• 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."

• 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...)

Labels: Angel Investors, Business Planning, Conferences, Incubators, KOSGEB, MetuTech, ODTU, Trainings, TTGV, Venture Capital

Technology entrepreneurs that successfully complete the training will present the business plans to be prepared by them to a team of experts in venture capital and business plan evaluation during the "Business Plan Review Board" activity to be held on October 31, 2007, where they will finalize their business plans by obtaining the opinions of experts as well.

During the "Entrepreneur-Investor Meeting", which will be organized on November 1, 2007, on the other hand, technology entrepreneurs will share their business plans with potential actual investors – business angels or venture capital companies. Our objective is to allow the minimum technology start-up to proceed on its way with new funding opportunities …

Labels: Angel Investors, Business Planning, Conferences, Incubators, KOSGEB, MetuTech, ODTU, Trainings, TTGV, Venture Capital

'The European venture capital market saw an explosion in early-round investing as €600m was poured into 126 early stage deals,' said Jessica Canning, director of global research for Dow Jones VentureOne. 'The data shows the median amount invested in a first round during the quarter was €3.2m, by far the highest total on record. Add to that a continued interest in later stage deals and the overall median for a deal done in Europe jumped 41 per cent during the second quarter to a record €3.1m.'

'The record median round size in Europe this quarter is the continuation of a trend that we have observed over the last 18 months in which investors are providing greater sums to fewer companies, allowing those companies to better compete globally and build critical mass for an IPO or M&A,' added John De Yonge, research director for the Ernst & Young Global Venture Capital Advisory Group.

Labels: EVCA, Funding Gap, fundraising, Incubators, Investment Reports, Median Investments, Private Equity, private equity research, TVCA

• Accelerators - Such as Siemens (left sidebar)
• "Co-operative" Combinators - Such as Y Cominator, YEurope, and HitForge
• VC-funded "Entrepreneur Bootcamps" - Such as Techstars.
  (For links to these, see Post: Incubators: Is Turkey Ready for This?)

Labels: Accelerators, Corporate Venturing, deal flow, Incubators

1. Discipline: First of all, the Turkish entrepreneur needs to have structured ideas in the form of business planning, or atleast understand how to convey ideas in both the technical and business sense. Finding entrepreneurs with this knowledge and level of written implementation may be hard to come by. Once an entrepreneur receives funding, they must understand that it is not a golden parachute. Pursuing cash flow, profits and an exit for investors must be in the cards. If an incubator were to throw $5000 at someone, this may actually not be taken seriously - in addition to the loss of 2-10% equity. It will be up to the investor to have a hands-on approach in coaching, motivation and dispute resolution - because the idea of equity financing is still a foreign concept. To some, this may even appear foolish. A larger loan from a bank might seem cheaper to an entrepreneur despite the loss of mentorship.
   
   
2. Friends and Family: In the Turkish business world of family oligarchs, the funding of business aspirations through family bootstrapping is very prominent. According to a study by the OECD in 2000,

   "99.8% of all enterprises were SMEs employing 76.7% of the workforce. Some estimates slate that the informal economy could also represent 50% of SME activity. Nonetheless, despite the employment, SMEs operate with comparatively little capital equipment, generate relatively low levels of value added, make only a small contribution to Turkish exports and receive only a marginal share of the funds mobilised by the banking sector."

   Thus, the fundamental weaknesses of the sector were stated as insufficient know-how and very low technology. So, as I've said before, the enterprise with the ability to look past the culture of family ownership toward 3rd party investors will perhaps enjoy greater chances of expansion. For an incubator to step in and invest so little compared to the value of a father's money, for example, might be a difficult hurdle to overcome for a Turkish entrepreneur. Again, it is the concept of parting with equity that may be difficult. However, needless to say, there are still a lot of opportunities out there for SME investment, provided the pipeline, whereas good due diligence is still important at the end of the day.
   
   
3. The Turkish Angels/VC Network: The network of Turkish VC's is a small but tight group of wealthy individuals. In some cases, syndications with other VC's are simply a phone call away, while the ability of a VC to fund using their own money can be a suprisingly easy, alternative step for an entrepreneur. In the end, whether it is through a large fund, an incubator, or an angel investor, the ability of the entrepreneur to convey a differentiated idea that displaces competition while generating cash flow will definitely find funding. The crux of the problem is that the existance of private sector venture capital in Turkey has only emerged in the last 10-15 years, and even then, the top-end of private equity M&A is where most of competition for deals lies. Some colleagues have even mentioned the rush toward the high-end deals and the mid-cap, leaving a giant vacuum, and therefore minimal competition, of venture capital funding. Thus, for an incubator (or an accelerator), finding dealflow is crucial. Whether it is through contacts, universities, or business plan competitions, access to innovative Turks at the forefront of development is the deal maker or breaker. This must be considered about all else before renting that office, hiring that assistant and putting the name on the door.
   
   
4. Minority Shareholder Rights: I've mentioned before the importance of corporate governance, and the nightmarish problems of the past. Between the judicial system and bureaucracy, shareholder rights are a pivotal concern amoung investors, both foreign and domestic. Entrepreneurs giving up equity need to realize that with VC funding comes a Term Sheet detailing the rights of the investor and what it entails. This may be a hard pill to swallow for some. Finding legal aid to put together such documents and making them valid may even give a few headaches, although manageable. An incubator, just like a VC, must be able to have all legal issues at arms length, for it might very well be somewhat of a sales pitch, not to mention a little hand-holding, guiding the entrepreneur towards understanding on these issues. But in the end, if the governmental systems show any sign of not working, all of this is for naught, and the investment climate may indeed get a little cold, and very quickly.
   
   
5. The Exit: Again, with a good network of individuals, VC's, Angels, and pertinant industry contacts, an exit is not impossible, given the current climate. Series A, B or C may operate a little differently, with or without more syndication, but ideally, funding great ideas and individuals can still reap good rewards. But we must now look at whether the incubator is funded "privately" or through a larger parent company. Yes, we must also remember that certain large companies R&D departments may spin-off into their own incubators/think-tanks and gravitate toward their own interests. These do exist in Turkey (see sidebar). If this is the case, motivation toward an exit and grandstanding of such may be very minimal, if necessary at all. However, from a seperate privately-held incubator, the exit of incubation is no different from Silicon Valley to the Levent-Maslak corridor.
   
   
6. The "Export of Brains": One issue has come up of late which I have discussed with a few colleagues as a viable option when funding entrepreneurs in Turkey - The export of entrepreneurs. This is not human trafficking! You may have heard of "Brain Drain", so perhaps we can call this the "Export of Brains". The idea is simple. Most Turkish VC's have existing contacts in Silicon Valley, the US, England, France, Germany, the Middle East, Israel and other countries. An incubator, given the right opportunity, with the right entrepreneur, technology, and timing, could very well incubate entrepreneurs outside of Turkey. As long as the Term Sheet is sound, investors and their "incubatees" could set up shop on Sand Hill Road, brush elbows with known industry contacts, find more funding, place them in prime location for market penetration, and even line them up for the next great IPO. Of course, for those people who believe Turkey will be the next Silicon Valley, don't let me stop you from staying put. In the end, the VC needs to find the best resources for its investments, and if that just happens to be overseas while still maintaining investment potential, more the better.

Labels: Angel Investors, deal flow, Entrepreneurship, exits, Incubators, Venture Capital

Labels: Entrepreneurship, Incubators