Earlybird Digital East Fund — a fund associated with Germany’s Earlybird VC, however working separately — has launched a €200m ($242m) successor fund. The fund’s point of interest will remain the an identical as before: a Seed and Sequence-A fund specializing in what’s known as ‘Rising Europe’, in a host of phrases, nations stretching from the Baltics to Central and Eastern Europe, and Turkey. The company has additionally promoted Mehmet Atici, who’s been with the company for eight years, to Companion. The new fund has made four investments up to now: FintechOS, Payhawk, Picus, and Binalyze.
The serve-myth to DEF is a fascinating story of what took region to Europe in the last 15 years, as tech took off and Europeans returned from Silicon Valley.
Following his exit from SelectMinds (where he was the Founder & CEO) in 2005, Cem Sertoglu moved serve to Turkey. Even supposing he says he “by chance turned the first angel investor” there, he was clearly the excellent man, in the excellent region, on the excellent time. He told me: “I was very lucky and ended up writing the first checks in about a of the first tidy outcomes in Turkey.”
In 2013, Sertoglu partnered with Evren Ucok (the first angel in Top Games and Trendyol), and Roland Manger (Earlybird). Dan Lupu, a Romanian investor who had lined the plot for Intel Capital, joined them, and together they raised the ‘Earlybird Digital East Fund I’ plot at $150m fund in 2014, specializing in CEE and Turkey. This was and is an dwelling where there can be excessive-quality ventures to be chanced on, however very runt in the manner of VC.
Thereafter, between 2014 and 2019, the fund invested in UiPath, Hazelcast, and Obilet. UiPath has turn out to be a global chief in the dwelling known as ‘Robotic Route of Automation (RPA). Hazelcast is a low latency recordsdata processing platform startup with Turkish roots. Obilet is a marketplace centered for the massive Turkish intercity bus commute market. DEF has additionally exited Vivense, Dolap, and EMbonds and in more recent occasions the fund has exited Vivense, the “Wayfair of Turkey” to Actera, the fracture native PE fund.
The team had spectacular early success. Top Games, Trendyol, YemekSepeti and GittiGidiyor are the four largest Turkish tech exits up to now. Digital East Fund was an investor in all of them. Top video games exited for $1.8 billion in cash to Zynga most fascinating last year.
As of Q4 2020, the fund’s metrics are:
Funding A couple of: 24.9x
Execrable IRR: 104.4%
Obtain IRR: 84.1%
So in VC terms, they’ve executed handsome a lot.
I interviewed Sertoglu to unpack the parable of Earlybird Digital East Fund.
He told me DEF has executed a 17 occasions funding a couple of on a $150 million fund. He thinks “this may perchance occasionally presumably be the excellent European VC fund performance in historical past, and it’s no longer coming from Berlin, it’s no longer coming from London, however it completely’s coming from Eastern Europe. Now we were told by about a of our LPs that they mediate we’re the fracture 2014 classic VC fund on this planet, no person’s viewed stronger numbers than this.”
“Top Games turned out to be an even attempting myth. Whereas you stare upon how tricky it’s been for Turkey, macroeconomically. The real fact that a single company with 100 folk in actuality offered for $1.8 billion in cash, was appropriate… it was staggering for the native market right here.”
DEF’s emergence from Turkey, on the side of its relationship with a fund in Berlin, was no longer basically the most evident route for the VC fund.
“One thing we realized early one was that we may perchance perchance well perchance make investments with our bask in capital and syndicating to our friends, however for apply-on funding, we’d always must tear global. And that made us feel inclined. It made us feel we were always dependent on others’ comprehension of the different that we were facing. So that’s when the first fund plan came out this was,” said Sertoglu.
“We felt that there was this strange dislocation between different and capital in Eastern Europe. Our first fund was $150 million funds – I mean, a basically quaint dimension when put next with Western markets. But we turned the largest fund in the plot, and made up our minds to point of interest on this series A gap where we felt that there was this vast different, as a result of manner we mediate series A is nonetheless very a lot a local play.”
“Being a local player that understands the plot may perchance perchance well perchance be an advantage, so this was proven to be factual. Shall we in actuality gaze handsome a lot all the issues in Eastern Europe for the last eight years. And we caught the excellent one, happily, which was UiPath. I mediate very few funds world huge can dispute that they gaze the majority if no longer the full opportunities that fall into their mandate,” he said.
“Now we procure this dual approach of backing native champions as well as contenders for global markets as well. 20 years ago you needed to be in Silicon Valley. Now, Transferwise comes out of Estonia, UiPath comes out of Romania. And that was even before the pandemic.”
Sertoglu concluded: “So now we procure unusual capital, approaching the heels of a basically worthwhile first fund, which we’re alive to to deploy. We’re calling the full opportunities, seeing very ambitious, solid groups popping out of the plot. And now we procure 200 million euros to point of interest on these forms of opportunities in the plot.”