Introducing VCs in Turkey: Inventram

As Koç Holding and Mitsui’s investment company, Inventram focuses on high-tech startups. Comprised of a large investment committee, the VC has 9 main investment areas

Having founded in 2010, Inventram signed a partnership contract with Mitsui, one of the largest investment groups in the world, in 2016. As Inventram’s CEO Cem Soysal said, “…⦋we are] a new generation company. We provide support in three areas to the management of the portfolio companies we invest in: 1) Financial management, 2) Legal infrastructure, and 3) Business development and sales.” So far the VC invested in 9 startups, five of which are in the US, and focused on high-tech ventures, noted Soysal. I had a chance to speak to Cem Soysal and here is what he told me.

Can you tell me the story of Inventram? What exactly are you doing?

In 2010, we commenced our operations as Koç Group’s technology investment company. In 2016, we signed a partnership agreement with Mitsui, one of the largest investment groups in the world and in Japan, and Mitsui became a 30 percent shareholder in Inventram. During the last decade, we have accomplished many successes that allowed us to engage the attention of a large group like Mitsui. I can summarize this as follows; when it comes to the investor-entrepreneur ecosystem in Turkey, definitions such as start-up, angel investor, and venture capital (VC) come into mind. Inventram, however, is none of these. Inventram is a new generation investment company. We provide support in three areas to the management of the portfolio companies we invest in: 1) Financial management, 2) Legal infrastructure, and 3) Business development and sales.

Do you use only the resources of Koç Holding and Mitsui for your investments? Are you open to other resources?

Inventram is a company capable of making investments of high amounts. Therefore, we do not need different resources.

I noticed that you have two investment models. Could you explain how these models work?

I would like to emphasize that we are one of a kind company in Turkey in this field. Our philosophy is to make investments that will disrupt the conventional business standards. We invest in projects that change the rules of the game and resonate around the world. We have been pursuing engineering and high-tech since day one, investing in unique inventions around the world, and trying the untried. Since we were established, we have climbed the ladders of success with faith, received more than 7,600 project and company applications, and today we have transformed Inventram from an early-stage technology investment company into a high-tech investment company. In the light of our philosophy, we invested in 9 high-tech companies, 5 of which were in the US. We also realized hundreds of patent investments in 42 individual technologies, as well as 51 iPreferred Partners business partnerships. Today, we are proud to have accomplished many exciting projects not only in Turkey but also throughout the world.

There are detailed application forms prepared for the entrepreneurs of “scale-up” companies on our site. These application forms become a summary business plan document when completed. In addition to our corporate website, we also receive applications directly from Turkey’s leading technoparks including METU, ITU, Bilkent, Boğaziçi, and Yıldız Technical University, as well as our business partner Koç University, and also from angel investor networks and important stakeholders of the entrepreneur-investor ecosystem included. The applications received first go through a pre-qualification phase. After that, the eligible applications are submitted to the Investment Committee. The Investment Committee is composed of an advisory board of 54 people including us, other professionals in the Koç Group, and opinion leaders in the business world. The Investment Committee evaluates a project from five aspects. The evaluation processes are as follows: Is the technology deep and realistic? Does the entrepreneur have high qualifications? Is it protected properly in terms of intellectual rights? Are financial projections designed properly and is there any projection for growth? Are there legal problems, do they comply with the legislation? Would it sell or grow in the global markets? And do they have a three-to-five-year detailed business plan that includes all these topics?

What are your main criteria when you decide to invest in a venture?

In our investments, we first evaluate the entrepreneur’s profile and qualifications. A competent, passionate and hardworking company team with relevant pieces of training and experience are the factors that directly affect the success of the business. We care about entrepreneurs who want to launch their product as immediately as possible, have set their customer base and target market, have mastered the technical side of the business, and have a sales mission.  Another parameter that attracts us in our investments to date is that they are innovative works that are hard to copy with high entry barriers.  We immediately notice the brains combining deep technological knowledge and creativity with an entrepreneurial spirit and business management aptitude.

The entrepreneurial model that investors want to see should have different features. A good business plan should start with a brief executive summary of the business plan, which sets out the business model of the company, demonstrates how it can be achieved and contains the metrics and other information required for the investor to be able to make an assessment. The team’s background and capabilities, history of the company, which problem is addressed, technology, product, organizational structure, target market, market entry model and sales channels to be used, competition analysis, other operating processes, financial information, sales revenues and profitability, risk factors and returns, time plan and references are the headings that should be included in the business plan. In addition to this, it should include the requirements for which the requested fund will be used and how much shares are offered to the investor in return for the investment. Together with these, “scalability” is one of the most important criteria for us.

Are there any industries in which you particularly invest as Inventram?

At Inventram, we are launching high-tech and engineering projects in nine “disruptive” areas: robotic technologies, biotechnology and medical technologies, artificial intelligence, automotive technologies, electronic and durable goods, Internet of Things and sensors, big data and cloud systems, defense industry technologies and nanotechnology. Energy, augmented reality, virtual reality, HR technologies, data analytics, pricing algorithm, smart cities, smart agriculture and predictive maintenance were also the areas we are interested in. We will continue to work in these areas in the upcoming periods, but of course, we are not limited to these areas. We are in every field where innovation exists.

Do you think that the startups in Turkey have started to attract more attention globally after Zynga acquired Peak Games in Turkey for $1.8 billion?

I was proud that a company from Turkey had passed the unicorn limit with an investment of $1.8 billion. It is very important for Turkey that this news has been heard by the investor community worldwide. In this respect, I think that it has attracted the attention of foreign investors to Turkey. I believe that this acquisition will have an impact on global awareness and positive progress for the venture ecosystem in Turkey.

What are the pros and cons of the startups in Turkey compared to their global competitors?

Adapting to technological development and innovation is crucial. The disruptive technology wave, which began in the United States, is spreading all over the world. At this point, new technologies need to be adopted by consumers; but as a technology manufacturer, Turkey must have a say in global markets. The development of the ecosystem in Turkey and the strength of the investor network can make a difference in global competition. More creative and innovative ventures emerge from Turkey. On the other hand, the entrepreneurs in Turkey may also face geographical barriers in reaching the target market. For example, a company was established in the U.S. as part of the global goal of Sensobright in our investment portfolio. Being targeted by the Silicon Valley in the United States is an important step for companies. In this sense, geographical proximity is a must to be taken into account to penetrate the target markets. In the field of technology investments, we can consider Turkey as still at the beginning of its journey, compared to the rest of the world. Especially when the amount of investment is considered globally, we just started in this field, and we need to sustain it increasingly. In this regard, I have full faith in the scientists and entrepreneurs in Turkey, but we must also say that we still should cover a lot of ground.

On a global scale, what kind of startups do you anticipate to shine out, especially during the COVID-19 process?

First of all, I wish the entire world would overcome these hard times as soon as possible. Such a pandemic that affects the entire world, of course, affects technology and technology investments. During the pandemic period, there is a progress in using technology and opportunities more efficiently. In this period, I think there is a good chance that ventures adapting their technology to the situation in the fastest and most reliable way and act courageously have a high chance to stand out. The need for digital transformation has also accelerated. During the pandemic period, business processes, consumption, remote health, and especially remote diagnostic developments gained importance. This is where smart devices come in. The area of diagnosis independent of geography is also remarkable. On the other hand, e-commerce is already an important area and has a significant growth rate. It is necessary to adapt quickly and have a continuously innovative approach. For instance, the practices that allowed us to hold online meetings during pandemic periods were indispensable for everyone. It is hard to predict what will be the primary need for people in the face of major changes, but it is necessary to adapt quickly. In this period, the companies that provide services to the houses and logistics businesses stand out.

That is all I wanted to know. If you have anything extra, please add.

First of all, thank you for your interest.  Finally, I would like to add that the world is undergoing a great change and transformation without us realizing it. Unfortunately, the COVID-19 pandemic continues to affect many areas, from the economy to social life. When we enter the normalization process, we will realize that certain events and situations that we used to see very necessary are not as mandatory as we thought. For example, business trips have not been made or preferred for a while. We see that companies continue to sell without business trips in many industries. In this way, we save both cost and time. In this regard, it is possible to say that the pandemic has a positive impact on digital transformation and the increase in technology investments, despite all the negative aspects. A completely different picture can emerge when we leave these hard days behind in good health. Looking at this approach, I can see that important and good developments for technology investments are awaiting us soon.

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