we were successful in deploying all invest-able funds at the end of the period.  Finally, in September 2016 our tech investment portfolio had reached 21 companies.
I was very pleased with the performance of our investment team in 2016 as it had a chance to invest either alone or in some cases together with international investors from the US and Israel in good, mature teams with promising projects in Virtual Reality, Artificial Intelligence, Internet of Things and Big Data Analytics. This has been a positive signal that over the past 4 years the young technology Greek startup ecosystem is growing in the right direction, producing internationally fund-able projects.

Five active technology focused venture capital funds that were established in the past 4 years have been responsible for the significant gains made in the Greek startup ecosystem that took place under especially adverse country economic conditions. PJ Tech Catalyst has played a prominent role in supporting this ecosystem.In 2017, political and economic uncertainty will continue to overall undermine political stability and economic growth in Greece and the region (i.e. Turkey, the Balkans, Eastern Europe). However, I stay positive about the tech startup ecosystem in Greece and the region.

First, I believe that more successful exits will take place in the Greek startup ecosystem in 2017 and help this to further mature, strengthen and grow. Also, EU and Greek governmental initiatives that target to increase Venture Capital funding liquidity into the economy will further support entrepreneurship and tech startups. Specifically, the European Investment Fund and the Greek government have recently announced plans for an injection of €260 mil. Venture Capital funding – matched by another at least €100 mil. private investors’ money – into the local economy for the support of tech entrepreneurship. Greek Venture Capital funds will claim this money in 2017 and invest it in the next 4 years in local companies that produce innovation and technology. Considering that four years ago this amount was approx. €70mil. and the local ecosystem accelerated enough to produce its first successful results (i.e. exits and a few international tech companies), I suspect that €360 mil., if deployed efficiently, can take the ecosystem into a whole new level.

Also, the influx of  such an amount of Venture Capital funding in the Greek market can create the conditions to turn it into an investment hub. Hubs usually extend their activities into neighboring markets/ecosystems, support regional cooperation and increase the possibility of creating regional success stories.

For PJ Tech Catalyst 2017 will be a year of challenges and opportunities. Our team will have to work hard and close with the teams that we chose to fund in the past 4 years. Our goal will be to create truly world class companies and exit(s).  Finally, we will explore ways of raising a new fund to continue supporting deep tech startups.”

Beco Capital:

You can find Beco Capital’s predictions here and here.

Leap Ventures:

Leap Ventures predictions can be seen here.