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Investors’ Review on Startups

This article is written by Clinton James, a Contributor Author at Startup Turkey.

Ben Rooney, Technology Editor at the Wall Street Journal Europe, hosted venture capitalists in Antalya for Startup Turkey’s event in conjunction with Etohum to understand investors’ views about the positions, challenges and solutions to startups.

Following serious concerns and what investors are looking for in Turkey compared to other European countries, Hans Jurgen Schmitz of Mangrove Capital Partners believes Russia has been similar for the last five years of innovation. At first there was no money to invest, and suddenly the gap was filled by business angels.

Some of the biggest financing challenges for startups in Turkey are based on the fact that investors don’t know exactly where their money goes, and start-up companies may be forced by the investors to take a certain path but may not want to do it as they may not be ready. In addition, there is an impression of urgency and hypersensitivity that can be dangerous because they can get out of control, especially for young entrepreneurs, who put them at risk of their own investors’ money.

Start-ups find it very difficult to raise money, confirms Ali Karabey, Managing Director of 212. But a good idea, team and implementation plan must be enough to attract investors. You only need to take this picture and show them how to spend their money.

Considering that all the participants in the panel had invested in Turkey, Charles Irving, founder of Pond Ventures, saw the need to not only raise money, but also to raise reasonable ‘smart-money’ and be careful not to give much of equity for Capital to the investors in the first round of business. Instead, find out why building a business is difficult, regardless of enthusiasm, because you have to be very realistic about your expectations. Most investors’ resources come from global institutions and there are two important issues to consider.

First, investors can decide to collect more money to do something other than to support the startup. This statement shows that investment funds are very difficult to find. Second, when it comes to investing, these are people who are brave enough to invest this money with you, so they expect high returns when they take high risks by investing money into venture capitalists.

The problem here is that some venture capitalists can invest at an early stage and take between 5 and 7 years before their returns are met, hence would be judged as a bad investment. Find out what investors think about how they exit the business, how they want to make money, when they want to sell the business, and how long the money flows back into their pocket. There is need to understand what their investment structure is and agree as an entrepreneur with investors.

Pamir Gelenbe, a venture partner at Hammingbird Ventures, believes that it should not be a problem for business owners to enter gaming and e-commerce platforms, as long as they monitor diligently how quickly their businesses generate revenue, especially in their first year.

29 September 2019

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