Turkey’s venture capital fund ‘hunts’ for early-stage startups

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The amount of funding going to tech startups has increased, along with growing interest from venture capital funds.

Of these, Alesta stood out in particular and turned out to be one of the most active corporate venture capital funds in 2021 after making 22 investments, according to data from the industry monitor. , startups.watch.

It is known for its parent company, the Escort Computer brand, which gained particular recognition in the 1990s for introducing Turkey to personal computers. It has now become one of the important funds supporting technological initiatives.

Escort Technology Investment, which was listed on the stock exchange in 2000 and whose shares are still traded on the Borsa Istanbul Stock Exchange (IPO) under the code “Escom”, changed its path from PC business under the “program of transformation” and shifted its focus to software and national initiatives and sustainable investments.

Engaging mainly through its subsidiary Alesta, the group invests in companies that produce a wide range of technologies ranging from cybersecurity, biotechnology, cloud and software as a service (SaaS) platforms to battery technologies, games and online therapy. These initiatives include startups such as BiSU, Bren, Bakiyem, Kidolog, Smpl, Servislet, Houston Bionics, and GlaucoT.

Start-up investment

Meeting with a group of journalists on the company’s 30th anniversary, Escort Technology Investment’s Chairman of the Board, Ibrahim Özer, explained that they had transferred capital, knowledge and experience necessary for the technology companies in which they participated at the seed , namely early stage.

Özer said that these entrepreneurs and businesses will bring great benefits to the country’s economy in the future.

Alesta was the fund that invested the most in startups in 2021, he said, noting that they expect at least four of the 50 companies they currently invest in will become unicorns – a private company valued at over a billion dollars.

Once this goal is achieved, Özer said Escort Technology will also become a unicorn. Additionally, he also announced that there are plans for a stock sale or an initial public offering in the event of suitable terms for some of the affiliates.

As for resources, the company, which is listed on the stock exchange, also uses software companies and income from solar power plants in its portfolio. Özer also said there has recently been serious investor interest in the company from pension funds and foreign stock market investors.

Glaucoma treatment

Alesta has invested between $50,000 (TL 772,260) and $100,000 on average at the seed stage, adding that it is one of the few companies to do so in Turkey in a corporate sense. He also said that they also have investments of up to $1 million.

GlaucoT, a maker of the world’s first neuroprotective glaucoma treatment device, BiSU’s data-driven, one-tap, on-demand water delivery initiative, Kidolog, which provides online counseling services for parents and children , and Datanchor which operates in data security are some of the companies that are growing with new investments.

Citing some of their investments, Özer said he acquired a 7.5% stake in Servislet, a startup that offers digital onboarding services for aftermarket brands, for TL 375,000 ($24,273) on December 30. 2020.

They sold a 5% share for $500,000 in the company’s new investment round nearly a year later on December 24, 2021.

“On the one hand, we have achieved a return on capital multiplied by 22 in 12 months; we retain our 2.5% stake in Servislet after the sale,” Özer said.

35 years of technological experience

Özer, who has spent 35 years in the tech industry, said he was involved in nearly every aspect of that venture, explaining the negotiations during which he made investment decisions.

“While the entrepreneur in front of me says something to me; in fact, I can more or less guess the next sentence. Is there no risk? Of course there are. However, I usually make my decision within the first 20 seconds,” he noted.

“When you look at competitors in general, investments are decided step by step. There are investment committees, the process can be long. On our end, we make quick decisions when we believe it is the right investment and meets the criteria of our entrepreneurial team. That’s why entrepreneurs love us so much,” he added.

For them, he says, the team is even more important than the project.

“Because even if the project collapses, if the team is good, it can take another direction. If the team is bad, even the best project does not work.

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