eBay Shutting down GittiGidiyor

It’s the end of an era. eBay is shutting down its Turkish marketplace GittiGidiyor, which it acquired back in 2011. It’s an important event for me since GittiGidiyor was the first investment I’d made as an early-stage investor back in 2006.

I must say it was the highest-conviction investment I’ve ever made. I had just started looking at the consumer internet market in Turkey, mapping it against proven models in more developed markets. When I met GG, triangulating the size of the Turkish economy at the time (~$600b), the lead that the company had over its competitors, and the quality of its team, I felt that it was almost certain to be an early champion in Turkish e-commerce, and fortunately, that foresight was validated with the eBay acquisition. I joined the small club of angel investors whose first investment turns out a big return. It was my first investment exit and the beginning of my VC career, and the journey was almost textbook.

The company’s story afterward also plays out like a cliché. The founders exited post-acquisition and the company was run by professional management. The advantage of entrepreneurial drive in growth markets, which served the company until then, became its Achilles heel, as competitors emerged, challenged, and eventually, overtook GG. The Turkish e-commerce market created a few giants, while GG got relegated to being barely relevant. It was clear that it was never a priority for eBay, which let the company wane and slowly die.

Trendyol is a $16.5 Billion Company

Today saw the announcement of Turkey’s first decacorn, with Softbank Vision Fund and General Atlantic leading the $1.5 billion financing round of Trendyol, bringing the company’s post-money valuation to $16.5 billion. Princeville Capital, ADQ and QIA also joined the round.

To put things in context, this transaction makes Trendyol probably the most valuable business in Turkey and the most valuable private internet company in EMEA. This is an incredible achievement for an 12-year old company.

Trendyol is Turkey’s leading eCommerce platform with over 30m shoppers, 140k active merchants and 1m+ deliveries per day. The company has grown its GMV by ~20x in the last 4 years, reaching ~$10b billion this year. This is a big testament to the size and dynamism of the Turkish market. When we contrast this performance with the difficulty with which Turkish tech companies raise venture capital, this transaction should remind global investors with the opportunity they may be overlooking in the local Turkish market.

I have had the opportunity to observe the Trendyol story very closely. Like many, this is an overnight success that took twelve years of blood, sweat and tears. I would like to extend a well-deserved congratulations to the entire team who built a company that is certain to inspire many bold, ambitious entrepreneurs.

UiPath – A Cinderella Story

“Victory has a hundred fathers; defeat is an orphan.” – John F. Kennedy

You have probably heard it by now: our portfolio company UiPath rang the bell at NYSE last week at what became the largest IPO for a Europe-born technology company, with a $36bn market cap after the first day of trading.  

The RPA leader’s journey is unprecedented. After my partner, Dan Lupu, met UiPath (then called DeskOver) CEO Daniel Dines in 2014, we had our first meeting with him in July 2014 and were blown away with the technology vision, and Daniel’s passion for and immersion in his product. It took a while for the seed round to come together, where we at Earlybird Digital East led the 2015 round with a $1m investment and partnered with two co-investors, after having offered the opportunity with many others who did not share our enthusiasm for Daniel’s vision. In the following two years, while UiPath focused on their product roadmap, we looked to help them secure a lead investor for their upcoming Series A round, which finally came together in April 2017. Along the way, we had to bridge the company through a convertible round in 2016 to make sure they did not have to pull their foot off the gas pedal.

2018 was the year where the market started to appreciate the promise UiPath represented. The company became a unicorn early in the year and emerged as the lead contender to take global leadership of the RPA market, which analysts all started to agree, looked like a giant category in the making. Along the way, the company grew its ARR from $1m to $100m in 21 months, a pace never seen before in enterprise software, and taking this trajectory to $600m in ARR today.

As investors realized that there may be high quality ventures in Emerging Europe, we were noticing another new dynamic in action: For the first time, a company hailing from Romania was vying for global leadership in a major category, and executing a global growth strategy, with revenues spread out quite evenly around the world. A group of Eastern European engineers was beating its US- and UK-rooted, better-funded, competitors.

To provide some context, the stereotype of the Eastern European techie was that of a hacker. Teams lacked the polish and presentation skills that you’d expect to find in a team in Silicon Valley, London or Berlin. To illustrate, this was the shabby UiPath office building in Bucharest when we met them.

The building where the UiPath office was located in 2015.

At a tech conference, the CEO of a western competitor called the UiPath team, “Bums”. UiPath rallied around this comment, printing t-shirts that featured the team dressed up as bums, with Daniel as the Chief Bum. This is the kind of drive – or maybe we should call it a “chip on the shoulder” – that we see frequently in founder teams in our region, and which we love to back. We know each startup is a miracle, beating enormous odds stacked up against them, and these miracles only happen when companies are fueled by this kind of drive.

The UiPath IPO is another milestone on the company’s journey. We are fortunate and proud to have contributed and grateful for the experience. We hope to convey our learnings to the next generation of founders from Emerging Europe.

Most of all, we’d like to thank each and every team member at UiPath for making this Cinderella Story come true.

Earlybird Digital East Fund II Announces Final Closing

We are excited to announce the final closing of our Earlybird Digital East Fund II (DEF II) at €200m. Our focus remains the same as our 2014-vintage debut fund, which ranks among the top 5% of global VC funds in our vintage: backing the most ambitious teams hailing from Emerging Europe in Seed and Series A rounds.

Earlybird DEF II has already made four notable investments:

  • FintechOS was named the hottest Fintech company in Europe in 2020 at the Europas Awards
  • Payhawk is building the financial system of tomorrow that combines credit cards, payments, and expenses into one experience
  • Picus Security is a pioneer in Breach and Attack Simulation (BAS), named a Gartner Cool Vendor 2019 in the Cybersecurity category
  • Binalyze is a rising star in the area of advanced digital forensics and incident response (DFIR).

TechCrunch journalist Mike Butcher wrote a recent article on our new fund, featuring a recap of the past few years.

You can find further information on Earlybird’s Digital East Fund team and investments as well as the entire Earlybird platform on www.earlybird.com.

This post was first published on the Earlybird blog.

A New Partner at Earlybird Digital East

This is a big day for us at Earlybird Digital East Fund.

It is with great pride and excitement that we announce Mehmet Atici’s promotion to Partner at Earlybird Digital East Fund.

For anyone who has interacted with us, chances are that they have met Mehmet in the process. He joined us first in 2013, almost a year before the first close of the Digital East Fund I. His background until that point was one of overachievement. A product of the highly-competitive Turkish academic system, he was the valedictorian of his high school class, and the salutatorian at Bogazici University’s Computer Science Class of 2013.

At Earlybird, Mehmet’s tenure has since been one of quick learning, selfless dedication, and aligning with our priorities at every stage of our evolution. He made significant contributions to many of our portfolio companies, including leading the initial investments and successful exits, and forming strong working relationships with his founder teams. He has been very involved in the development of our investment team, playing a key role in their recruitment and training, as well as building up our internal machinery for sourcing and deal evaluation. During the challenging pandemic period, Mehmet was critical for our shift to a remote working environment, ensuring our operations did not suffer along the way.

We are a bit old school in that we feel venture capital is an industry learned through apprenticeship. Mehmet represents the best of how one can develop rapidly as an investor and earn the respect and trust of both his colleagues and the teams he works with in his portfolio.

Recognizing his demonstrated contributions in every aspect of the Digital East Fund, we are very proud to welcome him to our Partnership.

This post was first published on the Earlybird VC Blog.

A New Chapter for Vivense

The last few months were filled with good news for our portfolio. First, Peak was acquired by Zynga for $1.8 billion, setting a new high watermark for Turkish tech exits. Then, yesterday, UiPath announced its $225m Series E round at a $10.2 billion valuation. However, the transaction announced by Vivense yesterday probably stirs more emotions with our team.

We had known Kemal Erol for a few years when he approached my partner Evren and me for financing a management buyout of Rocket Internet’s Westwing operations in Turkey. We were keen on the opportunity in home & furniture e-commerce in Turkey as we’d been watching how Wayfair developed into a sizable business focusing on a vertical that Amazon was not prioritizing. However, we felt a Westwing buyout would be messy so offered to back Kemal in a greenfield venture, and Vivense was born.

In hindsight, 2013 was a very tough year to start an e-commerce business in the Turkish market. While the business started with a lean marketplace model, customer acquisition was still quite costly in a market with well-funded competition. We felt certain that the business would require significant capital and kept looking for co-investors to join us in backing the company. We must have introduced Kemal to over 100 VCs from around the world, focusing on those with e-commerce and emerging markets experience and appetite. In the end, it was a tough combination of sector and geography and got no bites (except for a small investment by FJ Labs). We were fortunate to be joined by a few of our LPs and private investors to give the company barely enough growth capital to scale to its impressive size it now has, of course making all investors very happy along the way. 

This is where Kemal and his team excelled. They built a lean machine to unleash the power of the large but fragmented manufacturer base of Turkish furniture, providing unparalleled choice for the furniture customer at a super competitive price. The company began growing very rapidly, serving millions of customers around the country. (My colleague Mehmed Atici shared our learnings regarding success in online furniture.)

Now the company has the European market in its sights. Of course, big plans require deep pockets, so we are excited to hand off the baton to Actera Group, a top Turkish private equity fund. They are partnering with Kemal to take the company to its next level and provide the necessary capital and support to get there. We think that the international potential is vast and that Vivense is exceptionally well-positioned to tackle it.

It’s also exciting to note that this is the first time a PE fund is acquiring a venture-backed company in our country. We are happy to see signs of completion of the capital curve for high-growth companies.

I’d like to thank Kemal, his co-founders, and the other team members who have been and continue to be part of this successful journey.

The Peak Exit: A Turkish Milestone

Yesterday morning Zynga announced its $1.8 billion acquisition of Peak Games. This is a story important for us in multiple ways.

Sidar, a passionate entrepreneur, was one of the first tech founders I had met upon my return home to Istanbul in 2005, as I was looking to understand the landscape. When he decided to launch Peak in 2010, my partner Evren Ucok (with his wife, Demet Mutlu, the founder of another billion-dollar Turkish success story, Trendyol) was the first investor on board and took the lead in helping the company with further financing rounds.  In 2011, we met Roland Manger, one of Earlybird’s founders, and Earlybird led the company’s $5m round.  In the process we got to discuss the opportunity we saw in our region with Roland and the seeds of our first fund were sown. It’s the genesis of the Earlybird Digital East Fund.

Meanwhile, Turkey lost its luster in the eyes of global VC firms and Turkish startups started struggling to get the attention of global players. Capital is a critical ingredient in a startup’s journey. When capital gets scarce, locally managed and deployed VC became more important.

Fast forward nine years, the Earlybird Digital East Fund has invested nearly $65m in Turkish companies, and $120m including the broader Emerging Europe region. In our capital-starved corner of the world, we are making a difference in the destinies of brilliant entrepreneurs who are beating the odds every day to create value for their customers, team members, and investors.

What could change this scarcity is big outcomes, reminding everyone of the potential of the brilliant tech talent, unusual creativity, and hunger for success that you can find in emerging European countries like Turkey.  We are grateful to the teams at companies like Peak Games, creating sustainable companies that will continue their contribution to the local ecosystems – in this case, growing Zynga’s presence in Istanbul with a world-class team, investing in talent development and reminding aspiring entrepreneurs that it can be done.

Congratulations and thanks to all who have contributed, and especially, Sidar! Elinize sağlık!

PS. Regarding the photo above, even though it’s an old one, I think it’s the one that best captures the spirit at Peak.

Butterfly Effect Business Plans


From time to time, we meet super ambitious teams with a unique insight around a big problem and a roadmap to take their solution to the market.  In these cases, teams are complete, the early product is in production and there are signals of some product-market fit, represented by a few loyal, paying customers.  They have done a remarkable job taking their idea to this stage and now need venture capital to accelerate their go-to-market.  They also rightly expect to be rewarded for the good job they’ve done with a high pre-money valuation.

The scenario I describe above is ideal for us, as an early-stage VC with a fund size of $150m.  It ticks many of the boxes we look for in our pipeline and typically we decide to extend a term sheet.  However, frequently, the valuation we attach to the business is lower than the team’s expectations.

The primary reason for this is that at the stage we focus on, the ultimate success of these companies is dependent on multiple factors, all resulting in a positive outcome.  Not only does the team have to continue to execute brilliantly, but their competition also has to execute more weakly and the regulators need to cooperate and the business cycle has to continue strongly and their market needs to grow as they predict, and so on and so on…

Their ultimate success is predicated on a long list of combined probabilities.  Facing these types of “butterfly effect” business models, one needs to take into consideration the resulting long odds of success and price investments accordingly.  Compounding probability is a notion that is not obvious to many founders.

Seeing the Invisible Market

Colourless Forest Nature Trees Fog Forest PathIt’s the last day of 2018 and it’s tempting to write a wrap-up post.  I will not, particularly because it has been an embarrassing year for this blog.  Let’s see how 2019 turns out in terms of blog productivity.

Instead, I’ll write about a sentence I saw in @fredwilson’s post this morning about their experience in trying to gauge Airbnb’s market opportunity:

We made the classic mistake that all investors make. We focused too much on what they were doing at the time and not enough on what they could do, would do, and did do.

As early-stage investors in technology companies, we find it a constant challenge to extrapolate the market power a startup will have once it achieves its goals.  Those goals are usually super ambitious, to begin with.  To evaluate the second order opportunities past the obvious goals is difficult.  However, some of the biggest historic returns in VC have been the result of new markets that opened up once a venture succeeds in its initial plans.

My tool for dealing with this challenge is evaluating the first market, but weighting the market size factor lighter than we used to.  We are probably less likely to decline an opportunity purely due to market size.

Every day is a school day.  Happy 2019!


Our First Unicorn

Today UIPath announced its new round of funding taking the company to a post-money valuation of $1.1b (The news had leaked on Friday and Techcrunch had already run the story).  I actually dislike the unicorn fetish and find the obsession with it meaningless, but I could not resist the headline of this blog post.

What is great about the story at UIPath is that it’s a validation of a key thesis of ours at the Earlybird Digital East Fund:

Innovation is not under the monopoly of Silicon Valley and bright engineers from underserved venture capital markets will continue to build great companies.  There is an attractive VC opportunity in focusing on regions with a strong tech talent base.

Congratulations to everyone involved, starting with Daniel and Marius, my partner Dan Lupu, who was the first to spot the talent in the founding team, Ondrej, Reshma, and Luciana, who have been on this fantastic journey.