Europ ropean ean Investm stment ent Fund d (EIF) F) Creat - - PowerPoint PPT Presentation

Jose e Romano ano Europ ropean ean Investm stment ent Fund d (EIF) F) Creat ating ng Winning ng Nationa

• nal Innova
• vati

tion

• n Ecosystem

systems: The Case of VC/PE PE in Turke key

Table of Contents

1.

• 1. Why is Public Interv

rvent ention n Needed ded At All 2.

• 2. Vent

nture ure Capital al / P Privat vate e Equity ty in T Turke rkey 2006 – 2016 2016 3.

• 3. EIF’s Impact in Turkey

4.

• 4. Some

e Factors tors to Have e in Mind 5.

• 5. Concluding

cluding Remarks rks

2

Bringing down policy to market needs

• Addr

dressing essing a GAP

• Gaps

ps in Access ss to Finance ance or/and nd Expertis tise

• E.g. YOZMA

MA in Israel el

• DEMON

ONST STRA RATIO TION effe fect

• Prov
• vid

iding ng a l learnin ing g curve e and signal naling ng effect

• E.g. NEOTEC

C VC Prog

• gram

amme in Spain in

• CATAL

ALYST ST for r deve velopm lopment ent

• Accele

lerati ation

• n of the proce

cess ss / trend

• E.g. iVCi in Turkey

All l of these se are are interd erdep epen ende dent nt

3

Snapshot 2006: “catch up” phase = opportunity

Increased investor confidence Structural reforms Fiscal discipline Prudent monetary policy

• Significant reduction in macroeconomic

vulnerabilities

• Healthy financial sector
• Growth (average an. growth of 7.5%)
• Disinflation (from 70% to 8%)
• Declining real interest rates

Investments FDI Reduced funding costs Productivity gains Output growth + Re - rating of Turkey Employment growth & higher disposable incomes Background of continued political stability, structural reforms, fiscal discipline and monetary discipline Privatization An expected US$5bn

• f FDI per annum

Including privatisation of banks and the energy and telecom infrastructures

Sustainable Economic Growth

2001 2004

Virtuous Cycle

EU Accession Process

Source: Actera Partners

 Macro-le

level l Stability bility & Trend

 IMF reform program

ramme adhered d to

 Fundamentals going the ‘right’ way  EU converge

genc nce process

 Large

ge and young g populat latio ion

 Istanbul’s true cross road locat

atio ion

Turkey Turkey Turkey

2005 Investment as a % of GDP – Countries of Destination

Micro-le

level

Entre

repre preneuri rial al culture re

Qualif

alifie ied d foreign gn train ained d manage gement

Conglomerat

rate struct cture re  deal l flow

Surge

ge in FDI  exit strat ategie gies ↑

Functionin

ing g stock exchange ge

4

VC/PE Landscape in 2006

Manage ged From Abroad ad Local Presence Locally lly Based

Target et Compan any y Size Local l Presenc ence

Small l Cap p < E EUR50 50m Mid Cap EUR50 50m – EUR20 200m Large ge Cap > EUR20 200m 0m Source: Industry Players

Turkven 5

VC/PE Landscape Today

SEAF EMF Capital Partners Fiba Capital KKR

Source: Industry Players

Target Company Size

TPG Providence Managed From Abroad Local Presence Locally Based Local Presence Small Cap < EUR50m Mid Cap EUR50m – EUR200m Large Cap > EUR200m Colony Capital Standard Unlu TRPE Gozde Girisim Is Girisim Turkven Bedminster Esas Holding NBGI Global Finance HSBC Cinven Abraaj Carlyle BC Partners Advent International Investcorp Bridgepoint Kerten Bancroft 3ts Capital Eurasia Argus Capital Innovent NBK Capital Kobi AS Swicorp iLab Pera Mediterra Crescent Kleiner Perkins Pond Ventures Axxess Capital Mid Europa Earlybird Hummingbird Eastgate Intel Capital RTP Ventures Actera Group DCP ACT Inventures Pinebridge Pine River Ribbit Capital Verusaturk Aslanoba Capital Revo Darby ADM Capital 212 iLab Ida Capital Angel Wings TaximCapital

6

EIF’s First Intervention – Istanbul Venture Capital Initiative

• iVCi addressed

essed the «backbone kbone » o

• f the industry

try

• EUR160m

m FoFs (2009)

• Public

c Private vate Partn rtnersh ership

• Invest

stment ent Strategy tegy

• First

st Time Funds

• Establ

blish shed d Funds

• Experie

ience nced Funds

• Portfo

rtfolio of 10 funds

• Over 50 compan

panies reach ched ed

• Positi

tive e Side Effect cts

Generalist funds Buyout funds Growth funds

Early stage funds Specialised funds Seed stage funds 7

EIF’s Second Intervention – Turkish Growth & Innovation Fund

• TGIF

F now w includes des «innovat

• vation
• n»
• EUR 2

200m m FoFs (2016) 6)

• Public

c Private vate Partn rtnersh ership

• Invest

stment ent Strategy tegy

• First

st Time Funds

• Establ

blish shed d Funds

• Experience

nced Funds

• Three

ee Fund d Appro roval als To Date te

Generalist funds Buyout funds Growth funds Early stage funds Specialised funds Technology Transfer Biz Plan competitions Associations Debt finance Structured finance Challenge funds Regulation Seed stage funds Capital Markets R&D Grants 8

TTA Turkey (1)

This project is co-financed by the European Union and the Republic of Turkey

Thi This fin finan ancing ng is is pr provi

• vide

ded from from IPA fun unds ds alloc allocated ted to to Regi egional

• nal

Com Competi petitive tivenes ness Opera Operati tional

• nal Programme
• gramme which

which is is su support pported ed by by EU EU and nd the the Repub epublic of

• f Turke
• urkey. The

The Contr Contracting cting Authori thority ty of

• f thi

this Proj roject ct is is the the Mi Minist stry of

• f

Sci cien ence ce, Industry ndustry and and Tech chnolo nology, DG DG for

• r EU

EU an and Fore

• reign

gn Relati tions

• ns, IP

IPA-PO PO, an and fin final al bene beneficiary ciary is is the the Scien enti tifi fic and and Technol echnologi

• gica

cal Rese esear arch ch Coun Counci cil of

• f

Turke key.

9

TTA Turkey (2)



TTA T Turkey is investi ting g in:



proof of

• f concept

pt generati ation projects ects



universi ersity ty / res resear earch ch ce cent nter er spi spin-offs, start start- ups



intellectu ectual al propert erty (IP) asset ets / projects ects



re retur turn for

• r eq

equity uity int nto start start-ups, ups, spi spin-offs, and SMEs SMEs



100% of t the investm tmen ents ts will be made e in Turkey



A minimu mum m of 5 50 projects cts to b be select cted ed by the Fund Manage gers rs by 31 December mber 2017 2017



At l least t 25 project ects s shall be identified ed and investe ted d in t the Target et Region (12 NUTS II, 43 province nces) s)

10

TTA Turkey (3)

IPA A Resou source rces

EIF as Adviso

sor & Projec ect Manag ager er Advisor isory Serv rvices es and nd Netw tworki

• rking

ng TTOs

TÜBİTAK

Visibility

Impact Evaluation

proceeds

TTA Turk rkey ey Fun unds ds

IPA: instrument for pre-accession assistance

* As of September 2016

01-Apr-2015 22-Jul-2015 22-Dec-2015

DCP @EUR30m 0m ACT @EUR22 22.54m 4m First closing date 01/04/2015 22/07/2015 Criteria In total, at least 30 30 direct investments to projects/companies from Turkey In total, at least 20 20 direct investments to projects/companies from Turkey Current situation* 11 investments 4 investments Location of investments Istanbul, Ankara, Kocaeli, Kayseri, Samsun, Trabzon, Gaziantep, Van, Izmir

11

• Provi
• vidi

ding g Strat ategic egic Guidance ance and Assess essment ment for

• r TTOs while

e building ding practica tical skills s in commercializ rcializati tion

• n
• Increas

easing ng the Pipeline e Deal Develo elopment ent for

• r TTA Turkey

rkey Funds

• Advancing TUBİTAK’s capacity in commercialization of R&D

Main objectives of the TTA-Turkey Advisory Services and Networking Project

12

• A call was opened

ned for

• r TTOs,

, 10 + + 10 T TTOs s were e selec ected. ed.

• First

st 10 T TTOs s are developin

• ping strategic

egic plans s with the guidance ance of the Projec

• ject

t Team and these e will be paired ed by US and FR TTOs

• 40 T

Teams s from

• m 20 T

TTOs s are recei eiving ving VPD PDP P training ning from rom US expert erts s based d

• n lean start-up

up methodo

• dology
• gy.

.

• Project Team is working with TÜBİTAK Program Managers to improve their

technol nology

• gy commerc

ercial alisa sation and TTO Support port Progra

• grams

To achieve these objectives (1)

13

• Busines

ness s Developm velopment ent experts rts have e and continue tinue to visit TTOs to review ew their r port rtfoli folios

• s
• Relations

ns have e been established hed with univers rsities, es, technoparks, noparks, incuba bati tion

• n

centers ers, , accelerator erator progra

• grams,

ms, angel grou

• ups

ps and other er VCs

• Port

rtfo folios of differe ferent nt progr grams/ ams/orga

• rganizat

nizations ns have e been evaluat ated ed; ; BD expert erts s are worki rking ng with founders unders of prom

• mising

ng deals s to be conside sidered red for

• r funding

ding.

To achieve these objectives (2)

14

• TTOs

s having g a b better er unders rstand anding ng of technology nology commercializ rcializat ation

• n proc
• cess

ess

• TTOs

s having g access s to best practices es globa bally and learn rn from

• m their

r peers rs in the US and FR

• TTOs

s developin

• ping strategic

egic plans s with guidance ance from rom US expert erts

• TTOs

s will be prov

• vided

ed uniqu que e study tours rs and staff ff exchan anges ges between ween count nterpart erparts s interna rnati tiona

• nally
• 40 t

techno nology

• gy based

ed ideas from

• m 20 TTOs will have business

ness and commerc ercial alizat zation n plans

Expected impacts as a result of these activities (1)

15

• Increas

easing ng visibility of TTA Turke key Funds ds

• Increas

eased ed pipeline e of TTA Turke key Funds ds (17 deals s have been present ented ed till Sep 2016) 2016)

• TTOs,

s, techno no parks, s, startup up prog

• grams

rams getting ng feedba dback ck about ut their r portfol rtfolios

• s
• TÜBİTAK will have a knowledge transfer and networking with US and FR

count nterpa erparts rts

• Overal

all, , having g a s stronger

• nger tech entrepren

repreneuria eurial and and tech transf sfer er ecosyst system em and contri ributing uting the economic nomical al developmen ment t of the count ntry ry

Expected impacts as a result of these activities (2)

16

Factors to Have in Mind

• TIME: Develo

eloping ng a V VC fund nd industry try takes s time

• Silico

con Valley‘s first st VC prese sence nce dates back ck to to 1972 2

• A

A FoFs life is is min. 15 years rs

• Responsi

sibi bility ty towards rds succ ccesso ssor funds

• Focus

us on dedicat ated, ed, incentivi tivised sed, profe

• fess

ssional

• nal fund

d managers ers

• Strict

ct corpo porate rate governance ernance (indepe depend ndenc ence e of invest stment ent decision) n)

• Prime

e focus us to be return urn on equity

• Interv

rventions entions / in initiat atives es must have a a demand nd-bas based ed logic

17

Concluding Remarks

• Winning

ning nation

• nal

al ecosyst systems ems cannot

• t be orches

hestra trated ed per se, they can be encoura

• uraged

ed by filling ng gaps and utilising ng public funds ds smartly

• VC is not the “Panacea”
• VC cannot and does not solve everythi

hing ng

• FoFs appro

proac ach is is a a speci cific & & complemen mentary tary tool

• Lessons
• ns from
• m other

er count ntri ries es (Neot eotec ec builds s on Yozm zma, , iVCi builds ds on Neote

• tec

etc.) but always s tailor

• r-ma

maki king ng to local al needs

• A clear unders

rstan anding ding between ween (and d within) n) mandato tors rs and implem ement enting ng agencie cies s wrt wrt (i) ) Risk / R Return rn appet etite, e, and (ii) ) Success ss Indicato tors, rs, is required red so as to reach h Seed d Stage e / Pre-Se Seri ries es A financing ncing

18

Jose Romano

EIF Coun untry try Representative resentative – Gree eece j.rom romano ano@e @eif if.org

• rg

www.eif.org