What does Turkey’s currency dip mean for local startups?

Image via Pexels.

Read In

In recent news, Turkey’s lira has marked a record-breaking plunge. At the time of writing, the Turkish lira is now down to TL 4.57 against the dollar, losing more than a fifth of its value this year, according to BCC.

No economic data have clearly justified the Lira’s depreciation; however, a Business Times source cited that the decline was attributed to speculative approaches before the elections in June that seek to portray the economy negatively.

Such currency dip could mean different things to different entities. To businesses whose operations are not solely based in the concerned country, the lira’s tumble could have positive effects. For instance, Insider, a Turkey-based growth management platform, generates most of its revenue from other countries in Asia Pacific, MENA, and Europe. “Our revenue base is in dollars while [our] cost base is [in] Turkish lira. Insider is affected positively, but we hope that Turkish lira devaluation will stop soon,” said Hande Çilingir, co-founder and CEO of Insider.

Modanisa, a Turkish online women’s clothing retailer, is also benefiting from the lira’s dip. This online store has an average of 1.5 million active users from 75 European and Middle Eastern countries, mostly Saudi Arabia, Jordan, and the UAE. Most of the company’s revenue is in dollars and euros while its cost base is in Turkish lira, according to founder Kerim Ture.

Ture explained that “if you are manufacturing and developing locally with a lower currency and selling globally, then you can benefit from the currency dip. I think, low currency and tighter local market margins will push the startups to think global and help them to leave their comfort zones.” He then concluded briefly, “We are benefiting from the currency dip, absolutely.”

This might be a difficult time for the country and local entrepreneurs, but Sure sees it as a sign to start thinking globally, which also applies to investors who are looking for investment opportunities in Turkey. Ture advises them to be patient and consider, for the time being, export startups or businesses whose operations are not run exclusively in the country.

“During this time, sales can go up and down. You need to be patient and wait. Sooner or later the fluctuation will finish, and the market will go back to the regular terms,” he assured, adding that a plummet in the currency value is not something new to them. “We had this currency dips before; we are used to it. This is not a complete shock for the entrepreneurs. It happened in 2001, 2004, and it’s not normal, but it’s a way of life. Sometimes it’s rainy sometimes it’s sunny.”

Disclaimer: Wamda Capital invested in Insider and Modanisa.

Read In

Media categories

Countries

Share

Related Articles