This article is written by Clinton James, a Contributor Author at Startup Istanbul.
The launch of the event hosted by Ozan Hose organized by Startup Istanbul brought together a panel of Yousef Hamiddan of Mena, Sharif El-Badawi of 500-Star Company & Leading Partner for VC-Google Partners and Khaled Talhouni who’s the Managing Partner of Wonder Capital. They are among the biggest investors who see the global growth of beginners. The discussion is about why investors are sometimes misunderstood, what we need to know about them, how they choose and assess ideas, and why they can reject proposals.
It starts with Sharif who believes that we first need to understand the structure of investors, because some of them collect money from other investors, called LPs, to ensure that funds are available for investment when they assess the scale of investment of entrepreneurs. He said a 10 million dollar fund that covers more than 10 years can be understood with simple mathematics, where investors will be in the next three years, pumping funds up to five years. This consolidates up to $ 2 million per year, and you can ask how many affiliates operate the funds. If they are two partners, each partner has $ 1 million, which can be divided per partner per year into 2 investments. So if you talk to an investor who doesn’t understand the funnel above, he might say no because he can’t invest just because he likes you, the product or the market.
Familiarize yourself with investment theory and geographic location so that you know at what stage they are investing, what they are looking for, where they are in the investment cycle and what their mandate is. Countries like USA, investors have a mandate to limit their investment only in the USA.
It is not that they don’t want to communicate, for example via email, but because they receive 1000 unnecessary information, they must set priorities.
Khaled, was able to make 17 investments, especially in Turkey, and found four different new companies. The idea is always very critical because they spend a lot of time researching theory. They go deeper to understand the profile of entrepreneurs and their geographical thinking, and then consider the investment process they have from Seed, then Series A and then B. Compared to Series C, there is a big gap. Most of the funds are mostly audited in Series A and these investors seem to have gone through the value chain prism along with other elements to find out whether it is worth investing.
Yousef stressed that it was a challenge to manage especially new ecosystems and to promote new companies with certain values. They need to make major changes that require them to increase their margin money and costs, and if possible, reduce the asset value to zero so that there is enough money to start, because the equity has to be maintained between 7 and 10%.
For this reason, there is a need for financial confirmation. If this fails, we will face greater challenges in terms of existence.