Deals in focus: Earlybird makes first commitments from CEE-focused fund

European venture investor Earlybird made a trio of maiden investments from its Earlybird Digital East Fund in early May. The vehicle, which held a first close on $110m in January 2014, focuses on post-seed investments in CEE and Turkey. Seven-figure funding rounds were drawn down from the vehicle and committed to Metrekare, a Turkish real estate listings platform; Tjobs, a Romanian cross-border recruitment platform; and Flipps, a TV streaming platform founded in Bulgaria but now headquartered in San Francisco.

"All three deals were sourced through our immersion in the market," says Cem Sertoglu, a partner at Earlybird. "In the case of Tjobs, one of our partners [Dan Lupu] is Romanian, so he has a relationship with the region. He has been there a long time; he used to cover the region for Intel Capital before he joined Earlybird as a partner. We see almost all the high potential opportunities in Turkey because of our visibility in the local ecosystem. I've been making personal investments here since 2005."

The network, then, is key; Earlybird partner Roland Manger agrees: "The corporate finance function is completely unnecessary in our business and region; it's really direct interaction with entrepreneurs that counts." In the case of Metrekare, the interaction with the entrepreneur was direct indeed; the firm's founder and CEO, Serhat Karahan, is a former associate at Earlybird.

Earlybird made its maiden investments in CEE and Turkey

Founded in 2013 and based in Istanbul, Metrekare recorded 100,000 listings in its first year and boasts one million monthly viewers. Users are able to buy, rent and sell real estate assets on the platform, which is also accessible via mobile devices.

The real estate sector in Turkey records transactions worth around $100bn per year, according to Sertoglu, making it the largest sector in the country's economy. "We had been attracted to the sector for quite some time, tracking companies in the sector to see if there is any investment opportunity. As we began to due diligence some of the companies, Serhat announced that he wanted to build the next disruptor in Turkish real estate listing companies."

The company's founder, Karahan, ranked first nationally in every standardised high school and university exam he took. He has also worked for Rocket Internet, was a summer associate at Accel Partners and an analyst at McKinsey. "He's a posterchild for part of our investment thesis, which is that the talent of tech entrepreneurs in Turkey is increasing as there are more success stories," says Sertoglu. "Five or six years ago, the brightest young people would not have chosen a career in start-ups when you could go and work for McKinsey. The philosophy is changing in Turkey."

Crossing the border
The VC entered advanced discussions with Tjobs in the second half of last year. Founded in 2009 and based in Targu-mures, Tjobs is an online recruitment platform that focuses on cross-border job vacancies. "The rules in the EU have been fairly clear for a long time; we want total mobility of labour," says Manger. "But when some of the eastern European countries joined, there were some temporary national rules. Since 1 January, those exceptions have all gone."

The round, which also saw participation from Hungarian investor iEurope Capital, was designed to support the company's European expansion in the wake of the recent liberalisation of European labour mobility laws. Says Manger: "The company has signed up practically all of Romania's recruitment agencies, so they have a full grip on the candidates interested in working abroad. On the other side, they are working with companies in western Europe that want to hire people, and bringing them together on the Tjobs platform. They're using the internet to bridge east and west."

People
Cem Sertoglu and Roland Manger are partners at Earlybird.

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• CEE
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• Turkey
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