Strategies of the Development of Entrepreneurship and SME

State Support for R&D (loan by TTGV): This measure aims to stimulate investment in R&Dby the industry by providing soft loan up to 50% of the project budget with a maximum durationof 24 months.State Support for R&D (grant by TUBITAK-TEYDEB): Grants are provided for R&D projectsof the industry up to 60% of the project budget with a maximum duration of 36 months. Cooperationbetween the research and business communities is promoted under this measure.Consultancy Support for SMEs: The measure foresees fostering innovative organizationaland management practices in SMEs by supporting procurement of consultancy. Percentage of theproject budget to be financed changes from 60% to 80%, depending on the level of developmentof the region where the SME is located. 100% support is provided for start-ups.Technology Research and Development Support: The measure aims to support researchand development activities of SMEs. A mixture of grants and soft loan is provided for this purpose.6.2.3. Financing Start-upsAlthough the first organized attempt to raise a PE fund targeting Turkey was undertakenin 1991, the first regulation, related with VC, was made by Capital Markets Board of Turkey in1993 and three amendments were made in 1998, 2003 and 2004 to develop the sector. Untilnow, the sector has shown several fluctuations because of political and macro economicalconditions as mentioned above. It is estimated that between 1993 and 1999, approximatelyUS$ 36 million was invested into 10 companies. Especially in this term, there was high volatilityin the market and political conditions did not support the for long term investments. Specificallyin 1999-2000, it was the first time in Turkish market history, a relatively larger number of PEinvestors started entering and investing in Turkey due to international macro economicconditions and IMF-Turkey relations. It is estimated that approximately US$ 114 million wasinvested in 13 companies during this term. However, these favorable conditions changedsuddenly and activities had started to decrease pertaining to the sudden change of goodconditions due to several reasons such as earth quakes, economic crises and the 9/11, etc.,until 2003. Since 2003, “private equity investments started to increase in 2003 and 2004 as EUaccession negotiations became a possibility and as the economy responded positively to strictimplementation of the IMF measures by the governments in power after the February 2001crisis…approximately US$ 167 million was invested in the above 13 companies during thisperiod” (article). During 2006 and May 2007, 15 investments were made and approximatelyUS$ 2.5 billion was invested. The summary of investments can be seen in Table 32.Table 32.Number and Amount of InvestmentsBefore19991999-20012001-20052006-2007TotalEstimatednumber of 10 13 13 16 51investmentsEstimatedtotal investedamounts USD36 114 167 2.527 2.844(million)Source: Deloitte, 2007Although several legal regulations and measures have been implemented by Turkey, -forinstance, new entrepreneur support mechanism that aims to promote and disseminate the cultureof entrepreneurship by financial supports and loans, which are EUR 6,250 and EUR 25,000respectively-, it is commonly accepted that instruments, especially financial, are not enough tofacilitate establishment of start-ups and the huge increase in investment, realized in the last twoyears, still depends on considerable efforts of a few Turkish intermediary institutions and key133