Revo Capital Fund II holds first close on €40m

Katharine Hidalgo
26 March 2020

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Revo Capital Fund II has held a first close on €40m towards a target of €60m.

The fund has a hard-cap of €90m.

Revo managing director Cenk Bayrakdar said he expects the fund to hold a final close within 18 months: "We started our fundraising process in Q1 of 2019 and had already secured most of our commitments by Q4 of 2019. As a result, recent global developments have not affected our fundraising process significantly."

The onset of the Covid-19 pandemic has not daunted Bayrakdar: "Recent developments surrounding the coronavirus are creating some uncertainty in next year's economic outlook. This currently slows down decision-making for any investments, naturally. However, we are optimistic that LPs will be even more interested in this asset class given the impact that technology will have over the next few years."

Domiciled in the Netherlands and structured as a BV, the fund has a 2% management fee with a carry rate of 20% and a hurdle in accordance with market standards, according to Bayrakdar. The fund has a lifespan of 10 years.

Revo Capital Fund I held a final close on $66m in November 2016 towards a target of $75m. The fund has now made investments in 20 early-stage technology companies.

Investors
The fund has 15 investors excluding the management team.

The European Bank for Reconstruction & Development (EBRD) has committed €12.5m to the fund, an investment that comes under the bank's early-stage innovation facility, a €100m programme for investment in early-stage venture capital funds. Turkey Growth and Innovation Fund (TGIF), which is backed by the European Investment Fund (EIF), provided a commitment of €15m. Other investors include Yıldız Ventures, QNB Finansbank, EnerjiSA Enerji, and Finberg.

The fund has a minimum commitment size of €500,000.

Investments
The fund will invest in early-stage technology companies, particularly those developing cloud-based enterprise software, financial technology, digital market places, big data products, artificial intelligence products and technologies for the healthcare sector.

65% of the capital will be allocated to Turkey, while the remainder will go towards Central and Eastern Europe and the Baltic region.

Bayrakdar said: "We see investors acting with greater caution. This, coupled with a slower economy globally, will result in tougher times for startups. Our institutional LPs, both in our previous fund and our new fund, such as IFC, EBRD, and EIF, have been very supportive in trying to provide additional resources to our portfolio companies to overcome this period."

Typical equity cheques from the fund will be €1-4m and Bayrakdar expects to hold companies for around seven years.

Bayrakdar said of the firm's pipeline: "We expect to close our first investment very soon and we are looking at several other startups currently. We expect to make at least two or three investments in 2020."

People
European Bank for Reconstruction & Development – Anne Fossemalle (director, equity funds).
Revo Capital Management – Cenk Bayrakdar (founding partner, managing director).