Turkey to work with European Investment Fund, back angel investors

Speaking to Anadolu Agency (AA), Deputy Prime Minister Mehmet Şimşek, who is in charge of the economy, said Monday that in order to back "angel investors," the Prime Ministry is preparing to put the common investment fund into action in cooperation with the European Investment Fund.

Expressing that Turkey is the biggest supporter of angel investors - also known as personal participation capital among developed countries - Şimşek said, "Despite the fact that it is a new system, Turkey has become a part of the super league with the support it has given."

Şimşek assessed the contribution of the angel investors on a global and domestic scale, stressing that those who invest in businesses during the start-up phase open the door for easier growth and development. The number of licensed angel investors increased by a mere 347 in January. The numbers come as the Treasury Undersecretariat aims to license 625 investors in the first five years. Moreover, the interest of investors in the angel businesses resulted in an investment volume worth TL 7 million ($2.37 million) in January, thanks to 14 angel investments that were made, while 20 additional angel investments have been waiting for a response, caught in the limbo of the application process. Without the support of the state, it is estimated that either licensed or non-licensed angel investors contributed an investment worth TL 40 million in the previous year.

In order to back angel investors in Turkey, Şimşek said they drafted a piece of legislation called the Personal Participation Capital. The bill was an important step toward eliminating the problem regarding entrepreneurs accessing funds during the start-up phase. He also stressed that a new regulation was put into effect in 2013 regarding the business angels' investments licensed by the Treasury. Şimşek said: "In this new period, we enabled the angel investors, in cooperation with entrepreneurs, to put capital into businesses and benefit from the income tax exemption. Moreover, within the scope of the programs determined by the Science, Industry and Technology Ministry and either the Scientific and Technological Research Council of Turkey (TÜBİTAK) or the Small and Medium-Sized Industry Development Organization (KOSGEB), innovative, research and development-focused, high-value but very risky firms are given the opportunity to be exempt from paying income tax in order to spur development."

Despite the fact that the angel investor system was introduced in Turkey merely two years ago, Şimşek said Turkey has left the United Kingdom, Italy, Spain, Germany, France, Singapore, Israel and various states in the United States behind in terms of angel investor support and advancement in this field. Also, through this system, he emphasized that they have already begun to see an increase in domestic investments.