'Angel' support for technology based startups
GBA Managing Director Ayşe İnal, gave an interview to Techstar magazine on the interest of angel investors on technology investments and the approach of GBA to technology start-ups.
Providing capital for projects to help ‘Start-up’ companies grow and to average size companies with projects waiting to be realized, the investors, widely accepted as ‘angel investors’ around the world and localized as ‘melek yatırımcı’ in Turkish, help start-up companies and financially restricted companies develop their projects by supporting them with financing. Angel investing, which has a business volume worth of 50 billion dollars in the USA has just become popular in Turkey. Angel investors pay special attention to projects in the field of Internet, technology and mobile applications. Angel networks make plans to draw investors selected based on the specified criteria in order to increase the investment potential. One of these networks is called Galata Business Angels (GBA). GBA General Manager Ayşe İnal, gave an interview to Techstar magazine on the interest of angel investors on technology investments and the approach of GBA to technology start-ups:
How is the inclination and attention of angel investors for technology companies?
As technology-based companies can easily be scaled, angel investors show great interest especially to technology companies. It would be best if we define scalability in this context. Scalability is the condition, when companies grow their income with minimum cost increase. Due to the fact that a product based on proven technology or a business model can easily be extended to new geographies and markets, the interest of angel investors on technology companies increases.
How is Turkey in terms of transforming technology-oriented projects into investments, the potential of uniting projects with investors and the rate of rendering investments into revenue?
In the last 5 years, entrepreneurs have been able to access necessary amount of money much more easily thanks to more than 10 angel investor networks. It is possible to get an investment today if you have an idea and energy to execute this idea and talk about it simply and clearly to the ones listening to them. When numbers are considered, as GBA, we have received 2100 applications in 4 years, interviewed 1080 of them face-to-face, 192 entrepreneurs have met investors, 65 entrepreneurs have been examined and 17 start-ups have got investment. It is too soon to give a number for conversion rate of an investment into revenue. We still have a couple of years ahead for that.
Is government promotion adequate for technology projects?
We have arrived at a point of time, where Turkey invests in technology and patenting. Invesment in technology has become better than ever in public funds, Ministry of Industry and Technology and TUBITAK. TUBITAK and KOSGEB support entrepreneurs by providing necessary funds to develop their products. The next step for entrepreneurs is ‘smart money’, which is to apply for angel investment network in order to take advantage of investor networks and mentorship.
“The road is long and challenging, and being alone is more tiresome than expected after a while. That is why, it is quite important to make business with partners whom they trust and believe in.”
What kind of conditions are to be fulfilled in order for angel investors to support technology projects?
First of all, you need a good team. The team must have a vision and the ability to act fast. Also, it should have a large market to grow fast. Other than that, the third most important thing is how they solve problems. The important thing is not the solution but the problem because a good team starts to solve the same problem from different aspects in time. Other than these, a well-studied business model, a business plan and budget is required. As Galata Business Angels (GBA); we evaluate start-ups which have organized a team, have a product and ensured product-market harmony. In addition to this, entrepreneurs need to be ready to face the investors with a simple and comprehensible business plan. They should have a simple statement in their own hands representing themselves, their technologies, business and how the business will result in financially. At this point, we lead the path to how they should represent themselves with a presentation when they appear before investors by educating entrepreneurs when necessary.
As GBA, what kind of investments do you promote? Which sectors are invested most?
As GBA, we support technology companies. When broken down the sub-sectors, our main focus is online projects like SaaS, Big Data companies, Mobil, FinTech and market places. We have an interest in internet, mobile, software and telecommunication sectors.
Which projects have you invested in so far? What are the new projects on the agenda?
We have supported 17 projects, 5 of them international and 12 domestic projects. The reason why we invest abroad is to create a bridge between Turkey and other countries and help successful start-ups enter into Turkish market. We also try to open the gate for investment made in Turkey to step abroad. Our investments in Turkey are: Insider, Ustaeli, Prisync, HIZLIÇEVİRİ, Flowerbox, Anlatsın, Inploid, Stilsos, Mapps, JoyFoodz and Yumag Studios. The start-ups we support abroad are; Woto,Faveeo, Boatbookings, Dopios. Our final investment is in London but we are not at liberty to expose it now. Except for 4, all portfolio companies are active. One of these start-ups, Butigo has been sold to Ziylan shoe group. Prisync and Insider has been opened up to international markets and continue to grow fast. After being successful in Turkey, HIZLIÇEVİRİ aims to enter into American market soon. Other than these, 3 of the start-ups that we have invested abroad, take firm steps towards entering intoTurkish market.
What do you recommend to entrepreneurs and project owners?
I advise entrepreneurs to make necessary research, a good plan and enter into a field that they are well-informed. Also, I recommend them to have a strong founding team. The road is long and challenging, and being alone is more tiresome than expected after a while. That is why, it is quite important to make business with partners whom they trust and believe in. It is important for them to keep informed of the market conditions, know their competitors, have correct information in financial and legal regards, follow global market, use current capital properly and learn from the experience of experts.