When we set out to raise our early stage VC fund focused on Turkey and CEE in 2012, one decision we had to make was on fund size. At that point, we decided that it would have to be a $100+ fund. I want to share our thinking behind this.
There is already quite a bit of talk around Series B difficulties. Mattermark's Danielle Morrill has looked at the numbers, and Redpoint's Tom Tunguz and Atlas's Fred Destin have chimed in with their well thought-out pieces. We agree that the hurdle for Series B rounds is quite high for startups, as this is when companies start selling numbers and performance, rather than visions and dreams.
Please note, that the conversation so far is centered on developed markets, with many VC firms, mostly well-capitalized, evaluating the Series B opportunities. Now, superimpose this situation on the market that our new Turkey and CEE fund is covering. You'll see the same difficulties facing Series B seeking startups, compounded with the fact that the small number VC firms covering the region are mostly small, or not committed to investment shere.
Therefore, we decided that we'd have to have deep enough pockets to be able to underwrite the fundraising needs of our portfolio companies and see them through maturity. Of course, this assumes that they are performing - we would not put good money after bad money, but we feel comfortable that our successful portfolio companies will not be at the mercy of the funding climate or the appetite of potential investors.
This is reflected in the case of Metrekare.com. Even though we invested at quite an early stage, the Metrekare.com team feels comfortable that they will have access to funding, as long as the company is progressing in the right direction.