E483 | Rina Onur, Peak: Offboarding as a VC Partner, Istanbul’s Gaming Boom & the Tug-of-War Between Building and Investing

0:00From an unlikely hub, a revolution in gaming was born. in a country rarely mentioned among tech powerhouses, one founder's journey would change the landscape forever. Turkey has created its first unicorn, it was a gaming company, which Rina co-founded and Turkey went on to not only build another unicorn, but also 80 studios came out of Peak Games. But for Rina Onur, success wasn't enough. After building a billion-dollar company, she ventured into investing. Yet something was missing, the thrill of creation, the hunger to build. And one thing Rina can't tolerate, standing still. I can't postpone something I want to do for like a year and a half, two years.

0:33Maybe in the grand scheme of things, it doesn't change anything, but in my mind, it kills me slowly, so. This restlessness drove her back to founding armed with hard-earned wisdom about what truly creates unicorns in the gaming world. Investing not in trends, not in ideas, none of that, but investing in the people. But the landscape has transformed. The golden days of easy growth are gone, replaced by a brutally competitive market. Back in the day, we would acquire users with pennies on the dollar. Now it's cheaper to go buy somebody dinner than acquire a purchaser to one of our games, basically.

1:03Yet through it all, Rina remains undaunted, focused on a timeless truth that transcends platforms and trends. At the end of the day, we used to play games, we still play games, and I bet we will continue to play games. Join us on the European VC podcast as we explore how an unexpected gaming powerhouse emerged from Turkey and how one founder's relentless drive continues to shape an industry built to outlast us all.

1:46This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back, everyone, to the European VC podcast. As you know, we're all about shedding light on the great people we have in the ecosystem and connecting everyone. And today I'm super excited because we're bringing Enes on for another episode where we're talking to some of the outstanding outlier people that are in the Turkish ecosystem. And Rina is definitely one of those. Enes, would you just spend a little bit of time to talk about Rina and why we should bring Rina on the pod?

2:19Absolutely. It was crazy good to work with her. I mean, I've learned a lot from her between 2016 and 2020 when we did SpundOne together. So that's one of the reasons. Second is I think she's been one of the corner stores in the Turkish ecosystem. Turkey has created its first unicorn as a gaming company, which Rina co-founded. And Turkey went on to not only build another unicorn, but also 80 studios came out of Peak Games. So Rina Peak Game Story, now doing Spike, was I think very instrumental in the transition of the ecosystem from creating local success stories to creating global success stories starting with gaming.

2:51Reena, you've got to expand a little bit on that story. And we're also going to go a bit into the foray of diving into venture and then deciding not to. I have to ask that question. I think it's a super interesting conversation to have on this pod, a bit of an off-boarding conversation. That's a good question, Andres. Do you have any other examples like that for people, entrepreneurship, VC, back to entrepreneurship? it. I actually had one lined up to happen here in this month as well with a guy who built his own firm in Eastern Europe and then decided not to continue. The conversation there was around a failed fundraiser, so to say.

3:34So they didn't get it off the ground, or at least they decided to shut it down. And as such, it's a bit of a different lens, right? Because I think you could fundraise for a fund pretty quickly. I don't know. When I talk about everything I've done, it feels a little bit odd. It feels like there's something wrong with me that I can't stick with something for far too long. It might sound like that. I get bored easily. But jokes aside, I did kind of flip-flop between investing and building, operating. I started my career with investing, actually. I started with private equity. I did invest in large family-style corporatized companies where we owned a large chunk of those businesses and the mission was to grow them and then have a meaningful return for everybody involved.

4:24Then it became my entrepreneurial journey where my life changed, my outlook to the world and everything I did pretty much changed because of it. So after peak, basically, when I went back to investing again, this time, drawing upon my private equity experience and also my operational experience, I think I went back into investing in technology, specifically early stage, because I thought Turkish ecosystem back then was a little bit more conducive to that. And then we did that, I think, quite successfully for a fund of our size and a team of our size for some years. But after that, the itch of like wanting to build something from scratch, having kind of full control over the destiny of that one project or that company organization kind of called back to me.

5:10Whereas like the VC hat is quite different, you know, very distinct. So having long conversations with Ennis at that time as to what I wanted to do with my life and what he wanted to do for his life, I think it was the best decision to kind of stay along a little bit, help him raise the team that he wants to lead with the fund as it progressed. then that's basically what we did. I stayed around a little bit in helping him recruit an amazing team, come up with a partnership that was going to take the fun to bigger and better terms. And then as soon as I felt that they could do that, I peaced out basically and went back to building.

5:44Enes, what are your reflections from having started out together with Rina and then realizing both of you, this wasn't the right thing for Arena and thus the team would break up a little bit. We did a bit of an off-boarding conversation, but without one of their parties, with the guys from formerly Cavalry, now Knapp. And I don't know whether it was unfair or not to have the full team on that conversation. But we had the conversation with the staying team and spoke about the process a little bit, but it was, out of respect for everyone, didn't dive too deep. But since we have both of you here, I think it's an interesting, and here we also have a very happy breakout, which I think is very important.

6:33But I think thus also we can really dive into this thinking back, would you wish that it hadn't happened? Would you wish that you had been able to, from the beginning, see that three years in this would change? or would you be, are you be like, well, it was one fun iteration. It was perfectly fine. Got us off the ground. We learned a lot together. We did great things. And we then just decided next fun iteration is a different setup. Amazing question, by the way. It's intense. And it feels like this is the first time I'm talking about this. I like it. It's like therapy, basically. But you know how when you look back, you can easily connect the dots.

7:13And looking back, I feel like it was kind of obvious. But if I knew while we were partnering up back in 2016, then I think life would have been more difficult for me. Not knowing and then living in the moment while he decides to leave and then we're raising fund too and there needs to be a transition, etc. I guess made me over-ambitious or over-optimistic about what I can do, which enabled us to do the second fund and now we're doing the third fund, etc. But if I knew back in 2016 that this was going to be, say, a three to four-year partnership, then I think my pessimistic side, like my risk-averse non-entrepreneurial style, would kick in throughout that four years, so I'd be less committed, which would be optimized the outcome for me.

7:52I don't know, Rina, what do you think? I mean, first of all, neither of us knew, nobody knew. I have like the saying, nobody gets married thinking they're gonna divorce one day. That never happens because then you wouldn't get married in the first place. I didn't think I wasn't gonna do this for many years to come. I thought now I was in a different stage of my life where I didn't have the mental capacity or the energy or the time to actually give 150 % of my life and my time to a new venture. So I thought this was my thing, that I was going to do this for long periods of time. I didn't think, like we started out with a 500 startups brand.

8:26I didn't think, you know, that was not going to be in the picture at some points. And none of these things we really thought about. But like throughout my life, all the time, instead of making like very long-term, very definite plans, I make plans around people. because I think people are the ones who bring about or kill opportunities. And when we first when I first met Enes, we weren't even peers at that point, like in a very classical Turkish sense, I was his boss. And if I didn't really truly believe in him as a person and in his potential, I wouldn't have brought him up and like pulled him up first to my peer level, even before I had ideas about leaving and doing something else.

9:07I think from an outside, what people might be missing is, Ennis didn't rise up through the ranks and became like a partner and a GP in this organization because I was going to leave. This happened way before even I had ideas about leaving. And back then, I actually had ideas about continuing. And if I wanted to continue, I knew that we had to invest into building like a more robust system. It could not be just arena show, like accompanied by other people. It had to be like a partnership of people who would bring like different things to the table. And then like that partnership could like build a larger team as well.

9:44So I always kind of like make my decisions based on people. And even the first moments of when I started having like this internal questioning and discussion around what do I want to do? Like, do I want to go back to building? And this was actually one of the first people I opened up to, like being very honest. Like these are some of the thoughts and ideas I'm thinking about. I don't even know what I'm going to do yet. Like back then, like the gaming hadn't recrystallized. And I actually was like, listen, I love working with you. Whatever we do, I think we can figure it out. If you also have the inclination of saying, ah, maybe investing is not like what I want to do for the rest of my life.

10:20I'm young, yada, yada. Let's do something together. I'm like super open to figuring out what we can do together. And those were like some of the conversations we had and like internal, like looking in and kind of like understanding what we want for long-term. Again, my discover side, by the way. kind of kicked in because I knew that I tend to fund at least for the foreseeable future and make win with it, whereas jumping into entrepreneurship, something I've never done before. Gaming, non-gaming doesn't matter, I guess, you know, didn't have the courage. He gave me like this crazy plan of let's not do something for the next like 18 to 24 months and then we can do something.

10:53I'm like, what is that? Like, who? Like, no, it's too late. Like, it's too late. Even today, we should have started yesterday. That's like, so not me. I'm like, I can't postpone something I want to do for like a year and a half, two years. Maybe in the grand scheme of things, it doesn't change anything, but in my mind, it kills me slowly. It's pretty funny to even hear Enes be positioned as someone who would think about not being in venture because to me, Enes, you're Mr. Venture. You're like, everything about you is just venture because you're... I don't know if it's a compliment, but I'm thinking it's a compliment.

11:31To me, when I say this, it's because you're always thinking about the next thing. You're always, every time I talk to you, it's about, I'm thinking about this, about the firm. What's your take? What do you hear in the market? And you're always pushing to meet the next great founder, talk about the next thing that you're not sure about with the firm or planning to do. which I you know for me it seems like just so much the right mindset and also I think it's also rare to meet people with your type of energy in venture so I actually think so I think we have great people in venture but I think that you're definitely one of those that taught me in the beginning very clearly that there's definitely difference in the caliber of people and it's so good I'm putting this into our pitch deck we're raising fund three this counts as marketing I don't know what European Union thinks about business, we don't have the marketing license, but I'm to bring this into our pitch deck.

12:29No, so to me, my whole mission starting UVC back in the days was based on me realizing that there is such a big disparity between what the good is and the best are. And average, just do not cut it in venture. That's why I'm trying to build a podcast where we showcase the breadth of Europe and in And doing so also show what we have, meaning both the best and maybe not as best. And I do think that that's an important thing because I want to show what Europe is and I want to benchmark every firm. And getting on the podcast is not in any way me condoning that someone is great or that a firm is just exemplary and everyone should follow them.

13:13I think when people listen to what I say, they can figure out who I like more than others. you being one of them, Anis. But I really think that meaning you in the beginning of our journey was actually a very important one. So thank you for that, Anis. Just wanted to drop it in there. Thanks so much, man. Yeah, I was going to do that too. Oh shit, the hearts are coming out. Perfect. Oh man. Yeah, got it all. Rina, I want to ask you if we get back on the off-boarding conversation. There's the big topic that we can always talk about and I will ask Anis about afters, which is how do you manage LPs through this journey of losing a partner, so to say?

13:54But I'd love to ask you first, as the outgoing partner that really wants the best for your former partner, how do you do this best? What are the most important steps to take? Not sure if we did a good job. Honestly, you have to go back and ask the LPs, I guess. But I think the second part of the question was really important for me. Like I wasn't, I didn't feel good about doing anything unless I knew I wasn't leaving a mess behind. A mess for the portfolio founders, a mess for the LPs that I went and pitched this idea and got entrusted with their money and the team, all of that. So it was very, very important.

14:38And that's why even though I tend to hurry and move fast and potentially break things, this was something that I tried to do in a disciplined, slower than usual planned manner and in very true transparency. One of the reasons it was easier was because we had already stopped investing out of that first fund. So we had deployed all capital, right? It was a tiny fund. We had like wired all our first checks, didn't have a ton of capital to deploy for second checks because it was like this like tiny seed stage fund. You know, having being in that position kind of lifted a lot of pressure over our shoulders because the team was getting ready for fund two.

15:25You know, it wasn't like there was a lot of work that still needed to be done. And in that business and in that fund, if we were good at our job, by that time, a lot of these seed companies that we had invested in shouldn't have been in a position where they needed a ton of our help, right? Because they should have matured and evolved and brought other people to their cap table and brought other people who could be helpful to them as much as we could. So usually it turned out that the really good companies didn't need much of our help at that point. That's the reality. But in terms of making sure that the team was OK and the portfolio companies knew what was happening, that's why we did it deliberately slow.

16:06Our end came on. I want to take credit for making like convincing Guinness that it shouldn't be him only, that it should be a co-GP situation and he needs somebody because I felt really lonely in the beginning being myself. But yeah, like after that, once they were together and once we did the first few hires, which I was still around around that time, I think after that, they knew what they wanted to do. They knew what the culture of this new form was going to be and what the team and what the aspirations were. And I, at that point, knew I made the right decision because I would never, like, I don't think I had the capacity to feel as excited about what they were doing as they were.

16:47Like, I feel as excited about what I'm doing now. And like this mentality of, oh, like these are all so many things that we can do, like thinking like five, 10 steps ahead of time. That's what they're doing for the fund. And I never had that desire to take it to the next level with the fund, but they did. So I knew once the team got together that I kind of made the right decision for myself. And I did them a favor by like kind of getting out of their way. It's kind of true. And also while discussing this with Rina before her departure, she said something along the lines of whatever she does, she wants to at least have a shot at being the best in the world and doing the venture capital fund out of Turkey and Eastern Europe.

17:26She doesn't think that she can be the best in the world in that, whereas doing a gaming company out of Turkey, at least she has a shot, you know, and that keeps her going. I think because that was one of the reasons why she didn't have that aggressive mindset she has for everything in life. She didn't have it for the funds for the past, I would say. a year or two leading into that. But, you know, what did you hate the most in Ranger Capital? Was it I think conversations, fundraising, like back office, it's not dealing with soundbiz because that's the only good thing. What did you hate the most?

17:54The back office I really, really hated, especially because we had like with the first some of this convoluted structure. You know, it wasn't kind of a captive fund with the 500 brand. So it was tougher than I think it needed to be. Let's put that statement out there. I think it'll be hugely popular. I know. I don't know. I don't want to cause you any more trouble. That was Rina. That was Nenis. Yeah, exactly. I can say whatever I want. I'm no longer involved. I think also like one thing that was very surprising is that having like a good track record as an operator, as building games specifically, after a certain period, I never in my life, this is like a super luxury to have, and it's going to sound so spoiled, but I never had difficulty in fundraising.

18:42Because at that point, after grinding for so long, and then having massive success, it was much easier to build the type of team that I wanted with like the operational stuff, like stuff of building games, and then based off of that, creating good products, and then raising accordingly. But like fundraising fundraising for a fund is completely different. Obviously, yes, your strong pedigree as a founder comes into effect and you're not starting from ground zero. But all of a sudden, I was so far away from the comfort of, hey, listen, I have this idea that I want to pursue. This is the team, give me money, which is so easy when I try to do gaming or so much easier, let me say, that completely evaporated when I was trying to fundraise for a fund.

19:28Having said this, We tried to fundraise where like Turkey was going through a military coup and we did our like first fundraise like around, you know, our first call around that time. So it was a horrible time. But still, I didn't like pitching this idea and like asking for money and like, please give me your money. We're going to do great things with it. I didn't really like going back to that, like needing to prove ourselves all over again in an ecosystem that hadn't matured yet. But I was like, oh, I did this with Peak like 15 years ago. Come on. I can't go back to that level of trying to convince people again at this stage.

20:08I don't want to. I want them to just believe in me. You have to convince a lot of people. I mean, as a founder, it only takes one. You need one lead investor and the other little fellow. Obviously, it's tough. But we need to convince one front or one person sometimes. As a fund, you need at least a dozen, if not 20 people. All at the same time. so that's what makes it tough. I think it's tough to find. And the only thing that's tough about venture capital is the fundraising part. I mean, other than that, it's pretty much a lifestyle business apart from the fundraising part. I'm sure it gets easier, like being a founder, if you're Sequoia now.

20:41Like, I'm sure it's not as hard to fundraise as it is as like a first time fund in Turkey. So probably that's going to get easier, I guess. Yeah, I think there's also the tough grind of especially being in a less evolved ecosystem where you're raising also from a bunch of LPs that don't know venture well. So you feel like you're having the same conversations again and again. You feel like the question is really, can I convince these guys rather than, is my product good and is it worthy of funding? Am I right in saying that there's a bit of that feeling? I imagine, Enes, you have really seen also how your LP base has progressed from being less institutional to more institutional as you've grown.

21:26No, exactly. During our first fundraising for fund one and then the initial date of fund two, it was mostly high net worth individuals. And fundraising was more us pitching venture capital as an asset class, which is tough to do because it doesn't make a lot of sense and intermediate returns are negative. Even top quartile returns don't even cut it these days. You need top deciles to be able to. With financial engineering, people can make top quartile returns in more liquid markets. But that's what you pitch. So you stand out for the startup ecosystem and VC as an asset class, where as you go more mandated institutional, more mature family options, for example, who've been a venture for a while, you start pitching yourself.

22:01And I think that's easier because at least you're pitching yourself, not just an asset class, they agree. That's an incredibly important statement. And I do think that people want to, to the extent possible, find their anchor investor in the group that look at you as an individual manager within an asset class they've already bought, rather than trying to look for that early money from people that haven't bought into the asset class. Because what I keep hearing from family offices that haven't done much venture and don't have an inherent belief in venture is, well, when I look at the overall results from the asset class, I don't see why I should pay the liquidity premium.

22:39So I think that's a huge problem. And I really think you want to raise that money from people that understand the asset class or you as a manager are evaluated rather than the asset class. And the final thing that I want to ask you about this topic of managing through losing a partner, so to say, or changing the core team. What were thoughtful questions by LPs? Where did you see that they were smart in diligencing what the fund looks like now after Rina? I think it was really handy for us that fund one was fully deployed and we were in transition towards fund two, which gave us almost 24 months of no investments.

23:21Because even after we closed fund two, we didn't do a single investment for the first nine months while we're still building the team. So I think it seemed more robust and stable for a lot of people than it actually could have been if we were in a more tight time scale or if timing was different, it would have been more hectic. but in this case it wasn't. So all of our like fund membership agreements, et cetera, we selected the fact that Rina was doing something else. And Arina and me were the two GPs of the fund, the two people in the investment company, et cetera. Do you know how like going from fund one to fund two is the toughest because your fund one LPs, not a lot of them are going to continue to your fund two.

23:57So you need to find new capital. That new capital came on board knowing the fact that this transition was ongoing. When you look at our fund one LPs, I would say 70 % of them did to backlast in fund two, but they didn't come in first closing. They came towards the final closing. So I guess they wanted to kind of wait it out to see how this is all going to happen. But then eventually they did. Okay, now let's forget this whole conversation. And is that focused on you, Rina? The topic we're actually here to cover, which is... I have a question to Rina, which is on the overlap of gaming and VC. While we were doing fund one, there were some gaming deals, not as much.

24:33I mean, Pete wasn't a unicorn back then, although it existed. And we always discuss that gaming is cyclical. It's like buying a lottery ticket. It's hit or miss, not ventureable, et cetera. But then it suddenly became very ventureable. You saw this liquidity, et cetera. Looking back, how do you feel about that? Do you think, because I know that you did all like, I would love to hear it from you. Was it wise not to do gaming between 2016 and 2020? And that is it wise to start doing gaming post-2020? I get this question a lot because I come from gaming and Turkey's known for gaming. And why did we not do a single gaming investment from Fund One?

25:06which invested, if I'm not mistaken, from 2016 to 2019, right? That was the last check that we ever wrote. So if you look at that period, there's not one gaming company that emerged during that time that is commercially anywhere close to being successful. The first gaming company that came out that I actually wanted to back and tried to back, and as you know, this was Dream Games, which is a huge, massive success. And again, that goes back to the story of, you know, investing not in trends, not in ideas, none of that, but investing in the people. And the people that built Dream, I worked with them at peak.

25:42I knew them really well. I would trust with whatever they wanted to do in terms of gaming. And like a lot of people, including myself, we were right. But during the period that we were investing, there was nothing. And then gaming is very cyclical. As you know, there are like seven years of the two, three years that where you're like massive, like funds come in, liquidity is high, M &A activity is high. So a lot of these companies grow because they have the resources. And then something happens. It's like, this is like magic. I don't even know. It's every like seven years or so. It's different.