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Angel Investors’ Eye on Turkish Startups

Posted by Lilas Mahmandar on 4 March 2019
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We can identify the simple difference between the angel investor and the investor in the risk-taking projects: the first investor invests his own money, while the other investor invests a certain number of partners often.

Over the past years, angel investors in Europe and the United States have expanded extensively in Turkey. The name of the angels is given to investors who support new entrepreneurs by injecting money and advice. But some people called them fisherman hunters who are looking for lucrative investment opportunities for themselves.

Turkey is supporting angel investors through tax exemptions. To capitalize on this support, investments must be innovative, companies at risk should have prospects for rapid progress, and researches should be development oriented.

The Deputy Prime Minister for Economic Affairs said that angel investors are receiving tax breaks ranging from 75-100% of their tax liabilities.

In order to benefit from the tax exemptions, angel investors must first obtain a special license to pump money from the Ministry of Finance. Upon obtaining this license they are entitled to an exemption up to 75% of the income tax. Those who invest in projects supported by the Ministry of Science and Industry and Technology or the Turkish Technological Research Council, or invest in SME management, and support management for five years, they are entitled to a tax exemption of up to 100%.

The angel investors’ exemption from strikes in Turkey is higher than Britain, Italy, Spain, Germany, France, Singapore and many US states. Where Britain offers a tax exemption of up to 30%, having the second highest incentive in Europe after Turkey.

In two years, the number of licenses for 374 angel investors has been approved, where the Ministry of Finance planning to issue licenses to 625 angel investors over a five-year period because investors want to invest in high-risk, high-yield areas.

The interest shown in the major initiatives, rather than the small ones, has led to a high figure, with the investment rate of angel investors in Turkey estimated at 285,000 lira (97,000 US dollars).

As an example of angel investors, Kerem Alper and Engin Ayaz, who were educated at Stanford University and returned to Turkey, developed the Istanbul’s Atölye project. Then they marketed the ideas of new projects to large companies while supporting new ideas. Shortly after their project was established, Istanbul’s Atölye managed to attract 10 foreign and local investors to fund its shares.

At the origin of angel investors in the United States, around 300,000 people invested 23 billion $, and in Europe, 70,000 people invested 5 billion $. In Turkey, the current level of investment is 2.8 million $ where it recently entered this field.

There are a lot of investors who are investing without getting state support. Where last year they invested only 40 million lira. Although this amount seems little, it can contribute significantly to the investment and economic system, because they rely on technology and have enormous potential for growth.

These low figures indicate that Turkey has a long way to go to promote angel investments, even if there is a great potential for expansion in this area. But for angel investors, the most sensitive point is stability and a climate of confidence, as Turkish political turmoil can discourage angel investors or big investors.

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