48883 - DEF III

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Summary of Investment Information

Project Number

48883

Company Name

Digital East Fund III SCSp

Date SPI Disclosed

Oct 23, 2023

Country

Turkiye

Region

Central Asia and Turkiye

Projected Board Date

Nov 23, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 14, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Dec 21, 2023
Signed : Mar 29, 2024
Invested : Apr 12, 2024

Sector

Venture Capital Fund

Project Description

The proposed project consists of an IFC equity commitment of up to $25 million with a co-investment envelope of $15 million in Digital East Fund III, SCSp (the Fund, or Fund III or DEF III), a venture capital (VC) fund that will invest in technology companies in Turkiye and Central Eastern Europe (CEE).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	40.0

Development Impact

The Fund is expected to increase access to early-stage venture capital and provide operational support for technology startups in Turkiye and CEE, potentially resulting in business growth. The project is also expected to strengthen market integration in the real and financial sector in Turkiye and CEE, through the expansion of investees with disruptive business models, via demonstration and replication and/or innovation channels. Moreover, the project will strengthen the digital entrepreneurship ecosystem in the target regions, through inducing further investment by venture capital funds and establishment of local digital ventures, via demonstration and replication channels.

E&S Category Rationale / Risks and Mitigation

The proposed Project entails an IFC equity investment in Digital East Fund III. The fund will be mainly focused on technology companies, with no manufacturing activities in Türkiye and CEE. Pipeline to be supported through this Project is expected to have limited adverse environmental and/or social risks or impacts that are few in number, generally site specific, largely reversible, and can be readily addressed through mitigation measures thus this project has been categorized as FI-2 in accordance with IFC Sustainability Policy. The Fund Manager will be required to conduct an E&S due diligence and monitor the target investments against the applicable IFC's E&S requirements including IFC Exclusion List, and host country E&S laws and regulations and the IFC Performance Standards. The fund will not support activities on IFC Exclusion List, coal related activities, and projects exposed to higher risk business activities including a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. The key E&S risks and impacts of this project derive from the Fund Manager's capacity to identify and manage potential environmental and social risks associated with its investment activities. These risks are mainly associated with labor and working conditions and health and safety issues.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Grand Games	Turkiye	N-BB- Content (B2C Companies)
Kubbly	United States	R-AC- Other Services (Including IT Enabled Services)
Lace Software	United States	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Proofs	Poland	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Vitvio	United Kingdom	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Zeta	Poland	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)

Earlybird is an existing Fund Manager which currently manages Digital East Fund I (Fund I) and Digital East Fund II (Fund II). The fund has developed an E&S risk management system (ESMS) in line with the IFC's E&S requirements. The ESMS includes an E&S policy and a step by step E&S procedures which are integrated into the fund's investment process. The ESMS includes policy, procedures, responsibilities and tools for undertaking E&S risk management in addition to training relevant staff. E&S due diligences in line with the IFC Performance Standards are performed internally. A third party consultant may be retained if and where necessary. The fund has appointed an E&S officer responsible for the implementation of the E&S procedures. There is an established external communication mechanism where grievances are reviewed by Fund team. The Fund will be required to report on its E&S performance to IFC on an annual basis, inform IFC in the event of any material change in nature or scope of its portfolio activities, and disclose investments on a yearly basis, including their names, sectors, and locations (if needed).

Contacts

For Inquiries About the Project, Contact

DEF Digital East Management, SARL
Ertunc Alioglu
CFO
alioglu@earlybird.com
https://earlybird.com/

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For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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