Investing Internationally: Turkey-based 212 VC launches a second Fund to target MENA

Istanbul-based Venture Capital firm 212 has announced the launch of their second €49.3M ($58M) Fund, which will invest in startups across Europe, MENA, as well as Turkey.

212 invests in growth-stage companies; their first Fund invested in 12 companies with $490M value created and Fund II has invested in 7 companies to date.

212’s strategy is to invest in B2B tech solutions that have demonstrated traction, an exact product-market fit, and are ready to scale internationally. ‘Test local, go global’ is 212’s guiding principle. In addition to investing in startups, the VC puts significant effort into mentoring, supporting, and advising their portfolio companies.

MAGNiTT spoke with Ezabel Nihmet, CFO of 212 to delve deeper and get exclusive details into their new Fund, including what qualities they search for in a fundraising founder, why they are shifting towards MENA countries, the differences they expect to counter when investing in MENA vs Turkey, and more.  

Could you share some details of the new Fund and the startups you have already invested in?

The second Fund by 212 has €49.3M total committed capital with a strategy to invest in companies with primarily B2B tech solutions, and a mindset to test local and go global. The Fund invests in companies that have demonstrated traction, have a clear product-market fit, and are ready to grow international. The following are the first seven investments made in Fund II:

- AppSamurai: helps mobile applications and games to acquire, engage, and retain users with a portfolio of products like a user acquisition platform powered by AI.
- Chooch: provides flexible computer vision, object recognition, action detection, complex counting, facial authentication, and more, across every industry.
- Meddy: a doctor booking platform in GCC that helps patients find the best doctors and book appointments with them.
- MallIQ: location-based mobile engagement, analytics, and AI platform that empowers payment, retail, loyalty, and e-commerce apps.
- Marti: electric scooter sharing platform.
- OMMA: device-agnostic, cloud-based, real-time, and programmable software platform for digital signage projects.
- SmartMessage: all-in-one Platform to Boost Digital Marketing Activities that enable clients to maximize engagement with their target audience and increase marketing efficiency.

Why are you shifting towards MENA countries and what do you hope to see from MENA startups? In your opinion how does the startup investment landscape in MENA differ from that in Turkey/Europe?

212 sees some great opportunity in MENA with a gap in growth-stage funding. Just in Q3 2020, MENA saw $77M invested in 70 deals with the number of deals being halved to 70 from 141 a quarter earlier. At the same time, we have seen significant exits coming out of MENA. There were 27 exits in 2019 alone, with its unicorn Careem being acquired by Uber. We see this being just the beginning of the region’s success. 212 is confident in investing in MENA and sees a great opportunity as we feel we are entering the region as it is starting to hit its stride. In a few years, we see MENA’s tech ecosystem catching up to where Turkey is today. Given our experience in Turkey, we are well-positioned to add value to the region.

What qualities do you look for in a fundraising startup/founder?

The Fund invests in companies that have demonstrated traction, have a clear product-market fit, and are ready to grow international. We look for entrepreneurs with a strong focus and direction with open minds willing to discuss and move forward as partners.

What significant differences do you expect to encounter between investing in startups in Turkey/Europe versus investing in startups in the MENA region?

We don’t see a difference in investing in startups in Turkey, Europe, or MENA. All our startups and all our entrepreneurs are global. Whether they are sitting in MENA or Turkey doesn’t change the factors that make a promising startup and a good entrepreneur.

Do you believe MENA startups will be more incentivised to expand operations to Turkey/Europe if funds, such as the one you have launched, become more prevalent in MENA?

The entrepreneurs we see coming to us for funding are already looking to expand. They know that to achieve a unicorn type of growth, global expansion is a must. There is no question of focusing on only one or a few countries. Generally, the problems the entrepreneurs are working on are global problems. They come to us as a partner in international expansion.

What support do you provide to your portfolio companies?

We are partners with the founder. 212, in many cases, is supporting the entrepreneur far before our financial investment. On a measurable level, besides investing, we have strong relationships with many stakeholders. 212 brings these to the table, often helping with introductions for critical hires, customers, and other significant partnerships. We have biweekly meetings bringing resources to the founders that aren’t readily available. Fundamentally 212 is another partner in the founders’ journey to grow their startup.

What are your top tips for startup fundraising for the first time?

1. Know why you are fundraising. What is your goal in getting this money, and what is your end game with your company?

2. Come prepared. What does that mean? It means knowing what your plan is and how to measure if you are successfully executing that plan.

3. Be ready to change directions if what you plan isn’t working the way it should be. Remember, if you are fundraising from venture capital, they are looking for significant growth, so be ready to go big. 

What key takeaways from the first Fund will you be bringing to this second Fund?

Some key points we saw are that entrepreneurs are everywhere. They aren’t concentrated in one location in the US. They are a group of resilient people who have an idea that they are putting into execution. That execution can happen anywhere. We have seen that as long as the entrepreneur is thinking globally from day one, they will succeed. It is not about the startup’s location, it's about the company's global mindset. Another critical factor we have found to be a strength in the region, are B2B focused technology firms - they have shown great success, and we hope to empower them further with our partnership and capital.

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