Arcven Capital to raise debut VC secondary purchase fund with EUR 80m target

Domiciled in the Netherlands, Arcven will be the first secondary fund in Turkey and the MENA region, said Argun. Its primary focus is Turkish and Eastern European startups.

The debut fund will have a 10-year lifespan, with the first five years dedicated to its commitment and investment period, he added.

The process has just been launched and soft commitments is being received, Argun said, without mentioning details. Talks with institutional investors are underway and the first close is expected to be in September, with a minimum of EUR 10m, he added.

The first investment will be made after the first close and talks with potential targets in the pipeline are underway, Argun noted.

The minimum subscription for the fund will be EUR 200,000, with a management fee of 2% and carry rate of 20%, said Argun.

Arcven is based in a fertile region which has helped breed decacorns like grocery delivery app Getir and e-commerce marketplace Trendyol, as well as mobile game developer Peak Games, marketing tech startup Insider and well-being app Meditopia, and will be closely monitoring similar companies, the managing partner noted.

Secondary purchase boom
Arcven plans to provide opportunities for founders, VCs and early investors to sell part of their shares at a discount to create liquidity to shareholders without waiting for a future IPO or an acquisition, said Argun.

In 2010, secondary deals globally totalled USD 25bn, which is expected to reach USD 138bn, this year, only in the US, representing a nearly six-fold increase, Argun noted, citing Industry Venture’s data. As primary commitments increase, there will be even more growth in the secondary market, he added.

The fund will aim to become a shareholder at a discounted value versus its target growth-stage startups’ last valuation, whilst cleaning cap tables to provide convenience for future investment rounds and acquisitions, Argun said.

It also offers opportunities for pool sales of shares held by employees, as well as raising founder motivation by generating liquidity to cover lifestyle needs while not burdening startup cash flow, Argun added.

Investment strategy
The fund will invest in a total of 50 startups, focusing solely on secondary deals and with a sector agnostic approach, he said.

The fund targets valuation discounts of 20%-60% with an expected exit time within three to five years. Its target companies will have a high growth trajectory with a minimum of 30% revenue growth annually with a proven business model, Argun noted.

Arcven expects to profit with minimum 5X multiples from the acquisition and exit situations of portfolio startups, he said.

Potential targets are in the fintech, healthtech, agritech, edutech, insurtech, energy, Internet of Things, artificial intelligence, gaming, blockchain, cyber security, B2C platforms and procure-to-pay platforms, said Argun.

The minimum investment size will be EUR 250,000 and the maximum is EUR 2m, with the fund taking a stake of 10%-20% in the targets, he added.

It will deploy 30% of the fund in the first year, followed by 25%, 20%, 15% and 10% per year for the remainder of its investment period.

It plans to make a total of 50 secondary investments and expects 37 of them to be made at USD 5m-USD 20m valuations, nine at USD 20m-USD 50m, and four at USD 50m-USD 100m, Argun said.

The VC firm has 12 employees, plus its two founding partners. Argun is also the founding partner in Lima Ventures, while operating partner Mustafa Kopuk is the managing partner of TechOne Venture Capital, Tarvenn Ventures, Domino Ventures and WePlay Ventures.

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• Topics
• Funds
• Venture
• Venture
• Technology
• Consumer
• CEE
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• Turkey
• Secondary purchase