Turkey Is The New Hot Destination For Venture Capitalists and Angel Investors

When some 300 participants gather for the annual meeting of the European Trade Association for Business Angels, Seed Funds, and other Early Stage Market Players’  annual conference in Istanbul April 15- 16 they will hear about hot Turkish ventures in sectors ranging from the Internet to electric cars.  Expect them to take out their checkbooks. The country is rapidly becoming  the new destination for angel investors and venture capitalists, with the number of deals already in the works set to skyrocket.

The draw? A healthy economy, a highly educated pool of software and electrical engineers, a supportive government that issues R &D tax credits to companies and booming Internet usage.

The Internet audience in Turkey is one of the most active and engaged audiences in the world, according to comScore. Internet users spend on average more than one hour a day online, ranking it among the five most engaged online populations worldwide. As of January, comScore ranks Turkey as the fifth largest Internet market in Europe, behind Germany, France, Russia and Britain. Although global Internet brands like Google and Facebook are among the most visited in Turkey (Turkey now has the third largest country presence on Facebook, behind only the U.S. and Canada), there is also a vibrant community of home-grown Web properties like Dogan Online (owned by Dogan Media Group), Nokta.com and MyNet, which has attracted private equity investment from New York’s  Tiger Management Corp. and is expected to make an initial public offering.

 Turkish companies are making their mark abroad as well. Among the speakers at the EBAN conference will be Alphan Manas (pictured on Informilo’s home page), the Turkish-born American -educated business mogul who made headlines earlier this month when he made an offer to purchase French auto parts manufacturer Heuliez  in a €30 million deal. The deal is expected to be finalized March 31.

“The idea is for Turkey to become a brand owner for electric cars,” says Manas, who talked to Informilo on a recent trip to Paris. To achieve that goal, Manas is teaming with Turkish native Murat Gunak, the former head of design at Volkswagen, on a line of electric cars which will use the brand name “Mia.” Gunak, who also held design positions at Peugeot and Mercedes-Benz, has spent the last few years concentrating on electric autos. Other partners are expected to be brought into the deal.

Heuliez currently has the capacity to manufacture the cars for some parts of Europe  but Manas says he envisions shifting some of the manufacturing to  Turkey in future.   “Electric cars will not be assembled in one place but in many places,”  he says.

Consumers will be able to personalize the design of the electric cars  and they will be able to buy them anywhere. “It is a lifestyle good,  the cars could be sold in LaCoste shops,” says Manas.  Expect the cars to be high-tech. “Maybe with an  iPhone you are going to be able to control most parts of the car, including maintenance,” he says.

Manas is the founder of Brightwell Holdings , a private investment company that is placing big bets in a variety of areas, including clean tech.  Its other investments include Greenway Solar, a Turkish-Israeli  company that wants to do business with the North African DeserTec initiative. (To learn more about Manas’ business projects click on the video below)

 

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 Manas’ businesses are not the only Turkish companies gaining global attention. Take the case of  Istanbul-based AirTies, founded by Bulent Celebi, a Turkish-born, American-trained entrepreneur. AirTies, which had 2009 revenues of $36 million, is one of the fastest growing companies in the European region. The company, which makes home networking gear, was ranked number four out of 75 communications and networking vendors on the Deloitte Technology Fast 500 EMEA 2009. It grew 5,951% over 5 years and came in 21st overall.

The company started in wireless technology and ADSL and expanded into VoIP and IPTV. It started gaining traction with products that are compatible with broadband infrastructure in countries such as Greece, Ukraine and Russia, the type of concrete and stone buildings common throughout Europe, and in areas where electric power outages are frequent.  But business really started booming after AirTies  developed a way to wirelessly distribute IPTV to different television sets in the same household with the touch of a button. That  service is fueling the company’s rapid international expansion. Clients now include carriers in the U.S., India, United Arab Emirates and western Europe, says Celebi.

In 2010 the company expects to do 50% of its business abroad and is forecasting that number to jump to 70% over the next two years, he says.   Though the company has not taken any venture capital to date, Celebi says the firm is currently in talks with several western European VC firms about raising funds.

So are a number of other Turkish tech companies. When Pamir Gelenbe, a Turkey native and partner at Big Bang Ventures, a London-based seed and early stage venture capital fund for high-growth digital media and software companies, organized the NuBridge Venture Summit  in Turkey Jan. 21-22 , some of Europe’s and the U.S.’s most respected venture capital firms showed up, including Accel Partners, Index Ventures, Wellington Partners, Tiger Global Management, VenTech, Holtzbrinck and Endeavor Vision.  Gelenbe says he is now negotiating deals with two Turkish companies and says other European VCs have since initiated their own deals.  Since the deals are still in the works, Gelenbe says he can not identify the Turkish start-ups.”We are hearing about a lot of deals happening,” says Gelenbe. “There is really a lot of excitement around Turkey right now.”

That doesn’ts surprise Manas, who made his fortune after returning to Turkey after receiving his master’s degree in production management from the state university of New York (SUNY) in 1987.  After honing his management skills as country manager in Turkey for the Colonial Corporation, a subsidiary of  apparel giant, Vicks Corporation,  Manas jumped to the tech sector, cobbling together an initiative to bring Ericsson’s Mobitex mobile data service to Turkey, through a partnership with Turkcell, Turkey’s largest GSM network.  Mobicom offered portable point of sale, vehicle location and remote metering services, but had trouble turning a profit because the cost of manufacturing equipment for the Turkish market, which operated on a different frequency than that of the U.S., was four times higher.  Two other ventures proposed by Manas and financed by Mehmet Emin Karamehmet, the head of Turkcell, also failed. But the fourth one, IDDAA, a network of licensed sports betting shops in Turkey, made up for the rest, earning Turkcell a 55% stake of a $650 million dividend after five years of operation, says Manas.

Manas acted as project leader from 2000 when IDDAA, was conceived, to November 2005, until  his holding company -Teknoloji Holding’s –  20% stake in the company was sold to Intralot for a total company share value of $400 million. Manas parted ways with his partner in Teknoloji Holdings in February of 2006 and established Brightwell Holdings in the Netherlands , with offices in th U.S. and the U.K., taking along seven companies from Teknoloji Holding.

Another Manas initiative, Bilyoner, a legal interactive Internet sports betting and horse racing site, currently has revenues of $300 million. Manas exited the company in 2007 when it had a $50 million market cap.

Today, Manas is a go-to guy for those wanting to launch or fund tech-related companies in Turkey.  But, he stresses, the country needs foreign investors to help make local companies into global players.  “In Turkey the most intelligent people become electrical and computer engineers,” he says. “They have many good ideas but lack the funds to build companies so investors will have no difficulties to find good projects.”

 

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