Angel Investors in the Turkish Legal System

Angel investors are investors who invest in a company in the “start-up stage” by subscribing to capital increase and becoming a shareholder of the company. With this aspect, it is a special investment concept used by investors who ensure the development of companies that are in the “start-up stage” or growth stage and have difficulty accessing financing due to their high-risk nature.

The concept of angel investor was regulated in Turkey for the first time in the Regulation on Individual Contributory Capital (“the Regulation”) published in the Official Gazette dated 15/02/2013.

In the Regulation, the concept of angel investor has been defined as “individual contributory investor” (“the ICI”) and as “real persons who transfer their assets and/or experiences and funds to companies in “start up stage” or growth stage. The company which the ICI invests in has been termed as a venture capital company. Additionally, venture capital companies must be established as joint stock companies to be subject to the Regulation.

Within the scope of the Regulation, a number of government incentives have been brought into force for ICI investments with the intention to accelerate the growth of venture capital companies and encourage the ICIs to invest in the venture capital companies.

According to the Regulation, provided that the shares of the venture capital companywere retained for at least two years from when investment amount as cash capital was deposited into the bank account of the venture capital company, the ICIs can deduct 75% of the share amount they obtained from their investment, from their income and revenues in their annual income tax return. This deduction rate is 100% for the ICIs who invest in venture capital companies which, in the last 5 years, have been supported by the Turkish Ministry of Industry and Technology, TUBITAK (Scientific and Technological Research Council of Turkiye), and SME (Small and Medium Enterprises) Development Organization for their projects in the fields indicated by these establishments. Moreover, it is regulated that the deduction amount cannot exceed the amount of TRY 1,000,000 per year.

The ICIs must have a license to benefit from the tax reduction support. In accordance with the Regulation, the ICIs must meet one of the following conditions:

i) investor with high income or wealth, or

ii) experienced investor.

Pursuant to the Regulation, investor with high income or wealth means:

  • the investors whose annual gross revenue, expressed as the sum amount of the items of income stated in annual income-tax return or the gross amount of annual wage for employees, is at least TRY 200,000, for the last two years before the obtaining date of the license, or
  • the investors whose sum amount of personal assets consisting of all kinds of property on the application date is at least TRY 1,000,000.

Pursuant to the Regulation, experienced investor means:

  • the investor who has at least two years of experience in i) banks or financial institutions as fund or portfolio manager, or ii) SMA finance, project finance or corporate finance departments of banks or financial institutions or venture capital companies including venture capital investment trusts as a director or equal or above status, or
  • the investor who has at least two years of experience before the obtaining date of the license in a company, which has an annual return of at least TRY 25,000,000 , as assistant general manager or equal or above status, or
  • the investor who has a membership ,for at least one year before obtaining the license, in an ICI organization and who is a shareholder as an ICI in one or more companies of which net sales in the last financial year were less than TRY 5,000,000 and which are not publicly traded at the time of application, or
  • the investor who has at least two years of experience in the incubation center established for the purpose of supporting “start-up stage” or growth stage companies or technology development centers and who invested in one or more “start-up stage” or growth stage companies in these centers with the amount of at least TRY 20,000.

The application for the ICI license must be made before the Ministry of Treasury and Finance through an accredited ICI organization. ICI organizations are legal persons who act as intermediaries to bring together entrepreneurs and ICIs. An ICI license is valid for 5 years and can be extended for additional 5-year periods. The regulation prohibits the transfer of an ICI license to someone else.


Angel investors (or “individual contributory investor” in the Turkish Legal System) satisfy the financial needs of “start-up stage” or growth stage venture capital companies. Due to the nature of the angel investment system, angel investors are not only expected to meet the financial needs of the venture capital companies they invest in but also expected to provide them with mentorship. This mentorship can take place when developing ideas or at the stages of marketing or promotion.

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