To diversify the financial resources for startups and SMEs and reduce reliance on the conventional banking system, Turkey launched two new funds to facilitate the development
The Industry and Technology Ministry and the Development and Investment Bank of Turkey announced Tuesday the launch of the Technology and Innovation Fund and Regional Development Fund worth TL 750 million.
The funds will be managed by the Development and Investment Bank of Turkey and the ministry, operating under the umbrella of the Turkish Development Fund, according to the statement made at the event, which was attended by Industry and Technology Minister Mustafa Varank and the bank's General Manager İbrahim Öztop.
Varank, whose ministry was the primary investors of the funds, said that TL 750 million will be used to mobilize venture capital investments countrywide as well as encourage private sector participation in high-tech and innovation industries.
"These funds will make investments in innovative ideas in the technology and industry sectors. These investments will help us to make the best of our nation's potential and accelerate our industrial and technological transformation." The minister said the main target was not to simply give financial funds but provide strategic support to companies for them to make rational investment decisions.
"We want to help competitive, long-lasting, institutionalized companies to dominate our economy," Varank added.
TL 350 million will be allocated to the technology and innovation fund, which will give capital support to technology ventures, new-generation startups, especially those operating at the country's technoparks.
"Maybe unicorns coming out of our country, which we like to call 'turcons,' will discover their potential through these funds."
As part of its 11th Development Plan, Turkey envisages increasing the share of medium-high and high-tech products in exports in the industrial sector from 39% to 50% by 2023. Back in September, the technology ministry launched the Technology-oriented Industry Action Program to boost the manufacturing of high-tech products using domestic means to reduce imports worth up to $30 billion.
Varank said the remaining TL 400 million will be given to small and medium-sized enterprises (SMEs) across Turkey that have the potential of becoming a regional or global actor within the scope of the Regional Development Fund. He added that the fund will prioritize certain sectors that have greater developmental importance and also has better employment opportunities. He underlined that the development agencies will play an active and significant role during the process.
For his part, İbrahim Öztop, the general manager of the Development and Investment Bank of Turkey, said the Development Fund of Turkey will continue to support sectors that carry a strategic role in Turkey's sustainable economic growth. Öztop said that they are expecting the funds will kick start a capital accumulation three times the funds' worth in the sustainable development of Turkey within the first five years.
"We will not only provide financial support. Our experienced teams will support the institutionalization process of companies through providing administrative, financial and strategic consultancy."
Restructured in August 2018, the Development and Investment Bank of Turkey played an active role in introducing brand-new securities in the Turkish financial markets. The bank issued asset-based securities worth TL 4.15 billion in December 2018 and March 2019. Dedicated to contributing to Turkey's sustainable development and projects that increase imports, the bank has so far financed several renewable energy and tourism projects. Nearly 50% of the loan portfolio consists of financing provided to solar, wind and geothermal power projects with a high ratio of repayment, the bank's officials said.