Venture capital firms seek to fill growth financing gap for tech startups
Finberg has become one of the successful investors in the entrepreneurial ecosystem and is now also developing financial instruments that enable technology ventures to grow during high inflation periods
COMPANIES in Türkiye that don’t struggle to find investment at the seed stage often face their biggest challenge during the growth phase. For some time now, venture capital investment funds (VCIF) have been striving to fill this gap.
Funds specifically targeting ventures seeking investment in Series A and B rounds were abundant. However, as many institutions gained experience in the venture ecosystem, alternatives for growth financing have proliferated.
İhsan Elgin, a board member of Finberg, a corporate venture capital firm and Fibabanka subsidiary, stated that as needs evolve at advanced stages, accessing capital becomes more challenging.
Elgin highlighted their new projects addressing
the most felt deficiency in Türkiye, namely growth funds.
“We are launching a new fund this April. We are establishing a fund ranging from a minimum of $1 million to a maximum of $5 million. If the need exceeds $5 million, we will also begin offering these funds to ventures seeking to grow with special instruments,” he noted.
He said it is more difficult for ventures seeking to grow to find investment financing in a high-inflation environment.
“For example, we are covering the growth financing of Avane, which wants to expand its shared kitchens. Similarly, we are preparing special financial instruments to support
the growth of EasyCep to meet the increasing demand for refurbished phones in the market,” said Elgin.
NOT JUST FINTECH
Elgin emphasized that they don’t solely invest in financial technology, stressing their engagements over the last five years.
“In 2018, we established Finberg as a fund management company. We manage four separate venture capital funds. We have core capital, national venture capital solely for Finberg, and now we are launching funds and new instruments targeting ventures seeking to grow. We started with financial technology ventures. Currently, 26% of our investments are in fintech, 26% in retail technology and the rest are evaluated as various opportunity investments,” he noted.
60 INVESTMENTS
Elgin said they have also established the structure of the fund of funds and have invested in 11 ventures from nearby and distant geographies.
“We have invested in different ventures at early and late stages. We are also investing with these investors in Türkiye. At this point, 30% of our investments are abroad and 70% are in Türkiye,” Elgin added.
Finberg has made investments in 49 startups and 11 venture capital funds over seven years. In this context, out of 60 investments totaling $72 million, it achieved six exit deals amounting to $42 million.
Elgin describes the characteristics entrepreneurs must possess, saying they must have clear competitive advantages in markets with high entry barriers.
He also said they should have a proven business model and mastery over economies of scale. He stresses the high potential for growth overseas as essential and notes having a strong network of corporate investors provides an advantage.