Turkish gov't to provide TL 3B to entrepreneurs with new financing sources in 2017
by Daily Sabah with AA
ISTANBULJan 09, 2017 - 12:00 am GMT+3
by Daily Sabah with AA
Jan 09, 2017 12:00 am
Deputy Prime Minister Mehmet Şimşek said they will provide revolutionary support in order to solve the financing problem of Turkish entrepreneurs as well as encourage young people toward entrepreneurship and announced that they will create new financing sources of TL 2.5-3 billion ($686-$823 million) in 2017.
Şimşek said in this context, they made it obligatory for Individual Pension System (BES) standard funds to invest a minimum of 1 percent in venture capital funds.
Speaking to Anadolu Agency (AA) with regards to the support given to the entrepreneurship, Şimşek said 2016 became a year in which many innovations were realized, and foreign investors have preferred Turkey regarding the venture capital investments.
Noting that they had a brilliant year in terms of entrepreneurship and financing, Şimşek recalled that the Treasury collaborated with the fund-of-funds in order to support the venture capital funds and transferred funds for the first time in 2016.
Pointing out that in this framework, the Treasury committed 60 million euros to the fund-of-funds established by the European Investment Fund, Şimşek said on the other hand that in accordance with the system's setup and bilateral agreements, the fund requires an investment volume of at least 400 million euros, which is much lower than their expectations, stressing that with the passing of this fund-of-funds, the prejudice of "foreign investors do not come to Turkey" has been overturned and the investment commitment of at least 300 million euros has been taken from three foreign investment funds.
Şimşek said projects will continue to accelerate in 2017 in terms of the development of the entrepreneurial ecosystem in Turkey, stressing that they will not be satisfied with the existing instruments and that they will both increase the volume of existing applications and put new ones on their agenda.
Resources will be directly transferred to funds
Stating that the Treasury will allow direct transfer of resources to funds in addition to the fund-of-funds in the coming period, Şimşek said: "With this change, we aim to increase venture capital investments in the entrepreneurial eco-system, to ensure that these cultures are formed in our investors, and to make sure that funds are directly committed to venture capital funds in terms of the development of our investors' experiences and capacities."
Şimşek noted that they will conduct studies for the venture capital funds, an important tool of interest-free financing, to make more widespread investments in Turkey and not just to be limited to specific environments.
Government will encourage participation banks
Şimşek said they will encourage participation banks to provide financing for entrepreneurs, and the works are in progress to lead participation banks to financing instruments based on profit-loss partnerships and to provide quality financing to entrepreneurs with such investments.
Şimşek suggested that they foresee the establishment of a fund in which the undersecretariat will collaborate with the participation banks, therefore providing alternative financing to entrepreneurs by creating a fund over TL 250 million.
Stressing that they will enable the Development Bank of Turkey to provide financing based on equity by restructuring it, Şimşek recalled that almost all of the developed countries set up development banks especially after World War I, and these development banks have been reinterpreted with new policies that guide the economies of the developing countries by completing their missions during their establishment period. Highlighting that the restructuring of the Development Bank of Turkey has become a necessity in this context, Şimşek said to this end, the bank is also planned to set up a fund in addition to its lending function in order to provide funding based on equity. "With this fund, venture capital will be provided to support the policies which will prevent our country from entering the middle-income trap, in addition to regional investments and core financing," Şimşek said. "I think we will make a very effective start with the planned fund of around TL 1 billion."
‘BES standard funds will also invest in venture capital funds'
Şimşek added that they made it obligatory for Individual Pension System (BES) standard funds to invest a minimum of 1 percent in venture capital funds, suggesting that with the revolutionary change also highly welcomed by the sector, they expect the activities of the entrepreneurial eco-system to increase with a high momentum.
"We will create new financing sources of TL 2.5-3 billion in 2017 with all these projects," Deputy Prime Minister Şimşek said, underlining that the said figure will be an important instrument that will significantly solve the financing problem of the Turkish entrepreneurs and also encourage young people for entrepreneurship.