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The World Bank invests $2.5 million to develop Turkish start-ups




The venture capital fund 500 Istanbul's Fund II is supported by the IFC (photo: IFC)
The venture capital fund 500 Istanbul's Fund II is supported by the IFC (photo: IFC)
TURKEY. The International Finance Corporation (IFC) announced on Thursday 26 August 2021 a $2m investment in 500 Istanbul's Fund II, a venture capital fund linked to 500 Startups and focused on early-stage technology companies. A member of the World Bank Group, IFC focuses its financing on the private sector in emerging markets. The institution works with around 100 countries in which it has invested $31.5 billion over the 2021 fiscal year.

Today's deal is part of the IFC Startup Catalyst programme, which was established in 2016 to invest in around 20 accelerators, incubators, seed funds and similar vehicles that support entrepreneurs and their start-ups. This is to facilitate the development of technology ecosystems, in order to reduce the digital divide.
It will help "build a resilient start-up ecosystem and a strong foundation for venture capital markets in the target countries", as stated in a statement.

"As the country with the fastest growing developer pool in the EMEA region, Turkey is home to a high level of skilled human capital. Despite limited access to finance in recent years, it has seen immense cash flow from technology-related mergers and acquisitions thanks to its strong talent base," Enis Hulli points out. General partner of 500 Startups Istanbul, alongside Arin Ozkula and Rina Onur, he favours "investing in local early-stage teams that are building a solution for the global market, which has led to exceptional returns."

 

80% for Turkey

The $2m from the IFC will be reserved for companies focusing on information technology or engineering technology-based products in various sectors. "The target size of Fund II is $30m, of which 80% will be deployed in Turkey and the remaining 20% in Ukraine, Romania and Bulgaria, to support twenty-five early-stage companies," the IFC statement said. Its predecessor, 500 Istanbul Fund I, raised more than $500m in additional financing and created more than 3,000 jobs.

"Supporting the development of early-stage ecosystems, particularly during the pandemic, is essential to create a consistent, high-quality pipeline of investment opportunities on which venture capitalists depend," said Arnaud Dupoizat, IFC Country Director for Turkey. "IFC's investment with 500 Istanbul aims to support the promising and dynamic start-up ecosystem in Turkey and will be our first Startup Catalyst funding in South East Europe," he said.

The IFC package will benefit from a €500K co-investment from the Women's Enterprise Finance Initiative (We-Fi). This partnership, hosted within the World Bank, was launched in October 2017 between fourteen governments and six multilateral development banks. The complement will be used to accelerate support for high-impact start-ups owned or managed by women. "Turkey has one of the lowest female labour force participation rates among countries with similar income levels," the IFC statement said.

 

Eric Apim


Thursday, August 26th 2021



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