Turkey is transforming into a prominent center in the world where entrepreneurs can easily find angel investors, accelerators and entrepreneurship capital. Currently, angel investment networks are one of the most vital agents in the entrepreneurship ecosystem. The number of entrepreneurships that took seed investments is increasing considerably.
According to the IPC report, in the second quarter of 2017, Istanbul comes in first in terms of the number of angel investor license applications. The report, which evaluates the fourth year of the application, has important data about individuals and foundations that took angel investments. Also, interest in angel investment networks was considerably high in the first years of the application. An IPC regulation put into practice Feb. 12, 2013, resulted in new record-setting numbers in the first year – 155 applications.
On the other hand, in the second year, the regulation had 120 applications with 69 and 68 in the following years. In the second quarter of this year, 12 angel investors got licenses. When we evaluate applications by province, Istanbul comes first with 334 applications, followed by Ankara with 34 applications. However, these numbers are insufficient when evaluated on an international scale and indicate that provinces around the country should be promoted to increase their application numbers.
Investments in micro-entrepreneurships
The report indicates that 93 percent of invested entrepreneurships consist of micro enterprises (businesses that operate with less than 10 employees). On the other hand, 7 percent of investments are in small-scale enterprises (with less than 50 employees). When the number of business partners in investor companies is examined, nearly half of the companies (48 percent) have less than five partners. The number of partners in 21 percent of the companies is between five and 10, while the remaining 31 percent of companies have more than 10 partners.
A considerable portion of investors with angel investor licenses consist of master’s degree holders (186) and doctorate degree holders (34). According to the report, accredited angel investor networks have 402 angel investors operating without a bachelor’s degree. The range of entrepreneurs evaluated by 13 angel investor networks changes monthly.
Business and finance for angel investors
Entrepreneurships attracting the most attention from angel investors in Turkey are those that specialize in e-commerce and finance technology (Fintech). The first two quarterly reports issued by Startups.watch, which specializes in investment numbers, revealed that Fintech investments are popular. Improved technological infrastructure in Turkish banks is also effective in this situation. Even though financial services are primarily bound by regulations and enterprise license requirements, application programming interfaces (API), which present access to banking applications, are now the most popular subjects in Turkey and Europe. While the Payment Systems Law in Europe (PSD2) and financial foundations compulsorily open their APIs to use and grant access permission to their financial transaction functions by third-party persons, some banks state that they present their API to access in accordance with the regulation. However, newly presented APIs which are functioning in the most basic way, prevents entrepreneurs to come up with new developments. Many banks and financial foundations are expected to release their own APIs in the near future. The most prominent deciding point for software developers and entrepreneurs in the competition coming along with this situation will be the new features of these APIs. However, basic functions like payment and money transfer are still close to any access from outside.
Taxation motivation for angels
It is possible to say – by a long shot – that the most powerful motivation behind investors with angel investments which have licenses is tax advantages. Moreover, 196 angel investors say that tax advantages are effective or really effective in their getting the license. Another 37, on the other hand, say that tax advantages are effective to some extent, while ineffective in helping obtain license. According to the report, the rate of those who stated that the most important reason behind their getting an IPC license is 43 percent.
Most investors above 40 years of age
Among licensed investors, 45 percent specialized in social sciences serving in the areas of economy, law and various other branches, while 44 percent specialized in mathematics and engineering. Those with a background in other areas make up 11 percent of the total number. Six licensed investors are younger than 30 years of age, and only two investors are above the age of 65. There are 24 investors aged 30-35, with 70 investors aged 35-40. The majority of investors are aged 40-45, with 106 investors in this age group.