Türkiye: A Global Powerhouse in Gaming

For me, the most striking feature of Istanbul's history is that it served as the capital of three universal empires: the Roman, Byzantine, and Ottoman. Perhaps, then, it should be no surprise that nearly 1,700 years after Istanbul was declared the Roman capital in 330 A.D., it now stands as one of the world's mobile gaming development capitals. Funny enough, prior to the talent explosion in gaming, Türkiye was seen as a swampland from a tech perspective and had failed to produce a unicorn until 2019. So what changed?

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Insiders within the Turkish tech scene know that many of today’s successful tech founders got their start at either one of these companies; Rocket Internet (a German Investment vehicle), Peak Games (founded in 2010) and Trendyol (founded in 2009) which attracted the top-tier talent to the technology landscape from other industries like finance and consulting. Subsequently, many of the smart and ambitious people initially hired at Rocket (when it left the market quite fast) went on to join either Trendyol or Peak Games, further instilling a global mindset in these companies. These companies were the primary schools that have trained a generation of globally-facing entrepreneurs, arming them with skill sets comparable to their western counterparts.

The success of Peak (acquired by Zynga for $1.8b), in particular, has upended Türkiye’s startup ecosystem as a whole. Games developed in Türkiye were now reaching millions of players worldwide, thanks to the trail blazed by Peak’s founders. Before this, many Turkish companies were constrained by a domestic market deemed "large enough" by some measures often neglecting international expansion. This created a growth ceiling and limited repeatable success, given the finite number of locally focused tech businesses that can be disruptors. The shift toward more globally oriented ideas, leveraging local talent, revitalized Türkiye’s early-stage ecosystem and led to the creation of six additional unicorns following Peak Games' exit.

This paradigm shift has affected the entire ecosystem and paved the way for more global ideas and founders. Heck,it even changed my own career and life! As a repented ex-M&A Banker; I’ll be forever grateful for the opportunity to be on the buy-side advisory team of Zynga when doing the initial Card & Board Games acquisition from Peak Games which ended up being my ticket into the tech landscape.

The cambrian explosion in gaming is still ongoing. Türkiye is now home to a strong lineup of gaming studios, with two unicorns, more than 700 active gaming startups and five USD100m+ exits. In terms of the number of gaming studios, Istanbul ranks second in Europe behind London, with Paris following in third and Türkiye’s capital Ankara in fourth. And Peak Games alone has led to the establishment of 60-odd studios, just in and of itself underlining the breadth of the multiplier effect.

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The data makes Türkiye the second biggest gaming hub in Europe, both in terms of the number of gaming companies and USD 100m+ valued exits from the likes of Peak Games, Gram Games, Rollic Games and Alictus. As well as, growth stage companies like Dream Games and Spyke Games (built by e2vc’s ex-GP Rina Sirinoglu) slated as the next big gaming exits out of the Turkish ecosystem.

The inherent "build local, distribute global" nature of the mobile gaming industry has established it as a key secular bullish trend for us. This has led to allocating a low double digit percentage of our portfolio to gaming, a category where we invest in ideas rooted in local talent equipped with exceptional development skills and robust distribution capabilities aimed at achieving global reach. Over the past three years, we have invested in five gaming companies from our Fund II, many of which are showing remarkable progress. For example, Cypher Games has raised $12 million in the last two years, led by Raine and Play Ventures, while Agave Games recently closed an $18 million round led by Balderton Capital and Felix Capital and saw its ARR go from 0 to $50m+ in less than 6 months.

We believe that Türkiye will continue to lead in the structurally challenging mobile gaming sector, leveraging its unique strengths in game-development insights, innovative user acquisition strategies and access to highly cost-effective production talent. The recent deprecation of IDFA (which previously allowed advertisers to identify iOS users by a unique device ID) has disproportionately impacted newer and smaller mobile game developers and ecosystems, consolidating advantages for larger more established ecosystems. As Türkiye is home to some of the largest mobile gaming companies and access to later-stage gaming funding, the talent emerging from these studios has a greater likelihood of success compared to non-Turkish counterparts. Consequently, we plan to maintain our focus on the Turkish gaming market as one of our key investment pillars, with around 10% of our portfolio earmarked for this sector.

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