Investors’ View

This article is written by Clinton James, a Contributor Author at Startup Istanbul.

Ben Rooney, Technology Editor of Wall Street Journal Europe hosts venture capitalists in Antalya for Startup Turkey’s event dubbed Etohum to understand the investors’ view of position and challenges that can be solved with in startups.

Raising a major concern of, what are the impressions when investors are looking at Turkey in comparison to other European nations, Hans Jurgen Schmitz of Mangrove Capital Partners feels that it is similar to Russia assessing it in the past 5 years, where a lot of innovation has been happening. Initially, there was no money for investments and suddenly the void is filled by business angels.

Some of the biggest challenges for funding for startups in Turkey are based on the investors not knowing exactly where their money will go, and may want to push the start-up in a certain path yet they may not be ready for it. Additionally, there has been rushed and overhyped impressions that may be dangerous because they may get out of hand especially to new entrepreneurs, making it a risk to their own investor’s money.

It’s been very difficult for startups to get investment money, confirms Ali Karabey, Managing Director of 212. But a good idea, team and execution plan should be enough to attract an investor. All that is required is to draw that picture and show them how you will spend that money.

Considering that all the panelists had made an investment into Turkey, Charles Irving, founder of Pond Ventures, sees the need of not only raising funds but raise smart money and be cautious not to give a lot of your equity on the first round of the company, instead, understand why building a company is tough regardless of the enthusiasm as you become very realistic on what’s expectations are. Most of the investor’s monies come from global institutions and there is two key things to consider.

First, investors can choose to raise more money to doing something else other than supporting ah startup, therefore, this statement reflects that investment monies are extremely difficult to find. Secondly, when investing, it is to the people who have been brave enough to invest that money with them, so, they expect big returns on taking high risks by putting the money into venture capitalist.

The problem here is that venture capitalist invest in early stages and might take a long time, 5 to 7 years, before they consider returns hence a bad investment. Therefore, understand what investors think about how do they exits the company, how do they want to make money from it, when are they planning to sell it and how long to have the money back. Understand how their investment structure is and align yourself as an entrepreneur with the investor.

Pamir Gelenbe, Venture Partner with Hammingbird Ventures, feels that it shouldn’t be a problem that entrepreneurs wish to venture into games and e-commerce platforms, but instead, look at how quick the companies can achieve its revenue especially in the 1st year.

─ December 9, 2019