Boasting 16 exits, Turkey’s Revo Capital eyes bigger Fund III

Revo Capital, a Turkey-based early-stage tech investor, is targeting $100 million for its third fund with a hard-cap of $150 million, Venture Capital Journal has learned. The firm previously closed its oversubscribed second fund at €90 million in 2021, preceded by its $66 million debut fund in 2013.

The oversubscription of Fund II and early success of Fund III likely comes down to the fact that the firm’s debut fund has completed 14 exits from its 21 investments, generating an IRR of 24 percent for the exited portion of the fund, according to fundraising documents shared with VCJ.

Revo has also generated two exits from its second fund, resulting in a combined 54 percent IRR on the two deals. One was a partial sale of its stake in software development platform Builder.ai and the other was the complete sale of Yazara, point-of-sale system developer,  to an undisclosed acquirer.

Revo’s largest exit to date was its sale of half of its stake in online marketplace Getir on the secondaries market to an unknown investor, which generated a net IRR of 128 percent, the documents show.

Founding partner and managing director Cenk Bayrakdar told VCJ that being based in Turkey gives Revo certain advantages over other investors.

“When we invest we take the company to an R&D center so that it has all the incentives from the government; the Turkish government has lots of tax benefits,” he said. “We keep the R&D there and establish it and then start the company in the US, do the marketing and sales there, move the founder there, move the IP there without any tax problems and then do a flip.”

Fund III will target companies in the same sectors of focus for previous vehicles, namely B2B SaaS, cloud operations/security, fintech and health IT. The new vehicle will also expand its focus to companies in the energy and gaming industries.

Revo declined to share the terms of the fund but said LPs from both Fund I and Fund II are returning, including the International Finance Corporation, German development bank DEG, European Investment Fund and the European Bank for Reconstruction and Development.

IFC committed $20 million to Fund III, after investing €15 million in Fund II, while DEG, which also put €15 million into Fund II, has written “a very similar check” for Fund III, Bayrakdar said.

How it started

The idea for Revo came about 11 years ago when Bayrakdar was working at Turkish telecom company Turkcell with Berkin Toktas, a former T-Mobile US executive. They looked into starting a corporate venture capital arm but couldn’t make it happen, so they left Turkcell in 2013 to found Revo. Bayrakdar previously served as Turkcell’s chief investment officer and chief product and services officer and founded its research and development arm. The pair raised about $15 million of its first fund from “close friends,” while the remaining capital came from IFC, EBRD, an undisclosed bank and several corporations and high-net-worth individuals, Bayrakdar said.

Beyond the firm’s unique access to tax incentives in its home country, Revo believes its in-house data system allows it to better compete with larger international players when looking for investments.

Bayrakdar explained that the firm’s portfolio companies are tied into Revo’s in-house database. “If you have a start-up and you start hiring people more than usual, we know about it. If you start marketing and your website gets more traffic than usual, we learn about it. If you change your website, we know about it. You get an investment, of course we know about it. CRM is really connected in many ways, so that’s how we looked at 5,400 companies and did 40 deals in the past 10 years.”

Revo claims to be the largest venture firm active in Turkey, with more than $180 million in AUM. Indeed, affiliate title Private Equity International reports that Revo is the largest dedicated venture investor headquartered in Turkey.

The Turkish VC market has long been largely ignored by the international community, only surpassing $1 billion in invested dollars for the first time in 2021, according to research Revo shared with VCJ.

Funds targeting the Middle East and North Africa accounted for less than half of 1 percent of global venture fundraising in the first quarter, according to Venture Capital Journal’s Q1 Global Fundraising Report. MENA-focused venture funds raised a combined $54 million in Q1, compared to a combined $7.8 billion for North America-focused vehicles.

Bayrakdar said that despite his firm’s small size relative to US funds, Revo has helped drive substantial interest in the region from foreign investors. “For the investments we have done so far, after our initial check, they have gone on to raise [a combined] $2.9 billion. Ninety-two percent of this is foreign money, so with $100 million we helped nearly $3 billion come into the ecosystem.”

As for Revo’s name, Bayrakdar said it comes from Esperanto, a global second language derived from Romance languages. “In the language Esperanto, Revo means dream. We are the capital that helps you build your dreams.”