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Emerging as an Eastern powerhouse, Earlybird Digital East Fund launches new $242M fund

Emerging as an Eastern powerhouse, Earlybird Digital East Fund launches new $242M fund

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 generally known 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 to date: FintechOS, Payhawk, Picus, and Binalyze.

The back-story to DEF is an enchanting 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 “by accident turned the primary angel investor” there, he was clearly the suitable man, in the suitable place, on the proper time. He advised me: “I used to be very fortunate and ended up writing the primary checks in a number of the first massive 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 lined 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 could be high-quality ventures to be discovered, however little or no in the best way of VC. 

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Thereafter, between 2014 and 2019, the fund invested in UiPath, Hazelcast, and Obilet. UiPath has turn out to be a worldwide chief within the space generally known as ‘Robotic Process Automation (RPA). Hazelcast is a low latency knowledge processing platform startup with Turkish roots. Obilet is a market targeted for the large 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 group had spectacular early success. Peak Games, Trendyol, YemekSepeti and GittiGidiyor are the 4 largest Turkish tech exits to this point. Digital East Fund was an investor in all of them. Peak video games exited for $1.eight billion in money to Zynga solely final yr.

As of This fall 2020, the fund’s metrics are:
Investment Multiple: 24.9x
Gross IRR: 104.4%
Net IRR: 84.1%

So in VC phrases, they’ve achieved fairly nicely.

I interviewed Sertoglu to unpack the story of Earlybird Digital East Fund.

He advised me DEF has achieved a 17 occasions funding a number of on a $150 million fund. He thinks “this may be the largest European VC fund efficiency in historical past, and it’s not coming from Berlin, it’s not coming from London, but it surely’s coming from Eastern Europe. We have been advised by a few of our LPs that they assume we’re the highest 2014 classic VC fund on this planet, no person’s seen stronger numbers than this.”

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“Peak Games turned out to be an exceptional story. When you have a look at how powerful it’s been for Turkey, macroeconomically. The truth {that a} single firm with 100 folks primarily offered for $1.eight billion in money, was simply… it was staggering for the native market right 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 factor we realized early one was that we might make investments with our personal capital and syndicating to our mates, however for follow-on funding, we’d at all times should go world. And that made us really feel weak. It made us really feel we have been at all times depending on others’ comprehension of the chance that we have been going through. So that’s when the primary fund concept got here out this was,” stated Sertoglu.

“We felt that there was this uncommon dislocation between alternative and capital in Eastern Europe. Our first fund was $150 million funds – I imply, a really quaint measurement in comparison with Western markets. But we turned the biggest fund within the area, and determined to deal with this sequence A niche the place we felt that there was this large alternative, due to the best way we expect sequence A continues to be very a lot an area play.”

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“Being an area participant that understands the area could be a bonus, so this was confirmed to be true. We might primarily see just about every part in Eastern Europe for the final eight years. And we caught the largest one, happily, which was UiPath. I feel only a few funds around the globe can say that they see the bulk if not all the alternatives that fall into their mandate,” he stated.

“We have this twin technique of backing native champions in addition to contenders for world markets as nicely. 20 years in the past you needed to be in Silicon Valley. Now, Transferwise comes out of Estonia, UiPath comes out of Romania. And that was even earlier than the pandemic.”

Sertoglu concluded: “So we now have contemporary capital, approaching the heels of a really profitable first fund, which we’re eager to deploy. We’re calling all of the alternatives, seeing very formidable, sturdy groups popping out of the area. And now we have 200 million euros to deal with a lot of these alternatives within the area.”

EditorialTeam

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