Earlybird Digital East Fund — a fund related to Germany’s Earlybird VC, however working individually — has launched a €200m ($242m) successor fund. The fund’s focus will stay the identical as earlier than: a Seed and Series-A fund specializing in what’s recognized as ‘Emerging Europe’, in different phrases, international locations stretching from the Baltics to Central and Eastern Europe, and Turkey. The agency has additionally promoted Mehmet Atici, who’s been with the agency for eight years, to Partner. The new fund has made 4 investments thus far: FintechOS, Payhawk, Picus, and Binalyze.
The back-story to DEF is an interesting story of what occurred to Europe within the final 15 years, as tech took off and Europeans returned from Silicon Valley.
Following his exit from SelectMinds (the place he was the Founder & CEO) in 2005, Cem Sertoglu moved again to Turkey. Although he says he “accidentally became the first angel investor” there, he was clearly the proper man, in the proper place, on the proper time. He instructed me: “I was very lucky and ended up writing the first checks in some of the first large outcomes in Turkey.”
In 2013, Sertoglu partnered with Evren Ucok (the primary angel in Peak Games and Trendyol), and Roland Manger (Earlybird). Dan Lupu, a Romanian investor who had coated the area for Intel Capital, joined them, and collectively they raised the ‘Earlybird Digital East Fund I’ set at $150m fund in 2014, specializing in CEE and Turkey. This was and is an space the place there might be high-quality ventures to be discovered, however little or no in the best way of VC.
Thereafter, between 2014 and 2019, the fund invested in UiPath, Hazelcast, and Obilet. UiPath has change into a worldwide chief within the space recognized as ‘Robotic Process Automation (RPA). Hazelcast is a low latency information processing platform startup with Turkish roots. Obilet is a market targeted for the huge Turkish intercity bus journey market. DEF has additionally exited Vivense, Dolap, and EMbonds and in more moderen occasions the fund has exited Vivense, the “Wayfair of Turkey” to Actera, the highest native PE fund.
The staff had spectacular early success. Peak Games, Trendyol, YemekSepeti and GittiGidiyor are the 4 largest Turkish tech exits up to now. Digital East Fund was an investor in all of them. Peak video games exited for $1.8 billion in money to Zynga solely final yr.
As of This autumn 2020, the fund’s metrics are:
Investment Multiple: 24.9x
Gross IRR: 104.4%
Net IRR: 84.1%
So in VC phrases, they’ve completed fairly nicely.
I interviewed Sertoglu to unpack the story of Earlybird Digital East Fund.
He instructed me DEF has achieved a 17 occasions funding a number of on a $150 million fund. He thinks “this might be the biggest European VC fund performance in history, and it’s not coming from Berlin, it’s not coming from London, but it’s coming from Eastern Europe. We have been told by some of our LPs that they think we’re the top 2014 vintage VC fund in the world, nobody’s seen stronger numbers than this.”
“Peak Games turned out to be a phenomenal story. When you look at how tough it’s been for Turkey, macroeconomically. The fact that a single company with 100 people essentially sold for $1.8 billion in cash, was just… it was staggering for the local market here.”
DEF’s emergence from Turkey, along with its relationship with a fund in Berlin, was not the obvious path for the VC fund.
“One thing we realized early one was that we could invest with our own capital and syndicating to our friends, but for follow-on funding, we’d always have to go global. And that made us feel vulnerable. It made us feel we were always dependent on others’ comprehension of the opportunity that we were facing. So that’s when the first fund idea came out this was,” stated Sertoglu.
“We felt that there was this unusual dislocation between opportunity and capital in Eastern Europe. Our first fund was $150 million funds – I mean, a very quaint size compared to Western markets. But we became the largest fund in the region, and decided to focus on this series A gap where we felt that there was this big opportunity, because of the way we think series A is still very much a local play.”
“Being a local player that understands the region would be an advantage, so this was proven to be true. We could essentially see pretty much everything in Eastern Europe for the last eight years. And we caught the biggest one, fortunately, which was UiPath. I think very few funds around the world can say that they see the majority if not all of the opportunities that fall into their mandate,” he stated.
“We have this dual strategy of backing local champions as well as contenders for global markets as well. 20 years ago you had 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 we now have fresh capital, coming on the heels of a very successful first fund, which we’re keen to deploy. We’re calling all the opportunities, seeing very ambitious, strong teams coming out of the region. And we have 200 million euros to focus on these types of opportunities in the region.”