Startups, investments, & role of the government

Following decades of living in between Tokyo and New York and working at investment banks, I decided to move to Istanbul in 2010 to cultivate entrepreneurship and venture investments. The city, Turkey’s financial center, had started to emerge as a hub for tech startups, particularly in the e-commerce sector. Yet, there were no institutional investors – there was no Turkish venture capital.

Not long after I had landed in Istanbul did Kleiner Perkins, one of Silicon Valley’s top venture capital firms, invest along with Tiger Global a combined $26 million in Trendyol, a Turkish version of Gilt Group. In a separate deal, eBay purchased local company GittiGidiyor.com for over $200 million. Indeed, the ease with which my partners and I set up our firm, 212, and raised our first fund of $30 million confirmed my supposition that investing in Turkey had promise.

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Solvoyo Cited Among the Best SaaS Cloud Service Companies in Europe by the Euro Cloud Congress

Oct 1, 2014: The Euro Cloud Congress, the premier gathering of the European cloud industry recognized Solvoyo as one of the best SaaS (software-as-a-service) services in the market.

According to Bernd Becker, President of Euro Cloud, “it is without question that Europe is very much dependent on the creativity of start-up companies such as Solvoyo who are bringing innovative future shaping cloud services to the European and international market.”

Taking the award on behalf of Solvoyo, Nilufer Durak, COO, commented “we are proud to be recognized as a company not just because we bring cool technology through the cloud but also because we create significant value for our customers. Euro Cloud plays an important role in showcasing companies like us throughout Europe.”

 

About Solvoyo

Solvoyo is an international enterprise software company based in Boston, MA, and Istanbul, Turkey. Solvoyo provide strategic, tactical, and operational supply chain planning in one platform giving companies the most comprehensive tool to maximize profits while minimizing costs.

Solvoyo is unique in being able to plan inventory, orders, and transportation concurrently. By optimizing across companies’ entire network, as opposed to individual silos, Solvoyo helps get business results and benefits that are multiples of traditional solutions.

 

About the Euro Cloud Congress and the Euro Cloud Award

The Euro Cloud Congress is an umbrella organization bringing together the leaders of the European cloud industry every year to further the cause of cloud adoption in 21 member countries. The Euro Cloud Awards recognizes the best European cloud service providers – winners of the national Euro Cloud awards in their respective countries.

Tech Startups & Boutique Wineries

Last weekend we visited some boutique wineries at north east of Turkey (Trakya). After having wonderful conversations with winery owners, I realized the similarities with startups.

Both start ups and boutique vineries are run by entrepreneurs who want to do something different or change the way others do the things. All work with passion and want to build something great. Of course like any other business, “me too” types who want to make quick bucks exist in this business, too. Continue reading

Number of investments doubling in Turkey comparing to previous two years

Turkish technological sector has been experiencing a major boom over the first half of the 2013. The number of Venture Funds, angel investors and number of investments are growing dramatically. The total amount of Venture Capital investment in Turkey was around $142M* in 2011. It decreased to $100M level in 2012 and has already passed last year’s performance in the first half of 2013. (Please note that these figures are calculated based on announced investments and details)

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How to navigate the long slow SaaS ramp of death

How to navigate the long slow SaaS ramp of death

I received above link from a friend. Being ex-customer of Constant Contact, I really enjoyed watching Gail Goodman’s presentation. So decided to share it here. This is definitely in “must watch” list.

Also blog post by David Skok – SaaS Metrics 2.0 – A Guide to Measuring and Improving what Matters is very good.

 

Priceless lessons learned in building an online product. This is the compelling story with many real life facts on how the world’s largest email service, Constant Contact, grew and thrived. Complements of Business of Software.

“Our biggest barrier to usage is content. Small businesses doesn’t know what to say” – Gail Goodman, Constant Contact

5/7 Update: Updated the link with working one

212 is Ready to Make Investments!

We have been very busy in the last couple of months. While we maintained the deal pipe-line and continued to meet with new startups, we were also occupied with putting the right structure in place for our managed funds.

I’m thrilled to share we are ready to make investments through our managed funds. Our focus area will be companies in the Turkish ICT sector. Entire segment, especially e-commerce is at a very exciting turning point. I’m not going to repeat the statistics as they have been mentioned by Sina Afra and Venture Beat before. As an investor, we are seeing an increase in quality deals with smarter entrepreneurs to confirm our faith in the market.

It only gets better from here.

At the same time, on the investors’ side, we see an increase in both quality and quantity. Just two years ago, there were only a few angel investors and only one fund targeting this market. Today, however, we have regular visitors from Europe and the USA looking to invest. It is even more competitive for angel investors. Now everyone wants to be an angel investor. Market for both entrepreneurs and investors is changing and growing very fast. As result, we are entering a chaotic environment.

I believe, it will take some time for people to realize the difference between “enthusiast vs entrepreneur” and “money vs smart money”. Until then, we will have a bumpy ride with some horror stories – natural for growing markets.

We’re very excited to be a part of this change and to be able to contribute to the growth of the ecosystem in Turkey. Very soon we will be announcing our first round of investments. Stay tuned!

 

Moving forward… ( slowly! )

I realized that it has been nearly six months since my last post. Each time I think of posting an update on our progress and the market in Turkey, I end up deciding to wait until we close on the deal and unfortunately closing date keeps getting postponed.

On the fund raising front, we continue to meet with new potential LPs and at the same time, update interested LPs regularly on market news and deal flow. The good news is, we are seeing the light at the end of the tunnel, and we are sure it is not a train! 🙂

There have been more than 10 new investments within the last six months and at least 5 new investments are currently in due-dillegence phase. Most of the investments have been announced atWebrazzi. However I’d like to make a special mention of eBay’s recent acquisition. eBay purchased 93% of GittiGidiyor.com – “a Turkish auction site founded by Burak Divanlioglu and Serkan Borancili at $215million valuation (Valuation is based on Webrazzi news).  It is important to note that eBay already had 20% ownership of GittiGidiyor.  We are thrilled to see the first major exit in Turkey.Congratulations to everyone who is involved in the deal, especially to Burak and Serkan!

I would also like to share my observation on how entrepreneurs are evolving in Turkey. I moved to Istanbul about 15months ago and e-tohum Top-15 meeting in 2010 was the first event I attended here. This year, I attended the same event again and I was amazed with the difference. Last year, average level of knowledge on funding, process, structure, strategy, etc was basic at best.  This year, most attendees had in-depth knowledge, and more importantly, were ready to execute! Yes, knowledge alone is not enough to make a start-up successful.  Nevertheless, combined with the right team and right execution, it will drastically increase the chances of success for a start-up.  Mistakes in execution are likely to be made, but they can serve as lessons along the way.  Starting out with the wrong team, on the other hand, is a recipe for absolute failure.

Raising a VC fund in Turkey

Since we decided to start a Venture Capital fund to invest in early stage companies in Turkey, we’ve been working around the clock to raise money and create a strong deal flow. My last post was about our deal pipeline and we are happy to say that we have a solid list of companies on our potential deal list getting stronger every day.

Fund raising is also moving forward albeit with some challenges due to being pioneers.  We want to make sure that we are doing things in the right way. I must say it is extremely pleasing to meet people who share the same vision with us want to join us as Limited Partners. We are just at the beginning of this long journey. Despite some negative feedbacks such as “not possible” or “won’t happen here,” we are confident and committed.  We already received some commitments from some LPs and will continue to do so, until we reach the number we would like to raise.

European Investment Fund (EIF) has a matching program to invest PE/VC funds in Europe. We already initiated our application to have them as LP to our fund. If we receive matching fund, we will be the first VC fund in Turkey to receive fund from EIF. 

Return for the Jedi

With every new meeting I get more impressed with Turkish entrepreneurs’ grasp of the valuation concepts. I assume this is due to the widely available material on the web.

One notion they do not seem to think about, however, is the return an investor will require from any cash outlay.

If a pencil is worth TL1, I, with the investor hat on, will not pay 1TL for it…

While this might have to do with my idolizing of Scrooge McDuck at an early age (…), it actually has its roots in my ‘quest’ for a return. I need to put my money where I will get a profit, so I can satisfy my investors and feed myself. The return I might seek tends to differ between a company and a BK whopper, yet it is still the same concept:

I need to profit from the trade, which can only happen if the return I get at the exit (OK – stop thinking about the whopper here…) exceeds the one I can get on a similar investment with comparable risk characteristics.

And how do you calculate the return an investor will get at the point of exit. I like the clear explanation in Wikipedia, so please take a look there:

http://en.wikipedia.org/wiki/Internal_rate_of_return

And what kind of an IRR do I have in mind when I invest? Now, that will be the topic of a later post.