| A Turkey VC Analysis: A Request for Answers Continues… |
| 13 December 2006 |
As seen in Mike Wright and Ken Robbie’s book, ”Management Buy-outs and Venture Capital” (1999), a comparative analysis is presented concerning the private equity industry in Eastern Europe. “Venture Capital in Transition Economies: Hungary, Poland and Slovakia” (1997) written by Judit Karsai, Mike Wright, Zbigniew Dudzinski and Jan Morovic offers an objective and tantalizing analysis of an industry in its infancy, and therefore could be used as an analytic benchmark for Turkey. The report draws comparisons between the 3 countries in the following areas:
- Cultural, legal and institutional factors,
- Industry level and firm level governance,
- Screening of investments, valuation and due diligence,
- The ability to exit.
All of these areas could be directly applied to a report on Turkey, its neighbors in the Mediterranean, or the Turkic/Caucus region. In those three countries analyzed, 2 major problems occurred: 1) access to finance was limited, in addition to an environment of privatized government-owned companies having financial difficulties, and 2) issues involving corporate governance existed. Specifically:
“In all 3 countries, there continue to be major infrastructure impediments to the development of venture capital including specific legislation to permit venture capital firms, the development of reliable sources of information on potential investees, and the development of stock and corporate asset markets.” (Karsai, Wright, 1997, P. 110)
One can only guess to the immense benefit that this report aided those investors who pursued opportunities in Central and Southeastern Europe such as the SE European OPIC George Soros Fund [sic], the Intel Fund and just recently Cisco’s investment. In addition, when you simply look at the population of Turkey and its VC activity, and then compare it to Greece, Bulgaria, the countries of Eastern Europe, and even France, Germany, the UK and Israel, it tells a frightening story just how VC conditions in Turkey are simply not as they should be. More importantly, it shows the potential that exists for future innovation and investment so long as education is continually stimulated and evaluated.
I can’t help but be reminded of Sortipreneur’s Israel Envy as he speculates on the “powerhouse” of VC activity occurring in Israel. Surely, the differences between Israel and Turkey, though stark, need to be examined. He states that early-stage Turkish VC really needs a “strong nod from the Turkish government” and I couldn’t agree more, but as will be discussed in a future post, the direction that is currently being taken by the Turkish government is somewhat misguided and really needs a swift kick.
 Another resource, pertaining to these issues, that I have only recently found, but unfortunately not had the opportunity to read, is “The Growth of Venture Capital: A Cross-Cultural Comparison” edited by Associate Professor Dilek Cetindamar of Sabanci University. Published in 2003, she offers various works on 6 different countries including Israel and Turkey. Follow-up results of the above studies and status of the venture cycles in these countries would of course be beneficial and an area for future study.
So, in order to maintain these efforts, I therefore propose a similar study to be conducted in the next year on the countries of Turkey (outside the EU), Greece (within the EU) and Bulgaria (and/or another subject thereof). A formal proposal can be submitted upon request. I urge all those interested in a sponsorship of such an analysis to contact me at this site. Once a team and/or grant can be assembled, a method of distribution can be discussed. I await your replies.
 Technorati Tags: Mike Wright, Ken Robbie, Turkey, VC, Emerging Markets, Private Equity, Venture Capital Cycle, OPIC, Intel Fund, Cisco, Sortipreneur, Israel, Dilek Cetindamar
|
|
|
|
|
| The Turkish Private Equity Industry: With all these questions, where are the answers? |
| 03 December 2006 |
If one were to analyze the Private Equity Industry in Turkey, one might come to a quick realization upon their search, and then state clearly, "There is no industry!" Now, before all you VC's rush to object, this blogger must ask you, how forthcoming have you been to share this knowledge? Have the goals that you set long ago really been achieved? Despite all the economic and asymmetric excuses that you may entail, one only has to look as far as the Turkish Private Equity and Venture Capital Association's website only to find that it hasn't been updated since 2004.
Do we still have an industry in its infancy, or are the constraints of minority shareholder rights, government legislation and an emerging market economy constricting our efforts? In addition, the idea that VC's are over-protective and deliberately withholding this information as proprietary could be said to directly conflict with the objective of the Grandstanding Hypothesis. So where are the results? Who is currently doing research, and where is it posted? Therefore, to comply with its objectives, and as a budding industry with many questions, this blog wishes you to comment on: "Where are all the answers?"
 First and foremost, let us revisit the issue of the Turkish Private Equity and Venture Capital Association website. It has all the basics: general information, a mission statement, a hierarchy of the board, and contact information. It is probably fairly certain that the application for VC registration receives a relatively low hit-count. Despite all of this, the TVCA News and Publications page provides a fairly comprehensive selection of English and Turkish white papers and publications. However, and as mentioned before, it hasn't been updated for 3 years.
According to Thomson Financial, for 2006, in the PE industry worldwide, $421 billion has been spent on buying companies, which only represents 17% of the total M&A globally. For Europe, $159 billion was spent. It can only be speculated how much of this pie made it to Turkey, or how much Turkey wishes to obtain in the future. This is why a motivated push toward greater communication between colleagues in this industry needs to occur. Let's use this forum as a starting point; a launch pad to further comments suggestions, networking and publication of highly relevant information – for the benefit of this industry and country.
For further update, I urge the TVCA, fellow colleagues and bloggers to contact this site and set the record straight. In addition, if you have any announcements or press releases that you would like to be posted here, please contact us.
Technorati Tags: Private Equity, TurkVCA, Turkey, Thompson Financial, M&A
|
|
|
|
|
|
|
|
|
Publisher: Jon H. Black
