A Turkish Private Equity Web Log

In an effort to cover the Turkish Private Equity Industry - for the promotion of Entrepreneurship, the private equity asset-investment model, and the communication thereof.

Summary: METU/ODTÜ Holds Entrepreneur/Investor Summit
At the beginning of November, I happily attended the Entrepreneur-Investor Summit hosted by Middle East Technical University (METU/ODTÜ) at the Ritz Carlton in Istanbul. I went there with many ideas and goals in mind. However, what I took away was somewhat different from my expectations.

First and foremeost, who attended the event? A fine list of panelists can be found on the Metutech site. However, the attendees constituted:
  • International Banks - The EIF, the EIB and KFW presented their foci on helping other banks fund entrepreneurship through loans. Only the EIF through the EIB acts as Fund of Funds to the venture space.
  • European Angels - The midmorning panel consisted of a discussion on the merits, successes and opportunities of setting up an angel investor network. This included The European Business Angels Network (EBAN), and the Italian Business Angels Network (IBAN) as well as The London Business Angels. All stressed the need for increased legislation on the taxation or tax incentives for angel investments - which could in turn aid innovation and entrepeneurship. Only a handful of Turkish Angels were believed to be present in the room.
  • Entrepreneurs - Since the Summit was preceded by a business plan workshop online and presentations to a panel of angels for evaluation, it is only natural to see some entrepreneurs in the audience. Apparently, 18 entrepreneurs were able to present, but no word on if any got funded.
  • Innovation/Entrepreneur Consultants - A few European firms attended and sat on panels to discuss their particular methodology behind becoming innovative, how to present a business plan, and how to succeed at finding investors.
  • Academicians - Of course, with ODTÜ organizing the event, there were quite a few academics in the audience asking poignant questions. The event was also organized with the help of International Relay Centers (IRC) Anatolia, TTGV, KOSGEB, and MetuTech.
  • Turkish Finance Brokers - There were a few representatives of Turkish Brokerage firms in attendance. They were looking for both corporate venturing opportunities with entrepreneurs, or investors for their own funds. Perhaps they just wanted to hear about the current status of innovation, entrepreneurship, and news on the incubation/venture/private equity space. It is hit or miss whether they found what they were looking for.
  • Government Representatives - The event was delayed as we waited for the arrival of the Secretary of the Ministry of Industry - Hilmi Guler, who then preceded to go on and on about the development of energy in Turkey and how it vaguely applies to increasing innovation and entrepreneurship. Perhaps showing the readiness for foreign investment in Turkey was the goal here. Needless to say, the entrepreneurs and guys in Turkey's garages present in the conference hall couldn't have cared less. TUBITAK spoke (in Turkish) about the number of patents and published works - much of what can be seen on their website. TTGV, frankly, gave a very enlightening presentation on TTGV's work and increased spending (despite their small budget). Mete Çakmacı of TTGV confirmed my supspicions when he stated, "{In Turkey} Entrepreneurs have naive expectations {about obtaining funds and the requirements of that investment}, they want a 'life-style' business."

Notice anyone missing? Exactly. In all the sessions and panels, only one representative from an official Turkish venture capital firm was on a panel, and I have heard since the conference only a few were in attendance. Suleyman Yilmaz, CEO of Kobi A.Ş sat on the last panel. His firm comprises of 20 million YTL with the backing of TOBB, KOSGEB and various Chambers of Commerce from 15 cities.

In Mr. Yilmaz's presentation, he was fairly pessimistic regarding the current entrepreneurial environment. Some of his statistics were no different than any other VC. Of the 800 applications since the beginning of the fund, 3 investments were made. The translator mentioned that 400 of those applications/business plans were in very bad shape. Disappointingly, Mr. Yilmaz did not stick around for questions after the panel.

Suprisingly, there were those at the conference who believed that only 2 or 3 venture firms existed in Turkey, which is definitely debateable. However, not suprisingly, the consensus of the presenters confirmed that on the demand side there is a lack of activity and an investment gap between the incubation stage and growth stages. This was summarized as a gap between €100K - €3/5 million. Anthony Clarke, Managing Director of GLE Growth Capital (as well as Chairman of British Business Angel Association (BBAA) and President of European Business Angels Network (EBAN)) stated, "There is not only an equity gap, but we have a management gap." For the investor, the supply side barriers are simply that management teams are just not good enough in most business plans and the variety of risks to invest in some countries are simply too great. Here's a link to Anthony Clarke's PPT "Angels and Angle Co-Investment Funds" via the Metutech website.

Mr. Risto Kalske from Finland and Director of SITRA, The Finnish Innovation Fund, quite interestingly told the story of how Finland built a fund of funds to spur the venture capital market which in turn spurs the innovation of entrepreneurship. This in turn - worked - and it is only now, that Finland is starting to concentrate on Science and Technology Parks. This is exactly the opposite of what Turkey has done, and in my eyes confirms that the next great step for Turkey would be to establish this Fund of Funds. Here's the link to Mr. Risto Kalske's PPT "Public Measures: Encouragement for Private Capital?" courtesy of the IRC website

Overall, What Were the Results?

  • European Angels gained a better perspective on Turkey. Unfortunately, Turkish Angels were not in attendance. A Turkish Business Angel Network has a domain registered but whether it has been formed is up to speculation (although there are 2 Angels from Turkey registered with EBAN). This is probably why Angel Network representatives did not hang around for the last session.
  • 18 Entrepreneurs were able to improve their business plans and give their elevator pitches at the coffee breaks. (It would be interesting to learn if any of these entrepreneurs got funded - in the comments of this post.)
  • For academics, METU learned what to do (or not to do) for next year. Perhaps there will now be a deeper focus on attendance, innovation building and closing the venture funding gap.
  • As publisher of Grandstanding Traction, I received a number of topics and ideas on content to publish and improve this site. (To be continued...)

To conclude, upon speaking with a prominent Director of a Venture/Entrepreneurship consultancy, it was voiced that "At these types of conferences, you never know what kind of crowd is going to show up." Pardon the Forrest Gump analogy, but indeed, Entrepeneurs (and prospective fund managers) who were looking for investors - they most likely did not find them. For Business Angel Networks looking for Angels in Turkey to band together - they probably didn't find them. For academics looking for answers toward improving innovation and entrepeneurship - let's hope they found enlightenment. In addition, let's hope the government gets the follow-up memo.

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