Of 100 ventures receiving angel investment, only 7 show growth

Agile startups are getting choked up before they can attract the attention of venture capital funds that will help them grow their business and arrive at the angel investment stage, disappearing without taking the next steps. According to the research conducted by Startups.Watch, 93% of the startups that managed to get their first investments from angel investment networks or angel investors between 2010 and 2017 failed to take the next step. Only 7% attracted the attention of venture capital funds and received investment. Startups.Watch founder Serkan Ünsal said they did not take into consideration the last two years and explained the reason why.

“We do not include those who have received angel investment in the last two years as there is still the possibility of receiving investment from venture capital companies and maintaining investment tours. Furthermore, we do not want negative statements to affect entrepreneur negatively before a certain period has elapsed,” Ünsal said.

Ünsal further commented on the situation when he analyzed the figures. “In order to analyze this ratio, it is necessary to understand the functioning of the investments first. In the most ideal case, a startup needs to receive angel investment and grow, and when it reaches certain metrics, it needs to receive investment from venture capital funds,” he continued. “If we think of it as a ladder, startups must step up the stairs one by one, not to be stuck on the ladder, but to be able to reach the ladder as far as they can breathe. If we consider the seed stage of angel investments as the first step of the ladder, 93 out of every 100 startups between 2010 and 2017 were stuck in the first step. Either they were short of breath, or they could not find the strength to go to the next step.”

Growth targets

There can be several reasons why this rate is so low. With investments made by angel investors and angel networks, startups may not be able to reach the level of venture capital investment. Another possibility is that venture capital funds may not like these startups even if they reach a certain level. Or angel investors and angel networks may be investing in the wrong startups. A wrong startup does not grow rapidly, does not scale easily and does not reach at least TL 50 million in annual turnover in five to six years. The reason is that venture capital needs to invest in startups that will reach the level of Yemeksepeti and İyzico at least, in theory, in five to six years so that they can convert the fund. Or a startup with a turnover of TL 2 million a year today, which will reach TL 5 million five years later, does not quite work for venture capitals.

Numbers increase

It takes time for all components in the entrepreneurial ecosystem to form. In 2010, we did not have the angel investment networks and venture capital funds that we have today. Moreover, institutions had little interest in the venture capital funds. Today, the number of funds that growth-oriented startups will find is higher. Moreover, there are significant increases in the number of startups that want to evaluate the overseas option.

When we look at the figures, the appetite decreases as soon as the return rates of the startups invested by angel investment networks remain low. It may also be a problem that there is a gap between the expectations of venture capital funds and angel investment networks. Inadequate startups in terms of human resources, marketing, products or planning for growth targets do not give hope to angel investment networks in return. Therefore, investments in growth-oriented startups have become more important.

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James Dyson: From 50-year-old engineer to real estate entrepreneur

The extraordinary entrepreneur James Dyson set off with the financial support he received from Japan after 5,227 prototypes in five years which were then adapted into a design inspired by warplanes into vacuum cleaners.

It is possible to understand how James Dyson, the founder of Dyson, who prepared more than 5,000 prototypes in five years at the beginning of his journey, without any hesitation to make mistakes and without sinking into despair is a determined entrepreneur and engineer. He is a great example, especially for those looking for hardware-driven innovation and startup. Moreover, finding the first investment in Japan, not in Britain, is another example of his perseverance. It is not surprising that the Japanese who invested heavily in engineering invested in James Dyson at the end of the 1980s, but it is also proof of his enthusiasm.

The company’s research and development (R&D) center in the town of Malmesbury, near London, is a campus designed with all the needs of employees in mind. Dyson’s trials for wireless cleaning robot in 2000 and washing machine in 2003 failed. However, he was still not afraid to try. David Warne, the company’s chief engineer for electric motors, says that even his failed attempt on electric cars gives the company good experience in the future for batteries and electric motors.

5,000 engineers

Dyson is a global technology company that conducts engineering and testing in Malaysia, Singapore, the Philippines, and the United Kingdom and employs more than 12,000 employees globally, including more than 5,000 engineers and scientists, with an increasing share of its production and operations in Southeast Asia. With its global team, Dyson is working on new technologies with solid-state battery cells, high-speed electric motors, display systems, machine learning technologies, and artificial intelligence.

Dyson’s 67-acre campus in Malmesbury, Britain, is home to the Dyson Institute of Engineering and Technology, which opened in September 2017. Dyson has invested 31 million pounds in higher education to overcome the shortage of engineers in the U.K. The accommodation, sports, and social spaces offered to the students on the wonderful campus are unparalleled. The four-year undergraduate program is offered free of charge and provides basic engineering courses in the first and second years. In the third and fourth years, in addition to electronic and mechanical engineering courses, the students are allowed to work on real products on a paid job with engineers and scientists working at Dyson.

Protection against allergies

David Warne, Head of Engineering and Digital Engine at Dyson, commented on the company’s innovation culture and customized cleanliness. “You may have a baby or a pet at home. We use vacuum technology to eliminate allergens in the home. With the filters we use, we ensure that people with allergy sensitivity at home have a pleasant sleep and life experience,” he said.

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Azercell flies with Argela’s solution

Azercell, the leading operator of Azerbaijan, will further increase its network performance with Argela solutions, thus accelerating the transition to digital customer solutions.

Argela, the next-generation digital telecommunications solutions provider of Türk Telekom, continues to export technology solutions developed at world standards. Azercell will maximize network performance by using Argela’s “Mobile Network Performance Monitoring and Customer Experience Management” solutions.

Argela, a subsidiary of Türk Telekom, Turkey’s leading information and communication technology company, has initiated a notable collaboration with Azercell, one of the three operators active in Azerbaijan. Under the agreement, Azercell, the leading operator of Azerbaijan with approximately 4.8 million subscribers, will use “Mobile Network Performance Monitoring and Customer Experience Management” solutions developed by Argela.

Domestic solutions exporter

Argela CEO Bülent Kaytaz said that after Ethio Telecom, one of the biggest operators in Africa and operating in Ethiopia, Azercell started to use Argela solutions as well.

“As Argela, a subsidiary of Türk Telekom, we conduct research and development activities in the field of next-generation telecommunication technologies and pioneer our sector. We develop 5G and beyond technologies with our special position in the league of leading companies that direct communication technologies, working nonstop to gain new competitive advantages,” Kaytaz said. “In today’s highly competitive conditions for telecommunications operators, network efficiency, operational skills and customer experience are of top importance and priority. Thanks to the solutions we have developed as Argela, operators can monitor the network performance in real-time on the voice and data side and achieve the highest efficiency.

“We are pleased that Azercell, one of the largest operators in the Caspian region, to have opted for our solutions in the field of mobile network performance improvement and customer experience. The project we launched last year with Ethio, the largest operator in Ethiopia, is progressing rapidly. We will further increase our success in the international arena with new collaborations that we will announce in the future.”

High productivity

Argela Mobile Network Performance Monitoring System enables operators to detect problems that may occur at any point in end-to-end in mobile networks in real-time and thus take fast and effective measures. Efficient analysis of data and statistics ensures maximum network efficiency and uninterrupted operability. The innovative technology solution developed by Argela will ensure that any situation that may adversely affect the quality of voice and data services offered by Azercell and Ethio Telecom to their subscribers can be identified in the fastest way, thus accelerating decision-making and response processes and maximizing the quality of the service provided.

Argela’s Customer Experience Management solution also provides real-time reports by evaluating subscribers on the basis of the communication device used and the business groups to which they are connected, and also, if desired, to improve customer experience according to different sub-groups.

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CMB-approved first venture capital fund established

The first Capital Markets Board (CMB) approved venture capital fund, Omurga Capital Partners, was established for startups that have covered some distances with the goal of growth. Omurga Capital’s funds are around TL 300 million.

Omurga Capital and Partners Angel Investor Network reached a first in Turkey and established CMB licensed venture capital mutual fund, which cooperates with angel investor networks. The investment committee of the fund has a total of more than 200 years of experience with names such as Akın Kozanoğlu, Mehmet Erktin, Mehmet Buldurgan, Burak Divanlıoğlu, Aydonat Atasever, Oğuz Kösebay and Murat Ergin.

Omurga Capital’s fund, which aims to fill the capital requirement gap between venture capital/private equity funds (VC/PE) and angel investment as an investment strategy, will invest in healthy companies that have taken their place in the market but need capital support to grow. Omurga Capital Partners’ venture capital fund plans to invest in seven to 10 companies that need between TL 1 million to TL 5 million per venture.

Omurga Capital Partners fund prepares the startups it invests into private equity funds and determines the growth and exit strategy of the startups together with the fund. The fund to be issued in December 2019 with a focus on technology, particularly agriculture, health, real estate and finance sectors, is expected to reach TL 30 million in a year.

Growth stage

The fund, which advocates that companies in the growth-stage need consultancy as well as financial resources, aims to guide startups with the experience of its investment committee. With close monitoring of the fund’s investment committee, as well as independent audit and valuation, the venture capital fund will also give confidence to investors.

Another feature of the funds, which wants to offer exclusive content to its investors as well as startups, will be to get investors’ ideas in choosing startup with mobile applications. With this feature, it will be the first mutual fund allowing the investor to have a say and knowledge about the startups, providing the investor’s contribution to the investment strategy. Individual investors, as well as corporate investors, will be able to invest in the fund. Currently, 41 venture capital funds have reached a total amount of TL 1.6 billion in Turkey. The size of the funds available to Omurga Capital, on the other hand, is around TL 300 million.