With a focus on Turkey and Eastern Europe, Domino Ventures believes the startups and investors in terms of the possibility of high growth and return
Domino Ventures was established in the beginning of this year, with a Dutch-based early-stage VC focusing on Turkey and Eastern Europe. “When you look at the emerging markets, even though it is a fast-paced ecosystem, there is still a gap between the early-stage startups and the capital because of the instability and volatility. As Domino Ventures, we see the great potential of the tech talents and the ambition behind the success stories,” said Yağız Karadeniz, Managing Director at Domino Ventures. The company reviewed more than 12.000 startups so far, while 2.000 of them passed through the screening, and 178 have been interviewed by the professional team. Domino Ventures invested in 8 startups powered by AI and ML technologies. “We will invest in 30 tech startups with growth potential in global markets in total. 24 of them will be pre-seed and seed stage while 6 of them will be growth stage startups. The ticket size is between €100K to €1M depending on the valuation,” emphasized Derin Keskin, Investor Lead at Domino Ventures. I interviewed Karadeniz and Keskin and here’s what they told me.
Can you tell me the story of Domino VC? What is your role in the VC ecosystem?
Yağız Karadeniz (YK):Domino Ventures is a Dutch-based early-stage venture capital fund with a Turkish and Eastern European market focus. Besides our experienced team, we are also backed by our strong partners and advisory board from all over the world that have multi-sectoral experience. When you look at the emerging markets, even though it is a fast-paced ecosystem, there is still a gap between the early-stage startups and the capital because of the instability and volatility. As Domino Ventures, we see the great potential of the tech talents and the ambition behind the success stories. We seek founders and teams that can compete through innovative technologies and business models. We are here to invest in qualified and collaborative founders with global scaling potential.
What type of startups do you invest in? And how much did you invest so far?
Derin Keskin (DK): Our team is focused on discovering tech startups in rapidly developing areas like metaverse, gaming, and startups that are mainly powered by technologies such as AI, ML, and blockchain. We invest in early-stage startups that are well-structured, have great teams, potential to scale globally, have innovative tech-based business models, and of course, have the ambition to change the market dynamics. As Domino Ventures we started our operations at the beginning of this year and investing actively since June. Our target is to invest in 26 early-stage and 4 growth-stage startups. We reviewed more than 12.000 startups so far, nearly 2.000 of them passed through our screening, and 178 have been interviewed by our professional team. We have invested in 8 startups only in 3 months and announced 4 of them so far. Our approach is to do follow-up investments in the teams that we trust.
I noticed that your investments are concentrated in Eastern Europe. Are there any specific reasons behind this decision?
YK-The reason that we mainly focus on emerging markets is that there is a great potential for both startups and investors in terms of the possibility of high growth and return. Other important aspects of investing in those regions are the success stories that create an opportunity for greater returns. Besides the great startup potential, there are significantly important players such as great local investors, accelerators, and incubators in the region that empowers the ecosystem. The potential of the technology, which is becoming more attractive to global investors day by day, is an important indicator that shows that these markets will continue to grow in the following years. We should all focus on the mechanisms that need to be improved in order to facilitate more early-stage venture capital investments in emerging markets. As Domino Ventures our aim is to invest with an operational approach to create value by supporting our founders with our experienced team and global network.
What are your investment criteria as you invest in a startup?
DK-Entrepreneurs are the center of everything we do, in terms of that we focus on finding great teams that can work together in a harmony. We primarily provide seed or first-round funding to tech founders and startups that have global expansion strategies and market fit.
We deep dive in the KPIs to understand the business model and to see what is achieved by when. Business metrics help us to make a projection and to see the potential and the sustainability of the startup.
What are the pros and cons of Turkish startups as compared to their global peers?
YK-According to Q3’22 report of Turkish Startup Ecosystem, nearly $1.5M were invested across 208 deals in seed, early and later VC stages cumulatively in 9 months. The $90M were invested through 51 deals in seed, early and later venture capital stages only in the last quarter (January-September).
We can easily say that Turkey is on the radar for global investors due to its success stories and great potential despite the global recession. There are well-structured teams with strong technical backgrounds in Turkey. SaaS, maming, AI and fintech deals are the hot topics for Turkish entrepreneurs for a while. However, we can also see that early-stage Turkish startups are focusing on the local market instead of working on their expansion strategy. Nevertheless, it is encouraging to see that entrepreneurs are becoming more conscious day by day. As Domino Ventures we empower and back the leaders to overcome such obstacles.
What are your future plans for your investment strategies?
DK-We have invested in 8 tech startups that are powered by technologies such as AI and ML so far. We will invest in 30 tech startups with growth potential in global markets in total. 24 of them will be pre-seed and seed stage while 6 of them will be growth stage startups. The ticket size is between €100K to €1M depending on the valuation. We invest with an operational approach and do follow-up investments to our startups on their following investment rounds.