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.

CFK Partners Launches with Turkish Focus
In my correspondance with CFK Partners and the post in regards to their acquiring a stake in Vakif Girisim, I was able to secure some information regarding their plans and focus for Turkey. I do not know how helpful this might be for my readers due to the clarity of the email response, and for that I apologize.

Here's how the emailed questions were answered:

Important Note:

Acquisition of Vakıf Girisim, will be valid following the approval from Capital Markets Board of Turkey (CMB).

Our Investment Strategy, Investment Focus, and Growth Scenarios will be valid in the case of approved acquisition.

How does the acquisition of Vakif Girisim fit into CFK's strategy?

Along with the other products/services, CFK & Partners overrates Venture Capital with corporate social responsibility point of view.

CFK & Partners thinks that most of the innovative ideas come to the scene at the universities and at the Techno Cities organized by TUBİTAK, but financing is very limited to turn these ideas into commercial and industrial investments.

In this concept, our company plans to support innovative ideas –(that have high potential to compete with its rivals/peers with in the country or outside the country ,and suitable for our investment strategy)- to be beneficial for the Turkish economy and to promote young, successful entrepreneurs by providing finance & managerial support.

The reason behind the CFK acquisition of Vakıf Girişim

Vakıf Girişim was founded at 1996, and it was the first Venture Capital Company in Turkey. That’s why CFK has a strong desire to keep the Vakıf Girişim afloat; and also CFK believes that the business is highly compatible with CFK’s targets.

What is your investment focus and strategy?

Investment Focus:

Projected to invest at all the niche areas and sectors, with a focus on: technology, Internet Media, Food, Logistics (focus on warehousing), Health, Energy, etc.

Investment Strategy:
  • Start-up and Early Stage investments
  • Pre-IPO investments (invest before 6 months -1.5 year, and exit with IPO)
  • Co-Investments (invest with more than one international VC companies)
  • Invest within crosswise sectors
  • Founded new VC companies , to spread the risk, and to invest together (If technically applicable)

What will be your plan for growth of your portfolio? How many investments are you planning? How will you find dealflow?

  • To invest in more projects; after achieving acceptable growth rates; we want to invest in min.5-6 projects for an amount of $4-6 million.
  • Plan to invest with 10% of our portfolio in projects as “angel investor” , to reach our mentioned target we plan to:
    • Collaborate with universities (esp. engineering faculties),
    • Hold conferences
    • Organize contests to promote new ideas
    • Provide computer software for on-line application documents
  • Plan to get help form consulting firms, to reach our goal in an effective and efficient way. (Especially we want get help from “Venture Capital Portfolio Management Firms, that has been practical with August -2007 CMB announcement).
  • Plan to take a share from existence venture capital firms.
  • To diversify our portfolio, we can invest in the companies that are currently listed at ISE.

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Posted @ 22:08   1 Comments
Idea Contests: Beneficial to Students and a Nation? - Or Exploitation of Entrepreneurial Ideas?
Recently, the Turkish Daily News had a very generous front page article, ("Young Turks' career question: Why?") concerning Unilever's IdeaTrophy Contest. A business strategy contest for university students throughout Turkey, IdeaTrophy provides a competitive platform for students to form teams, culminate ideas, and present to Unilever executives. Winners of the yearly contest are rewarded with small cash prizes (and potential for employment). While I agree that the contest provides a good framework for teamwork, business planning education, presentation skills and valuable experience working with a multinational corporation, I will stop short at saying it promotes and improves innovation and entrepreneurship for Turkey.

This is the problem I have with these "idea" contests. For these large MNC's, they are quite simply building a marketing focus group for free, and a permission-based recruiting network. By asking for ideas (bordering on exploitation of rather entrepreneurial ideas that are not their own), the MLC focuses on the best of the best, refines them, and "rewards" (disguises) it with a contest prize incentive. Whether the student winners are hired is immaterial, the objective of garnering valuable market data on Turkey's youth, the largest demographic in Turkey, has been achieved. I find it interesting that last year's contest was on product development, as they received hundreds of brainstormed ideas for free. Having completed that production of an abundant array of Lipton Tea products (Long Tail?), this years contest decided to focus on customer attraction and retention. Hmm.. how interesting. (Back in the day, people used to actually work for a living)

Cem Tarık Yüksel, Unilever's veteran human resources manager, (interestingly enough) was quoted as saying,
"the first question youth ask themselves is whether they were doing a meaningful job or a “brand-name” job. “In the past, ‘brand-name jobs,' such as being the so-and-so manager of company X, used to be in high demand. But now they look at whether that job has a meaning,” he said. He added that people were not satisfied with “brand-name” jobs that did not provide them with real responsibilities."

The competitors have to pass various elimination processes, just as in pitching an idea to the board of a multi-national company. “The first one is at the idea level. The goal here is to promote innovative thinking. The roughly 50 teams that make it through the first elimination are asked to prepare their business plans,” said Yüksel. The second elimination yields 20 teams and these make a presentation to a board made up of the manager of the related brand and human resources group. Ten teams are chosen as finalists and are then invited to a three-day camp, where they receive training on their subject. The last day of the camp is “the big day,” when teams make a presentation to members of Unilever Turkey's board of directors."
Ironically, later in the article, interviews are made with previous winners of the contest who just so happen to work for Unilever, as they fit so nicely into their "brand name" jobs. Here's what they had to say the contest did for them.
Mehmet Çelikol is a member of the team that won the IdeaTrophy prize in 2005. “I was studying computer engineering in Bosporus University, but I had decided to go into marketing,” said Çelikol, who currently works as a products manager assistant for Dove Hair at Unilever Turkey. “So this was important for me. It was a turning point in my career,” he said.

Mirella Kasuto is another IdeaTrophy winner who has joined the ranks of Unilever Turkey. She was a member of the winning team in 2001, the first year the competition was held. She believes that the competition had positive results and was influential in her decision to apply for a position with Unilever. “The competition taught not only me, but the whole team quite a lot. It allowed us to have a real business life experience as students. It was also an opportunity for us to get to know Unilever better,” she wrote in an e-mail interview from a business trip abroad as customer marketing manager in charge of the Lipton and Amaze brands at Unilever.

How many entrepreneurs wake up one day and say, "I want to be the product manager for Dove Shampoo!" Do I dare say this is the reply to your primary school teacher's question, "What do you want to be when you grow up?" I think not.

So who are the real winners here? Does Turkey, as a nation, increase its wealth? Have we increased the entrepreneurial spirit and spurred innovation? Some may argue that the valuable job experience, which so few young educated Turks have, is of the upmost value. Others might argue that young Turks are able to sample new products first-hand. And this is an incentive to compete?

OK, OK, I'll get off the rant. But regardless, if you are a student with minimum ideals, prospects, dreams and/or ability to take risks, than these contests are an excellent opportunity to flaunt what you think you got. Take the 50 year job, get the gold watch and parachute. For other contests, you should also check out TRUST International Management Game by Danone, or Loreal's E-Strat Challenge just to name a few. Don't get me wrong, these contests are a great experience for students, but the hidden benefits for the company are greater.

That said, how many university students do you know that opted for an internship vs. a summer in Bodrum? The point is that it takes all kinds. Everyone is different. However, if you think you are an entrepreneur and your ideas will set you above the rest, then don't waste your time. Wait for the next business plan contest, and pitch your idea to real VCs. You may die broke, but atleast you weren't a numbered cog.

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Posted @ 22:24   0 Comments
Turkey's First Hedge Funds; Trouble for Turkcell; Carlyle Group's Summer Intentions; and Turkiye Finans and NCB
İş Bank's investment division, İş Invest (İş Yatırım Menkul Değerler), has been approved by the Capital Markets Board to operate a hedge fund. It will have an initial YTL 30 million ($23 million) under management.

The İş Invest's announcement comes one day after Garanti Bank, the Turkish lender co-owned by General Electric Co., said it received approval to open Turkey's first hedge fund. The fund initially will have about YTL 500 million ($388million) under management.

TDN: Banks race to open first hedge fund in Turkey

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It seems Russia's Alfa Group, just after acquiring AFM cinemas, may be about to gain control of Turkey's largest mobile phone network, Turkcell. The deal is hinging on a court case between Turkcell stockholders, Alfa Group and Çukurova Holding.

TDN: Russia's Alfa dreams of Turkcell ownership

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Carlyle Group's Can Deldag made an announcement stating to be on the lookout for deals coming this summer, possibly in June. The news is fairly weak, but you can judge for yourself.

TDN: Carlyle Group plans acquisitions in Turkey

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I reported on the Turkiye Finans deal with NCB last year, and it appears the due diligence has come full circle and finally been completed. The announcement was made last week.

TDN: Saudi Arabia's NCB buys Türkiye Finans

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Posted @ 22:29   0 Comments

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