| Turkey Launches iVCi - The Istanbul Venture Capital Initiative - a €200M Fund-of-Funds Aided by the EIF |
| 06 January 2008 |
Well, I finally get to break the news on this one since I only received the press release a few weeks ago. It is also fitting as it is Grandstanding Traction's first post of 2008. It should be a great year. The press release reads as follows:
.jpg) The European Investment Fund (EIF), together with the Technology Foundation of Turkey (TTGV), the SME Development Organisation of Turkey (KOSGEB) and the public Development Bank of Turkey (TKB) are jointly launching a target EUR 200m dedicated fund of funds and co-investment programme in Turkey. The Istanbul Venture Capital Initiative, or “iVCi” as the programme is known, aims to serve as a catalyst for the development of the private equity industry in this country whilst achieving good returns for its investors. iVCi is to be advised by the EIF.
iVCi further consolidates EIF’s risk capital activities in Turkey, where it already has invested in Actera Partners and Turkish Private Equity Fund II. EIF's Chief Executive, Francis Carpenter, said: "we are extremely proud of supporting and being advisor to this pioneering initiative in Turkey. We have first class local partners and are confident that iVCi will accelerate the development of a sector which is key to the development of the Turkish economy."
 Sahir Cortoglu, TTGV's Secretary General, added: "this fund is a crucial starting point for formation of a risk capital market and culture which we believe will further serve as a means of technology development in Turkey" To this, Mustafa Colakoglu, Vice President of KOSGEB further commented "iVCi allows us to deliver to SMEs in Turkey top quality finance to support them reaching global markets through what has been historically an under-developed asset class in this country."
 TKB reflected on the importance of iVCi for the development of the domestic institutional investor base. Adbullah Çelik, Chairman of TKB said: "the majority of current institutional investors in Turkish private equity funds are foreign, iVCi provides a secure and sustainable environment for Turkish institutions, both public and private, to become involved as investors without hampering the corporate governance of the underlying funds." Currently, the majority of institutional investors in Turkish private equity funds are foreign based. iVCi shall provide access for its investors to the increasing number of Turkish private equity players. EIF is expected to invite a small select group of blue chip Turkish and international institutions to participate in this programme.
First closing of iVCi took place in Luxembourg on 13 November 2007 at EUR 150m. Official public launch is envisaged in the first quarter of 2008.
According to the AltAssets article on the iVCi release, the fund has a target of €200M. Also, according to Bankaciyiz - a Turkish bankers blog(in Turkish), the TKB will be contributing €10 million.
Hopefully, as this takes shape, we will see more venture capital partners and firms transpire in the area and finally grow this industry to fill the venture capital gap. It will be interesting to see what partners will take the reigns as well as what blue chip institutions will participate. I can't help but breathe a sigh of relief as this initiative gets started. I have always been somewhat negative as to the direction of the government in spurring innovation, more toward the universities and technoparks, and with the limited budgets that have been devoted, it has always been the case of very little funds locked up in bureaucratic steps. It was always the case of tax-free revenues that were suplemented by governement subsidies, which to me sounds like a company that could not survive in the real world. In addition, the universities somewhat lock incubated entrepreneurs up into "lifestyle" companies, and either continue to fund companies that should be cut loose, or maintain companies that should be growing at a greater pace if they had greater access to venture funds.
As an emerging market, Turkey made that choice of putting forward funds into univeristies and Technoparks, which isn't unwarrented given an economy that does not rely on its technology entrepreneurship. But in this case, Turkey can try to reinvent the wheel and sort of reverse engineer the process of spurring more innovation, entrepreneurship, greater job growth, growth of technology, value-add, and possibly even greater exports. Turkey is capable of creating world class companies. Again, as has been stated before on this blog, the education needs to begin. The TTGV and KOSGEB have all the tools to implement. Perhaps now it is up to univesity professors to refresh how they are training Turkey's entrepreneurs to access this capital.
Happy New Year Everyone!
[---+----+ Other Relevant News This Week +----+----]
Courtesy of the Turkish Daily News
Turkven Private Equity has acquired 70 percent of Provus Turkey and Provus Romania, the independent payment processor firm in Turkey and its operations in Romania for an undisclosed sum.
Buyers line up for Turk firms (Outlook for Foreign Mergers & Acquisitions in Turkey in 2008)
Turkey's Yildiz Holding has sold 60 percent of Fon Financial Leasing (FFK) to Kuwaiti-based Global Investment House KSCC (GIH), for $120 million.
 Technorati Tags: Venture Capital, iVCi, Entrepreneurship, Fund Closings, Fundraising, Fund-of-Funds, EIFLabels: Fund Closings, Fund of Funds, fundraising, iVCi, Venture Capital
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| Actera Group Closes Actera Partners Fund at $475 Million |
| 23 December 2007 |
The Actera Group has finally closed their Actera Partners fund at over $475 million according to an AltAssets report. This would be a new Turkish fund record, and would most likely bring 2007 to a close with an increase in the private equity funding pool of over $1 billion.
Believe me when I tell you, I have seen a google search come from every country on this site, so Actera's reach has spread far and wide, whether it be through their road shows or due dilagence. Indeed, according to the statement, "commitments came from pension funds, multilateral institutions and sovereign wealth funds from North America, Europe, the Far East and the Middle East."
The main points of the statement include:
Actera Partners will focus primarily on buy-out and growth equity investments across various industry sectors in Turkey. In addition, the fund seeks to partner with Turkish companies to support their expansion to other countries.
The fund has already completed its first transaction. In partnership with US buy-out giant TPG it has invested in Turkish spirits company Mey Icki Sanayi.
 Isak Antika, managing partner and co-founder of Actera Group, said, 'Turkey is undergoing a fundamental transformation which is reshaping its economic landscape and underpinning its convergence with the developed economies of the world. Given the size of the Turkish economy, such convergence will result in substantial value creation opportunities.'
So, congratulations go to the gentlemen operating Actera Partners, Isak Antika (of Antika Partners) and Murat Cavusoglu (previously of the George Soros SE Europe Fund/Bedminster Capital). Since starting the fund in early 2007, they truly have done a lot to promote Turkey to the rest of the world. Now, it is only a matter of time before we see more PE come to Turkey. Private equity in Turkey has finally started to blossom, and the world is finally taking note of the small-mid-large cap opportunities that are awaiting investment, especially as funds have continually gotten bigger. This still confirms a gap, and venture capital can only be next as one of Turkey's great potential opportunities that await investment.
For some more background on Actera and one of Grandstanding Traction's most popular posts, please visit, "New Turkish PE Fund by Actera Partners to welcome Canadian Pension Funds to Turkey"
The Actera Group website is still under construction.
Technorati Tags: Private Equity, Isak Antika, Antika Partners, Deal Flow, Turkey, Murat Cavusoglu, Actera PartnersLabels: Actera, Fund Closings, fundraising, Private Equity
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| Interview: Mehtap Özkan - GoldenHorn Ventures |
| 16 December 2007 |
Mehtap (Mae) Özkan, founder of GoldenHorn Ventures, was kind enough to be interviewed via email concerning her fund, and about venture capital and entrepreneurship in Turkey. I am not suprised that Mae is someone that is very passionate about entrepreneurship in Turkey and also the part that she plays in supporting that end. For an overview of GoldenHorn Ventures, you can visit the GoldenHorn Ventures website (www.goldenhornventures.com). You can also visit the GoldenHorn Ventures Blog.
I think it is very telling when, speaking of Golden Horn, Senior Investment Officer at the IFC, Ralph Keitel, states, "I believe the Turkish market currently offers excellent investment opportunities for early-stage VC firms such as GoldenHorn Ventures which understand the challenges of entrepreneurs in a globalized world." I'll let Mae tell you the story. This will be the first part of that interview.
THE FUND - GoldenHorn Ventures
Tell us something about your background and how did it evolve into venture capital?
I was an entrepreneur. I had been involved with numerous startups and technology companies. I have a technical background, I started my career as software engineer and mathematician. Then I started founding technology companies and had to understand the business as well as technology. At least, I pretend to understand.
What brought you back to Turkey?
The passion to change the world! I can do it in a much wider scale then I used to.
How did you get your start as a VC?
I was coming back to Turkey and I was seeing all the ideas and projects disappearing after a while and people start doing mainstream jobs instead of realizing their dreams. That was very frustrating for me, because they were coming up with innovative technologies.
I started thinking about what the idea owners needed to become world changing companies. That is more crucial for the emerging markets, because you can change the world so much faster when you are in an emerging country, if you can. Then I started spending a lot of time thinking what would be the right investment model for a VC in Turkey, what is needed, etc.
I have come to a conclusion that more than the money, people who needed success are needed in the region. Success stories are needed. People who know and have been successful are needed.
Another exciting part of being a VC in the emerging country is you set up the rules. You train and teach everybody what venture capital is, how it is structured etc, from the attorneys to the entrepreneurs. Yes, it is very time consuming but it is very rewarding as well.
VC business used to be an old and very private community. That is changing as well. The VC business needs to go through a revolution. Silicon Valley and all the other set players have a hard time understanding what it would become. We have a shot there too.
All these exciting changes and my belief in innovation coming from emerging countries made me think what I know would be very valuable in Turkey. I can leverage myself and help create a self-sustaining ecosystem by investing all I have here – and I don’t mean only time and knowledge, but money, connections, emotions, really everything. So, I took a major decision and started fund-raising for GoldenHorn Ventures. That was 2 years ago. But the idea and modeling is a 5 year-process.
Then I was fortunate enough to meet my partners in Turkey. They are very courageous and open minded with great connections and experience. It is very hard to find partners who are so visionary as well as experienced and practical.
When was GoldenHorn Ventures formed?
GoldenHorn Ventures was formed very recently in August 2007, launched September 2007. The fund size is $25 Million, but we are raising more meanwhile and trying to have $50 M for this fund.
Where are you in the VC Cycle - fundraising/investing/divesting?
We are investing at the moment, but also preparing for a second close.
What will be your typical investment size?
$500 K to $3 Million. Our average investment size is $2.5 M.
How long will your typical exit period be?
We are looking at 3 to 5 years.
What position(%) are you typically taking in a company?
It really depends on the stage of the company we are dealing with as well as the valuation and how much money will take the company to the next stage. I can’t say we wouldn’t get in deals less than 30% or 20%. This will be untrue. Our preference is to take minority stakes.
Can you provide us with some details about some of your investments?
 Yogurt Technologies, we are betting on a virtual world idea that connects your real identity with the virtual one. As well, there are a few nanotech projects that are quite interesting.
We tend to get excited for ideas that can be a global phenomenon. In addition yes we also look at some companies in the Internet space as well. But we really believe in innovative and disruptive components in ideas or companies.
ENTREPRENEURSHIP IN TURKEY
As a VC focusing on Turkey, what are some of the biggest problems/challenges you encounter when looking for and investing in Turkish entrepreneurs?
We end up training everybody on what Venture capital is. That is a problem but also an opportunity.
Would you invest in Turks outside of Turkey? Or consider investing in Turkish companies and exporting them to countries that would facilitate their entrepreneurial ideas better (ie. Silicon Valley)?
Yes, definitely, We require a headquarters or idea production/ realization facility in Turkey. But we focus on creating international companies rather than only Turkish companies.
Overall, what suggestions do you have for a Turkish entrepreneur looking for VC funds?
Be bold,
Be honest,
Change the world.
VENTURE CAPITAL IN TURKEY
Why is the Turkish VC space still such a fledgling industry?
Because there are no success stories yet,
People tend to go after easy money,
Venture Capital requires entrepreneurial knowledge instead of just a pure finance background.
What are the typical concerns by LP's/potential fund investors in a Turkish fund?
People were laughing at me when I started talking about a technology VC in Turkey. The biggest concern was the deal flow, which is easy to prove. I have flown so many people here (investors and VCs eg. DFJ) to show the ideas and companies. The other concern is the exit strategy.
What do you think the government could do to promote:
- Entrepreneurship/Innovation
- The Turkish VC Industry
Let people work free. I don’t think there is much the government can do. Of course they can start programs like Yozma, but I am not really sure that governments understand entrepreneurship or startups. The best they could do is let people work free, decrease the bureaucratic steps, etc.
Being less bureaucratic as well as more entrepreneur friendly is very important.
Is the strategy and focus of Turkish VC's different from your stereotypical VC?
It has to be different in any emerging country.
I think being a good VC is about reading weak signals and detecting good ideas, good teams and good companies from those weak signals. There are many differences being a VC in an emerging country and, for example, the US.
- Weak signals are even weaker in the emerging countries.
- There is no ecosystem to support entrepreneur/idea owners or an entrepreneurial VC, so as a VC you need to disseminate your beliefs, bets, without getting tired, bring the value together from anybody possible to make things happen.
- For example in the US, the companies pretty much know what a VC expects so they tell the story according to what is being expected. That is good and bad. Good because it is easier to evaluate but bad because you are creating an environment assuming the finance world is more valuable than the ideas or idea owners. So you can actually miss big ideas just because they don’t know your rules of doing business. However, In emerging worlds, you need to understand the world of the entrepreneur/idea owner.
There are so many more differences but these are the ones that come to my mind first.
What are your predictions for the future of the Turkish VC space?
There will be more and more. The space will change very fast. There are many opportunities being a VC in Turkey, not only in technology but in many spaces. Soon, the education process will not be as tiresome and long and people will know what venture capitalists do. If we are good, than the idea of venture capitalism will be positive such as us being supporters, people who know things and support the idea owners not only with money but with experience and connections.
That is the main difference between a good VC and a bad VC. The good adds great value to a company. They praise the entrepreneur and the idea owner. They know that finance is just the means, it is not what matters, but the idea matters.
{ --- End of Interview ---}
For those entrepreneurs interested in submitting their business plans (or .ppt's ;-))to GoldenHorn Ventures, I urge you to check out the GoldenHorn Ventures website.
Technorati Tags: Venture Capital, GoldenHorn Ventures, Entrepreneurship, Fund Closings, Deal Flow, TurkeyLabels: Emerging Markets, Entrepreneurship, Fund Closings, fundraising, Golden Horn Ventures, Venture Capital
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| Turkven Closes Second Fund - TPEF II |
| 18 November 2007 |
Although there is not a lot of information out there, it can be confirmed that Turkven has closed its second fund. Posted in October in the WSJ (for subscibers), the TPEF II buyout fund is predicted to be a whopping $428 million, "which is 10 times the size of its 1st fund which closed at $44 million in 2002".
For a Turkish private equity fund, this will be the largest increase in fund size ever achieved through a second fund raising. It is also interesting to note that with the crisis in 2001 and with the formation of their first fund in 2002, they may have had to overcome a currency crunch with some of their deals as well as reassurances to their LPs regarding Turkey's economic problems at the time. It's amazing to think that despite any negative issues that may or may have not occured, the demand for and outlook of Turkey has still kept investors and LPs positive. With this second fund closing, it appears that these volatile issues have passed. In addition, their relationship with Advent International will continue.
According to the International Finance Corporation (IFC) website and synopsis of the Turkven deal, their investment will comprise of some €20 million. This synopisis/project description/letter of intent is quite telling concerning Turkven's focus, strategy and relationship with the IFC. The IFC has been affiliated with Turkven since their first fund.
Finally, we come to what is officially stated on the Turkven website concerning the deal.
TURKISH PRIVATE EQUITY FUND II (2007)
TPEF II has commitments from over 15 global investors, who have invested in Turkven's strong track record and first mover status in the Turkish market.
So we know the IFC has committed €20 million and I can confirm that the EIF has committed €10 million as stated at the ÖDTÜ Entrepreneur Investor Summit in early November. With Turkven closing $400M+ and (according to Deloitte's PE in Turkey Report) Actera looking to close their second round at $400M+ with their fund this year (can we confirm AccessTurkey/iLab as well?), the Turkish private equity pool just got a lot larger. Once again, this proves the appetite for the Turkish PE deals and investment is very promising as conditions appear to be good. This also means we will see a lot happening in the small-mid cap buyout market in the next three years. I still must ask, "where is the venture space?" to fill the equity gap, but that is beside the point. Nonetheless, congratulations go to Turkven.
On a side note,
I would just like to say that Grandstanding Traction and myself are in no way affiliated with Turkven Private Equity. That should take care of any rumours regarding Turkvcanalyst. If you are interested in who I am, please drop me a line at: Turkvcanalyst(at)gmail(dot)com
Technorati Tags: Venture Capital, Turkven, Private Equity, Fund Closings, IFC, Turkey, EIFLabels: Fund Closings, fundraising, Private Equity, Turkven, Venture Capital
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| A New Entry in the Turkish Venture Capital Space: Delta Capital Interested in Turkish Telecom Companies |
| 20 July 2007 |
In March 2007, Delta Capital, a Private Equity firm focused in the telecom industry in the Middle East and Africa, closed its MENA Telecom Fund, raising over 75 million USD. Conceived and headquartered in Dubai UAE, Delta Capital is part of Delta Partners - a company with strong expertise in the telecom industry.
According to the Delta Partners website, the fund will have a life of 7 years with an investment period of 3 years. In addition, unlike most VC funds that are constrained to a certain region, Delta has chosen a wide path - the MENA region. What is exciting about this is that it includes Turkey!
Over a conference call, I spoke with Delta Capital. I asked them to send me a few comments and answer a few questions about their fund. The following is a representation of that conversation according to Delta Capital's Head of Private Equity, Morten Kvammen:
"Why do you wish to invest in Turkey? Why now?"
Turkey, having a liberalised telecom industry and a continuously growing economy, is one the top priority countries for Delta Capital to invest in. With increasing competition amongst mobile operators and long distance telephony service providers, the Turkish telecom market has started to grow rapidly, proving to be one of the most thriving emerging market in the region. Thus, Delta Capital believes there is a great growth potential for companies in the Turkish telecom value chain.
"What kind of companies are you looking for?"
Delta Capital is currently looking for companies with operations in the Telecommunications value chain (from Network infrastrucure players to retail & distribution) that are looking for potential investors in order to achieve their goals. These companies should have their operations in the MENA region including Turkey, should be running a established business with demonstrated success, and with exceptional growth potential. The potential investee companies are expected to have developed an insightful and comprehensive Business Plan that describes the continuity of the high growth. Thanks to the unique structure of Delta Capital and Delta Partners, the MENA Telecom Fund is willing to provide growth capital and can leverage its telecom expertise to help in the expansion of the associated business.
"What will Delta Partners bring to the table?"
The Advisory side of Delta Partners offers strategy consulting to the main telecom players in the region, and has a solid team of more than 70 experienced professionals of 22 different nationalities, creating strong synergies with the Private Equity business. Delta Capital’s unique approach of combining a solid team with in-depth knowledge in the Private Equity business, together with top-notch intellectual capital from the Advisory side, and relevant contacts, makes it quite attractive to companies looking for partners to succeed and attain their growth objectives.
So, for all prospective entrepreneurs and companies that fit their focus - this is a great new opportunity for Turkey. I urge you to submit your business plans to Pipeline@deltapartnersgroup.com, or contact Delta Capital directly.
For any questions about this particular post, please contact turkvcanalyst@gmail.com.
Technorati Tags: Venture Capital, Delta Partners Group, Delta Capital, Fund Closings, Deal Flow, Turkey, Morten Kvammen, Delta Partners Group, MENA, Entrepreneurship, Telecom Industry, Dubai
Labels: Dubai, Entrepreneurship, Fund Closings, MENA, Private Equity, Telecom, Venture Capital
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Publisher: Jon H. Black
