Regulation Closely Concerning Angel Investors Updated

As known, angel investors play a critical role in the startup world by investing in high-risk projects with great return potential. The United States, in particular, stands out with a well-developed investor network and strong regulations in this area. In Turkey, significant progress has been made over the past decade, with government incentives and tax exemptions contributing to the growth of this sector.

At this point, the Regulation on Individual Participation Capital (Regulation) was published in the Official Gazette on 31 December 2024. The Regulation introduces significant changes to the angel investor ecosystem. It came into effect on 1 January 2025, with the aim of creating a more transparent, reliable, and encouraging environment.

The Regulation primarily sets out the procedures and principles concerning individual participation capital, which is a financial instrument for individual participation investors, also known as angel investors (BKY), and for startups or growth-stage venture companies in need of financing.

Angel investors invest in venture companies through BKY networks accredited by the Ministry of Treasury and Finance (Ministry). These BKY networks are legal entities that include at least five licensed angel investors as members and facilitate connections between venture companies and angel investors.

Under the Regulation, the requirements for BKY license applications, which are granted by the Ministry and allow angel investors to benefit from government support, have been updated as follows:

▪️ Applicants must have an annual income of at least 2,000,000 Turkish Liras to apply for a license.

▪️ The total value of personal wealth, including all movable and immovable assets owned at the time of application, must be at least 10,000,000 Turkish Liras.

▪️ Applicants must have at least two years of experience in one of the domestic incubation centers, technology development centers, technology development zones, or BKY networks established to support startup or growth-stage companies, and they must have transferred a minimum of 200,000 Turkish Liras in capital to one or more companies in these structures.

Angel investors must meet at least one of the above conditions to be granted a license by the Ministry.

The Regulation also specifies the conditions for tax support for angel investors, as follows:

▪️ To benefit from tax support, the minimum investment amount must be 200,000 Turkish Liras.

▪️ Additionally, the subsidiary shares of the joint-stock company must be held for a minimum of two years.

As can be seen, the amendments introduced by the Regulation aim to make the investment process more efficient and to foster sustainable growth in the ecosystem.

You can reach the relevant Regulation here (only available in Turkish).