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Ludus Ventures’ İsmet Gökşen talks mobile investment in Türkiye

We get an investors-eye view of the Turkish mobile market
Ludus Ventures’ İsmet Gökşen talks mobile investment in Türkiye
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Turkiye has become an increasingly popular choice for investment, especially domestically, and this has been mainly fuelled by an increase in startups and a growing mobile gaming market. Exits and successes have been on the rise and despite issues such as a weak lira impacting overall revenue, it remains a potent market, with a massive 81% of adults in Turkiye estimated to play mobile games.

We got the chance to speak to İsmet Gökşen, general partner at Ludus Ventures - one of a number of Turkish investment firms betting on the success of their country - about his views on the Turkish market and more specifically, mobile gaming’s place in investment. How do you view the current health of the Turkish investment market overall?

İsmet Gökşen: The Turkish investment market shows great growth potential, even in challenging macroeconomic conditions. Turkish startups strongly focus on domestic and international markets, capable of generating revenue from abroad. The talent pool and young population in Turkey present great opportunities for investors, with an agile approach to innovation and entrepreneurship enabling quick adaptation, iteration, and the ability to embrace change. Gaming fintech and related industries, excluding instant delivery, account for approximately half of the total private investments in the market, one of the hottest internal verticals for investors.

What do you think draws investors to the mobile gaming industry in Turkey?

Turkey boasts a vibrant gaming ecosystem, with over 500 active gaming startups, 10 gaming incubators, and 13 gaming accelerators, making it one of the largest gaming ecosystems globally. Secondly, the return speed for investors in the industry is impressive, with the fastest unicorn taking only 23 months and the fastest +100mm exit taking just 21 months. The industry has a strong track record, with five gaming-only funds, two gaming unicorns, and five +100mm exits. Finally, the young Turkish population provides a great talent pool for the industry, ensuring its growth potential. These factors combined make the mobile gaming industry in Turkey an attractive option for investors looking for a promising and profitable investment opportunity.

What factors determine where and how much you invest?

We are an early-stage gaming VC, mostly on pre-seed and seed. This means that we often prioritise intangible factors over tangible ones. The four main areas we evaluate include:

  • Firstly, what the company aims to do, which includes identifying the specific genre or subgenre they are targeting.
  • Secondly, we assess the co-founders and team to understand their experience and expertise in the industry.
  • Thirdly, we examine the business plan and financial projections to determine how much funding is required and how the company plans to use the investment.
  • Finally, we consider the commercial terms that the company is seeking, such as equity percentage and valuation.

By evaluating these key factors, we can make informed decisions on investing in mobile game companies with a strong potential for success.

What trends are at play for Turkish developers and players in 2023?

Undoubtedly, the increasing focus on privacy updates and IDFA depreciation by Apple will be a major trend affecting the mobile gaming industry in 2023, particularly in Turkey where more than 60% of game studios operate in the hypercasual space. The Apple privacy changes have already had a significant impact on hypercasual games and publishing, causing many publishers to cancel agreements or reduce payments, and forcing studios to pivot to other genres. This process is particularly challenging as each subgenre requires different levels of competencies, such as game economy expertise, massive funding requirements, or development intensity, among others, which are further compounded by the dynamic market conditions. However, there is optimism that new balancing will come to the studios in Turkey, leading to a more diversified split in the genre.

What international investment are you seeing in Turkiye right now?

The most significant interest in investing in Turkey comes from the US and Europe, which is also aligned with the location of M&A activity and the origin of the buyers in exits. Although there is some interest from APAC investors including China, the volume of investment from these areas is still low compared to the US and Europe.

How do you think the Turkish mobile gaming market will develop and grow in future?

The Turkish mobile gaming market is well-positioned for growth in the future, with 63 new gaming startups founded just last year, despite facing macro challenges. This growth can be attributed to three key factors. Firstly, the country's speed of execution and job culture is exceptional, enabling rapid and iterative production of games. Secondly, the talent pool in Turkey is strong, with many engineers and architects switching to the gaming industry to take advantage of the competitive salary and compensation range on offer. The availability of lessons on gaming, coding, and game art in most universities across the country has also contributed to the growth of this talent pool. Lastly, Turkey has strong expertise in user acquisition and monetization, with many strong marketing teams and Turkish games dominating the top charts, particularly in casual categories.

However, for the Turkish mobile gaming market to reach its full potential, more studios need to adopt a global perspective and plan for long-term investment strategies. This means focusing on global investments and considering investment strategies for future rounds. While Turkey is currently strong in "soft" categories such as hypercasual, casual, and puzzle games, there is still room for growth in the mid-core genres which require a different set of skills and strategies. Overall, the Turkish mobile gaming market is set for continued growth and development, offering exciting opportunities for both local and global investors.