Earlybird holds first close for new CEE fund

The fund is not far off its target of $130m. The Luxembourg-domiciled vehicle, which was launched in 2012, is described as having "normal VC terms" by Earlybird parter Roland Manger. The firm did not use a placement agent for the fund.

"While growth and buyout investing in CEE and Turkey are already considered mainstream for most institutional or professional LPs, venture is not," said Manger. "Even in western Europe, a lot of pre-conceived notions still exist about the attractiveness of the asset class in our region, much like those that US investors still have about venture capital in western Europe."

In conjunction with EDEF's first closing, Earlybird has brought in as a venture adviser Silicon Valley entrepreneur Ali Kutay, the former CEO of Golden Gate Software and current CEO of big data company WebAction.

The Berlin-based firm closed its fourth fund, Earlybird 2012 Fund, on €150m ($200m) in August last year. Alongside early-stage funding, Earlybird 2012 also offers later-stage investments, which distinguishes it from Earlybird's other funds. The vehicle has a focus on internet and technology companies operating in the DACH region.

Investors
Several large institutional investors contributed to the fund, including Turkish fund-of-funds and co-investment programme Istanbul Venture Capital Initiative (IVCI), which committed $25m to EDEF.

Alongside IVCI, the European Investment Fund, International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD) backed the vehicle. EBRD is believed to have made a commitment of up to $35m in EDEF, while IFC provided approximately $25m.

The fund also received commitments from family offices and high-net-worth individuals.

Investments
EDEF will focus its investments on technology start-ups, predominantly those based in Turkey but also businesses operating in the rest of central and eastern Europe, with the exception of Russia.

"Russia provides lots of opportunities for venture investing, but we believe there is a lot of capital already looking for these opportunities," explained Manger. "Capable local fund managers have set up dedicated and fairly large venture capital funds, and the country has already attracted significant interest from foreign VCs."

EDEF will make early-stage investments. Earlybird typically invests anywhere from €200,000-15m in companies. But the amount for EDEF "depends very much on the company we invest in," said Manger, "as well as its stage and the syndication situation."

He added that the firm is expecting equity ticket sizes to be similar to those invested in western Europe.

According to Earlybird, the fund's team has reviewed more than 1,300 potential deals in the CEE region over the last 18 months.

People
Roland Manger, a partner and co-founder of Earlybird, manages EDEF alongside partners Dan Lupu, a former investment director at Intel Capital; Cem Sertoglu, former partner at iLab Ventures; and Evren Ucok, former partner at management consulting firm Oliver Wyman.

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• Topics
• Venture
• CEE
• Technology
• Turkey
• European Investment Fund