Turkish venture capital fund ‘hunts’ after seed-stage startups
As a corporate venture capital fund, Alesta attracted attention with 22 investments in 2021. Having reached a total of 50 startups with consecutive investments made in just two years, it aims to increase this figure to 60 by year-end
THE AMOUNT of funding pouring into technology startups has increased, along with the soaring interest by corporate venture capital funds.
Among these, Alesta has particularly made itself conspicuous and turned out to be among the most active corporate venture capital funds in 2021 after it made 22 investments, according to data from industry monitor, startups.watch.
It is known for its parent company, Escort Computer brand, which was particularly recognized in the 1990s for introducing Turkey to personal computers. It has today turned into one of the important funds supporting technology initiatives.
Escort Technology Investment, which was listed back in 2000 and whose shares are still traded on the Borsa Istanbul Stock Exchange (IPO) under the code “Escom,” has switched its path from the PC business as part of the “transformation program” and turned its direction to software and domestic initiatives and sustainable investments.
Engaging mainly through its subsidiary Alesta, the group invests in companies that produce a wide range of technologies from cybersecurity, biotechnology, cloud and software as a service (SaaS) platforms to battery technologies, games and online therapy. Such initiatives include startups such as BiSU, Bren, Bakiyem, Kidolog, Smpl, Servislet, Houston Bionics and GlaucoT.
EARLY-STAGE INVESTMENT
Coming together with a group of journalists on the occasion of the company’s 30th anniversary, Escort Technology Investment Chairperson of the Board İbrahim Özer explained that they have been transferring the capital, knowledge and experience needed by the technology companies they have taken part in at the seed, namely early stage. Özer said that these entrepreneurs and companies will bring great benefits to the country’s economy in the future.
Alesta has been the fund that invested the most in startups in 2021, he said, noting that they foresee that at least four of the 50 companies they are currently investing in will become unicorns – a privately held company valued at over $1 billion.
Once this goal is realized, Özer said Escort Technology will also become a unicorn. In addition, he also announced that there are plans for a share sale or initial public offering in case of appropriate conditions for some of the affiliates.
As for resources, the company, which is publicly traded on the stock exchange, also uses software companies and solar power plant revenues in its portfolio. Özer also expressed that there has been serious investor interest in the company from pension funds and foreign investors on the stock exchange recently.
GLAUCOMA TREATMENT
Alesta has been making between $50,000 (TL 772,260) and $100,000 investment on average in the seed stage, adding that they are one of the rare companies doing this in Turkey in corporate sense. He also said they also had investments that reached up to $1 million.
GlaucoT, a maker of the world’s first neuroprotective glaucoma treatment device, the data-oriented one-tap, on-demand water delivery initiative BiSU, Kidolog, which provides online counseling services for parents and children, and Datanchor that operates in data security are some of the ventures that are growing with new investments.
Citing some of their investments, Özer said they acquired a 7.5% stake in Servislet, a startup that offers digital integration services for spare part brands, for TL 375,000 ($24,273) on Dec. 30, 2020.
They sold a 5% share for $500,000 in the company’s new investment round almost a year later, on Dec. 24, 2021.
“On the one hand, we have achieved a 22-fold return on capital in 12 months; we continue with our 2.5% share in Servislet after the sale,” Özer said.
35-YEAR TECHNOLOGY EXPERIENCE
Özer, who has spent 35 years in the technology business, stated that he has been on almost every side of this business, explaining the negotiations in which he made investment decisions.
“As the entrepreneur in front of me tells me something; in fact, I can more or less guess the next sentence. Is there no risk? Of course, there is. However, I usually make my decision in the first 20 seconds,” he noted.
“When we look at competitors in general, investment is decided on stage by stage. There are investment committees, the process can be lengthy. We, on the other hand, make quick decisions when we believe that it is the right investment and that it meets our entrepreneurial team criteria. That’s why entrepreneurs love us so much,” he added.
For them, he said, the team is even more important than the project.
“Because even if the project collapses, if the team is good, it can take it another way. If the team is bad, even the best project does not work.”