By Nilay Kar Onum
ISTANBUL
When turning an idea into a start-up company, the devil is the details – patience, determination, and organization - but the money comes from angel investors.
Tarik Sinan, a 36-year-old industrial engineer, created his Istanbul-based online repair company, Ustaeli.com in 2011.
Ustaeli.com offers a wide range of professional handyman services for repair and improvement in homes and businesses, ranging from plumbing and electrical work to decorating and cleaning.
"I had a bad experience with painters that came to my apartment in 2008. [The company] was supposed to finish painting it in 10 days but they took 20. They told us that two people would come but there was only one,” he tells the Anadolu Agency.
Sinan had considerable experience working for nine years as project manager, information systems manager and assistant to the CEO in one of Turkey’s best known retail companies, LCWaikiki.
Still, mounting a business, let alone a potentially successful one, would prove difficult without funds.
“If I had not found an angel investor, I would not have been able to continue with my project. Capital support and social surroundings are very important for entrepreneurship,” he says.
Sinan received $540,000 in total from angel investors for his project.
Now, he employs 29 workers and the value of his company has increased from $1 million to $ 8 million.
Angel investing is not an old term in Turkey, unlike in the U.S. but it is developing every day as young entrepreneurs generate new projects each day.
An angel investor designates an individual who provides capital and mentorship for a start-up business usually in exchange for ownership equity in the company. Not to be confused with venture capital firms who tend to shy away from start-ups and invest other people’s money.
According to the Turkish Prime Ministry’s Treasury department, there are currently 260 registered angel investors in Turkey, 76 percent of which are from Istanbul.
A long way from the 298,800 individuals registered as angel investors in the U.S in 2013, according to the Center for Venture Research at the University of New Hampshire.
But the practice of angel investing in Turkey is undoubtedly growing.
“There were only around 45 angel investors here in Turkey in 2011. The number of investors is now over 250," says Emine Ayse Inal, General Secretary of Galata Business Angels, Istanbul’s premier angel investor organization, established in 2011.
The Turkish law on angel investments, which came into effect in 2012, allows 75% deduction from the annual tax base for the capital invested. The maximum annual deductible amount is 1 million Turkish Liras (a little more than $430,000).
“It is a risky job,” says Nevzat Aydin, angel investor and also founder of Yemeksepeti.com, the leading online food ordering service in Turkey. “If you do not expect to get returns immediately, it is logical. As an angel investor, I’ve made six investments so far but only two of them have been successful.”
“I am doing this [angel investing] in order to both support the entrepreneurs as a social responsibility and to earn money by investing in a project, in which I believe,” he adds.
Burak Divanlioglu -- who is one of the founders of Turkey’s most frequently visited marketplace GittiGidiyor.com and an angel investor -- agrees.
“You invest in 10 projects but only one project, or two, becomes really successful. Being an angel investor is a social responsibility project actually for me in terms of providing startups with expert mentorship.”
In Turkey, around 56 percent of investments are made in e-commerce in Turkey, while 44 percent go into software and application development, says a report released this year by the Turkish Prime Ministry’s Treasury department.
“Angel investors mostly focus on the technology sector in Turkey, while the investors in the rest of the world are also interested in energy and health industries,” says Inal, general secretary of Galata Business Angels.
Talking about the advantages Turkey presents for entrepreneurs, she cites a more comfortable terrain for competition
“There is a tremendous competitive environment in the Silicon Valley, in San Francisco, where 100 people could think of an idea at the same time,” she says. “The chances of being successful are higher since the number of entrepreneurs is lower here."
“Turkey has a lot of potential [for start-ups] as an east-west destination. Half of the population is under the age of 29. This is really exciting for entrepreneurship,” Rahul Sood, general manager and partner at Microsoft Ventures, tells the Anadolu Agency.
Even with an angel investor on your shoulder, working hard and staying realistic remain essential to be successful.
“I think being a team is the most critical thing. Believing in your project is also very important. Belief can turn a project with a low success possibility into a successful one,” stresses 29 year-old Hande Cilingir, who along with five partners created INSIDER in 2011, a SaaS [software as a service] company that “converts browsers into buyers.”
They received $1 million from 13 angel investors to develop their business. The value of the company, which currently serves some of the leading e-commerce sites and online retailers such as Gittigidiyor, Avis, AtlasJet, Groupon, and Hurriyetemlak, now stands at $9 million.
Sood states that the biggest challenge currently faced by the Turkish entrepreneur is that the fear of failure. “People [in Turkey] don’t want to take risks,” he says, “Taking a risk is very important for [start-ups].”
“Entrepreneurship needs a lot of self-sacrifice,” adds Tarik Sinan of Ustaeli.com. “For example, I can not spare time for my family. During this period, I broke up with my girlfriend. I cannot even make an early reservation for a holiday because I need to take care of everything in order not to let things go bad.”
Indeed, despite playing an essential role in starting a business, an investor is no guardian angel.
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