Tag Archives: Funding

Tapu’s new round

Tapu, an online real estate auction marketplace where we’re investors, announced its new $1.2M funding round earlier this week.

The funding round which was led by existing investor Earlybird also included participation from existing investors Can Yucaoglu and Banu Kucukel.

Tapu has grown the number of online property sales that are completed on its marketplace to over 50 per month. Given the high price and lack of commoditization of these properties, that’s an impressive number.

Together with the new round, Tapu is well positioned to further grow this number by selling a greater number of properties on behalf of its existing partner banks while also attracting the properties of new business partners to its marketplace.

We value the continued support which our co-investors are showing the company and congratulate the Tapu team for their crisp execution and steady growth.

Sinemia’s new round

Sinemia, a movie membership and loyalty club that also operates movie content sites, recently completed its Series A funding round.

500 Startups was the first to participate in this round last November, and this was followed by Revo Capital who led the roughly $1.5M total round this month.

This investment makes us happy for two reasons.

First, it will help Sinemia establish new partnerships to grow in Turkey while also giving it the fuel to test the US market.

Second, this marks our first co-investment with Revo. We welcome the Revo team to the company.

Punching above your weight when recruiting

I was recently speaking with another investor about how successful our companies are at recruiting.

At the surface, one might expect a company’s recruiting success to be tied to the strength of their brand and the financial offer they make to candidates. Traction is a pretty good proxy for the former and the combination of profitability (or a lower net burn rate) and funding are good proxies for the latter. And this is indeed broadly the case. Companies with more traction and a better net funding position are more successful at recruiting.

However, during our talk we also identified several outliers in our portfolios. Specifically, some companies were punching well above their weight by attracting a level of talent that’s difficult to justify by looking only at their traction and net funding position. So there must be at least one, or perhaps more, variables that we’re missing. I think there are two.

The first is the founder’s ability to inspire others to join them in the pursuit of a shared vision. This comes from being authentic, being able to clearly communicate your vision, and caring about the people you work with.

The second is how much time the founder spends recruiting. All else equal, the more time you spend meeting candidates the more likely you are to hire the right people. Together with setting the company’s vision and keeping it funded, recruiting is one of the three most important responsibilities of a startup founder. And some founders have internalized this more than others.

Your traction and net funding position determine your weight when recruiting. Your ability to communicate your vision in a way that inspires others and the time that you dedicate to recruiting let you punch above your weight.

Volt’s new round

Following the announcement of Modanisa’s and Mobilotoservis’ new rounds earlier this week, I apologize for sharing yet another funding announcement. However, several of our startups have been active fundraising and the announcement of their rounds came back to back.

Volt, an inner city ridesharing startup for Istanbul where we’re investors, recently announced a new funding round led by existing investor Middle East Venture Partners (MEVP) with Saned Partners also participating.

Volt plans to use the round’s proceeds to attract passengers and attract and retain drivers on its marketplace. It will begin rolling out its promotional campaigns with these end goals in mind at the beginning of December.

We welcome MEVP’s follow-up and Saned Partners’ new investment in the company, and look forward to seeing more Volt rides on the streets of Istanbul from December onwards.

Mobilotoservis’ new round

Mobilotoservis, a car repair and maintenance service where we’re investors, recently completed a new funding round. The round was led by Nevzat Aydin, an existing investor and co-founder and CEO of food ordering marketplace Yemeksepeti.

The funding will be used to support Mobilotoservis’ recent Ankara expansion, as well as potential expansions into new cities in the future. It will also go towards MOSX, Mobilotoservis’ connected car hardware and software service whose devices will start being delivered in January 2017. I hope to write about this in more detail in a future post.

We congratulate the Mobilotoservis team on their strong execution and value Nevzat’s continued support of the company.

Modanisa’s new round

Modanisa, an online fashion retailer for conservative Muslim women where we’re investors, recently completed an approximately $2M bridge funding round led by Wamda Capital with participation from existing investor STC Ventures.

As Modanisa continues its fast global growth, Middle Eastern investors like Wamda and STC are valuable partners to better serve the company’s large and growing customer base throughout the Middle East.

Following Volt, Kapgel, and Insider, this also marks the fourth company where we’re fortunate to partner with Wamda.

We welcome Wamda’s new and STC’s follow-up investment in the company, and look forward to the next step’s in Modanisa’s global expansion.

Sinemia and 500 Startups

Sinemia, a monthly movie membership club where we’re investors, completed its second funding round in August of this year.

Immediately following the round, 500 Startups expressed its interest to invest in Sinemia. Given Sinemia’s plans to grow abroad with an initial focus on the US market, a global fund with a US presence like 500 Startups has the potential to be a great partner for the company.

Sinemia therefore decided to bring 500 Startups onboard and the small strategic round was announced yesterday. We welcome 500 Startups to the company.

Sinemia’s US expansion is up next.

Sinemia’s new round

Sinemia, a monthly membership club for movie goers where we’re investors, recently raised its second round of funding. We participated in the round together with Burak Orucu and Ali Cebi from Istanbul Startup Angels. Similar to the company’s first round of funding, the new round once again took place on the Borsa Istanbul (Istanbul Stock Exchange) Private Market platform.

Following our original investment in December 2015, the company has grown its number of members and revenue five fold. It has also launched new projects like Sinemia Sosyal and exclusive movie pre-screenings which are complementary to Sinemia’s membership business.

We’re very happy to have participated in Sinemia’s new round of funding as the company continues to build products and business models that bring together movie goers, movie theaters, and film studios.

Follow-on reserves

We’ve invested slightly north of $60M into Turkish startups so far. About $30M of this number went towards our initial investments into companies, and the remaining $30M went towards follow-on investments into companies where we were already shareholders. This means that, so far, we have a 1:1 initial:follow-on investment ratio.

In startup markets with abundant capital, a 1:1 initial:follow-on investment ratio is reasonable. Some investors prefer a 1:2 ratio, but a greater allocation towards follow-on investments is rarely seen. Because there’s a lot of capital in the market, it’s easier for your best performing companies to get the follow-on capital they deserve from other investors. Funds therefore don’t need to keep this capital in reserve themselves.

In Turkey, I think that a 1:1 or even 1:2 initial:follow-on investment ratio isn’t enough. Although a company may be performing very well, since there’s limited capital available, they may not be able to access the outside funding they deserve. As a result, investors like us who are often the first money into a company need to keep greater reserves to support these strong performing companies. My gut feeling is that a 1:3 or 1:4 initial:follow-on investment ratio is ideal for investors operating in a market like Turkey.

Another reason why startup investors need to keep more reserves in Turkey is because of the number of great startups. There are a smaller number of great startups than in markets with abundant capital (hence the reason for the abundant capital), so you need to have the ability to increase or at least retain your ownership in your winners to achieve great returns. If you choose to make more new investments rather than to keep this money to back your winners as you get more information about each company’s performance, your ownership stake in the winners that determine the success of your portfolio will be gradually reduced. You’ll end up with a much smaller ownership stake in these rare winners at exit, and that will hurt your returns.