Koray Bahar is the Co-Founder of Turkish SaaS startup Figopara. Previously he was the General Director and Partner at Foriba. He took the company from 35 to 220 employees, $2 million to $14 million in revenue, and from 30 to 15,000 customers to a successful acquisition by global tax software provider Sovos.
Koray spoke to us about his entrepreneurial journey, his latest venture Figopara, his tips for exiting a startup, how to scale culture in a startup, when is the right time to fund-raise as an entrepreneur, and what he looks for in a founder as an angel investor.
Q. Tell us about your entrepreneurial journey.
Koray: I started working with my partner Ahmet Bilgen in 2001 during my university days as a part-time developer and later as a full-time developer. Our first business was Dotto, where we developed mobile apps for Turkish enterprises and then Foriba, where we were doing SAP consultancy for large enterprises.
We knew that the database software development business was not viable and that we needed to develop a product. In 2010 the Turkish Government published a mandatory electronic invoice regulation, and we pivoted from software development to the tax and compliance software business. In 2014 the Turkish Government published an obligation for companies to use electronic invoicing, and our number of clients rapidly increased.
In 2018, we raised $10 million from International Finance Corporation, Revo Capital and Endeavor Catalyst Fund. And we expanded our operations to Europe, UK, Italy, Hungary, Poland, Norway and helped enterprises comply with the local regulations.
At the end of 2018, we wanted to fundraise to acquire a European company. During this fundraising round, we met Sovos, which would go on to acquire Foriba. We exited in 2019, and in 2020 I started my new startup Figopara, a supply chain finance platform.
Q. Why did you decide to sell the previous company, and what was the motivation behind the sale?
Koray: There were three main reasons. The first one was that we had made good progress with Foriba. We had scaled rapidly. But with Sovos, we would be able to be much, much bigger, and if we merged the companies, then our Turkish and European operations would grow bigger, and it would be a good chance to scale the company globally. The second one was that for all of us, including the existing investors and my partner Ahmet, the price was good, and the third reason was that I wanted to jump on a new entrepreneurship journey.
Q. What are your tips for a successful exit for a founder?
Koray: Focus on the business, keep the company safe, retain the growth mindset and keep growing. During our exit, we were running the company well. We were expanding in new countries, and roughly 30% of our revenues came from new countries.
When you’re running your business well and entering your competitors’ territory, you become more visible for the large private equity firms and the large enterprise companies that can acquire you.
Once you get that visibility, it is important to network with investors and others, including your competitors. I met all of my competitors, founders, their investors and learned from them. These relationships and your network are precious.
Q. What’s the problem that you’re trying to solve with your latest venture, Figopara?
Koray: For small and medium enterprises (SMEs), the main problem is cash flow. They might have a profitable business, but often they go bankrupt due to the extended payment dates because they’re not able to collect money from the customers on time.
Large enterprises would like to tune their working capital by extending or shortening the payment dates to the suppliers. And on the other hand, the banks and financial institutions would like to lend money to SMEs, but they don’t want to take the risk of lending to SMEs.
What we do is onboard large buyers who have thousands of suppliers. Most of these large buyers pay their suppliers 30 days later, but these suppliers would like to get their money today. Our banking partners open a line of credit to the large buyers and pay the supplier, and this credited amount is repaid by the large buyer to the bank 30 days later. SMEs can get their money instantly.
Within one and a half years, we have lent more than $200 million cash to thousands of SMEs in Turkey. And this year, we are going to expand the operations to Italy, then Greece, and then India.
Q. What is your strategy for acquiring customers?
Koray: We have two different customer segments. One of them is the large enterprises. For them, we use enterprise account management strategies. Our second segment is the SMEs. For them, we have different growth channels. One of them is the invoice service providers, who are our partners. We also use digital marketing. During the pandemic, webinars have become popular. We do a webinar almost every month.
Q. When you decided to start fundraising with Foriba, what were your main motivations?
Koray: We were bootstrapped until our first round of fundraising. We went out looking for funds because we wanted to grow the business with SMEs. But up to that point, we hadn’t sold a single thing to an SME. We needed an investor who knew how to pack, price and sell a SaaS product to SMEs. That’s why we decided to raise funds the first time and how we selected the investor.
The second time we wanted to raise funds was to acquire a competitor that would enable us to enter the European market. We were very specific when raising funds, which allows us to scale our business rapidly.
Q. What are some mistakes that early-stage founders looking to raise funds should avoid?
Koray: First thing is over-engineering the product. Stick to MVP fundamentals. Verify product-market-fit and show that your product can generate revenue. That’s the most important part.
The second thing is that the time of fundraising is critical. If you’re too late, one of your competitors can get your customers before you reach them. If you’re too early, the VCs or the potential investors don’t like your KPIs— your revenue, ratios, or whatever they’re looking at while they’re auditing your business.
You need to start sending and sharing your ideas, products, and numbers with potential investors. Look at your competitors and similar businesses, and then look at their investors and reach out to them. Just send them an email or fill their forms on their webpage, and then start sending some update emails.
You want to build a relationship because if I know you, and you sent me an update a year ago saying I launched a product and then nine months ago, you got your first customer. Then six months back, your monthly recurring revenue (MRR) crossed $10,000. And now you have $100,000 MRR. The VC knows your history. You’ve given some promises in those emails, and you delivered.
Also see: Raising funds, hiring, and crossing the chasm with Hemant Mohapatra, Partner, Lightspeed Venture Partners
Q. You’re an active angel investor. What do you look for in founders who you invest in?
Koray: I start with the team and the founder and the passion of the founder. For example, say you wanted to sell water, and that is what you’re passionate about. First, you need to understand the water market. You need to talk to people who are already selling water. With people who pump the water from the ground, you need to look at different technologies. You need to talk with academics, and just collecting this data is not enough. You need to generate content about it and share it on the internet to build a network around you. That way, people know that you have expertise on the problem you’re trying to solve.
I watch out for these entrepreneurs who have an idea, develop an MVP, bring together a small team, and are bootstrapped. These are all good signals that the founder can do business and the employees believe in the business. If they have generated revenue, I like to look at the numbers as well.
I also see if I can bring anything else to the table other than money, whether it be opening a door, helping them with an infrastructure problem or helping them establish the business globally through my previous expertise.
Q. You’ve scaled two companies from a handful of employees to larger teams. How do you retain culture as you scale?
Koray: First, it’s important to define culture. Culture is not something that the founder pushes on to employees. Culture is the total of your employee culture. Building the culture starts with hiring the right people who are motivated and believe in the company.
In Foriba, when we were still 100 employees, I was able to keep track of everybody’s name, their girlfriend or boyfriends name, if someone had a sick family member, and it was easy to be close to all my employees.
When we grew from 100 to 200 employees, it became difficult for me to remember everyone’s faces and names. We hired an HR officer to the team, and she helped build the culture further. Then we started monthly breakfast with the newcomers. It helped me build a rapport with the newcomers and helped me explain our history, what we did, and how we worked.
With the pandemic, things have become difficult, but we still try to have weekly meetings at the park with around 10-20 of us, and we’re also active and engage with each other online.
Also see: Startup hiring, scaling your people function and management lessons from Covid with Suman Gopalan, CHRO at Freshworks
Q. If our listeners want to reach out to you, what’s the best way to do that?
Koray: They can directly write to me on Twitter or LinkedIn. I’m always open to having a good conversation.