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Corporate LawCrowdfunding in Turkey

Crowdfunding in Turkey is rapidly gaining traction as a dynamic startup hub, carving its niche in the global entrepreneurial ecosystem. The introduction of crowdfunding in Turkey has revolutionized the way individuals and businesses raise capital for their innovative projects, offering an alternative to traditional financial institutions.

The evolution of crowdfunding has been particularly noteworthy in Turkey, where startups have been quick to leverage this new-generation funding model. In this article, we’ll explore the landscape of crowdfunding in Turkey, its regulatory framework, and how it’s shaping the future of startups in the country.

Crowdfunding in Turkey

Crowdfunding is an innovative funding model that allows various individuals to invest in a project in exchange for shares or interest. It has created an alternative funding market that opens up opportunities for entrepreneurs who may struggle to secure funds through conventional means such as banks or investment firms.

Crowdfunding platforms act as intermediaries, facilitating the exchange between project owners seeking funds and potential investors. These platforms have transformed into a global showcase for innovative projects, making them a crucial tool for implementing innovative projects in today’s world.

Crowdfunding Legislation in Turkey: A Detailed Overview

The first legislation on crowdfunding in Turkey was introduced on November 28, 2017, with an additional article in the Capital Markets Law. This article stipulates that crowdfunding platforms must obtain approval from the Capital Markets Board of Turkey (CMB) to operate.

Subsequently, the CMB published the equity-based crowdfunding Communique on October 3, 2019, and the lending-based Crowdfunding Communique on October 27, 2021. These communiques regulate the activities of crowdfunding platforms, investors, entrepreneurs, and venture companies in Turkey.

Platforms: The Key to Crowdfunding Success

According to the Crowdfunding Communique, a platform is defined as an institution that acts as an intermediary in lending-based and/or equity-based crowdfunding services in the electronic environment. To operate as a crowdfunding platform in Turkey, the platform needs to obtain the CMB’s approval.

Entrepreneurs and Venture Companies: The Heart of Crowdfunding

Venture companies or entrepreneurs that will receive funds via lending-based and/or equity-based crowdfunding must engage only in technology and/or production activities. However, some companies, such as public companies, cannot raise funds through lending-based crowdfunding.

Investors: The Regulations of Crowdfunding

The Crowdfunding Communique also regulates specific investment thresholds for investors who are not qualified. Qualified investors are determined by the CMB, and they include venture capital trusts and investment trusts. The thresholds for investment by non-qualified investors are set at a maximum of TRY 50,000 in a year for equity-based crowdfunding and TRY 20,000 for each project for debt-based crowdfunding.

Government Incentives for Crowdfunding in Turkey

Crowdfunding is closely related to financing. But every innovative projects needs financing. Crowdfunding is a tool that helps startups and small projects to improve. The key to optimizing financing in this domain lies in effective government incentives. By introducing supportive policies and incentives, the Turkish government can stimulate greater participation from both investors and project creators.

Offering tax breaks, reduced regulatory hurdles, and other financial perks can incentivize individuals and businesses to engage in crowdfunding activities, thereby fostering a more robust and dynamic crowdfunding ecosystem. Such government initiatives not only encourage innovation but also contribute to economic growth by empowering a diverse range of projects that may otherwise struggle to secure traditional funding.

In Turkey, there is a significant positive relationship between being innovative and the intention to use crowdfunding. The innovative projects and startups receive government incentives from Turkey and innovative projects with government incentives are more likely to raise more support on crowdfunding platforms.

Turkish Lawyers for Crowdfunding

Turkish Lawyers for Crowdfunding

Navigating the intricacies of crowdfunding legislation in Turkey can be complex. For this reason, it’s crucial to seek professional legal help. At İstanbul Law Office, our team of expert Turkish lawyers, both English-speaking and Turkish-speaking, are well-versed in crowdfunding regulations and can provide comprehensive legal services in this field.

Our attorneys can assist with understanding and interpreting the relevant provisions of Turkish law, ensuring compliance with regulations, and avoiding potential legal pitfalls. As a law firm with a strong track record in handling complex legal matters, we understand the importance of crowdfunding as an innovative method of raising funds.

İstanbul Law Office: Your Trusted Partner in Crowdfunding

Understanding the legal landscape of crowdfunding can be complex and requires professional guidance. At İstanbul Law Office, our team of experienced Turkish lawyers can provide expert legal advice and services to ensure your crowdfunding venture is successful and compliant with Turkish law.

As a law firm with a strong track record in handling complex legal matters, we understand the importance of crowdfunding as an innovative method of raising funds. Our team is dedicated to providing the highest level of legal service to our clients, ensuring their crowdfunding ventures are successful and compliant with Turkish law.

We offer comprehensive legal services for crowdfunding, including guidance on setting up a crowdfunding campaign, ensuring compliance with regulations, and avoiding potential legal pitfalls. Our English and Turkish-speaking team of attorneys are well-versed in a variety of legal areas including contract law, NDA in Turkish law, employment contracts, sale contracts, lease agreements, franchise agreements, distribution agreements, and many others.

Frequently Asked Questions

What is crowdfunding?

Crowdfunding is a way of raising funds for a project or venture by soliciting small amounts of money from a large number of people, typically via the internet.

How does crowdfunding work in Turkey?

In Turkey, crowdfunding operates through platforms that act as intermediaries for crowdfunding services. These platforms must obtain approval from the Capital Markets Board of Turkey (CMB) to operate.

What are the investment limits for non-qualified investors in Turkey?

Non-qualified investors are limited to investing up to TRY 50,000 in a year for equity-based crowdfunding and up to TRY 20,000 for each project for debt-based crowdfunding.

What legal services does İstanbul Law Office provide for crowdfunding?

İstanbul Law Office offers comprehensive legal services for crowdfunding, including guidance on setting up a crowdfunding campaign, ensuring compliance with regulations, and avoiding potential legal pitfalls.

Crowdfunding has emerged as a significant avenue for funding innovative projects in Turkey. However, understanding the legal landscape of crowdfunding can be complex and requires professional guidance. At İstanbul Law Office, our team of experienced Turkish lawyers can provide expert legal advice and services to ensure your crowdfunding venture is successful and compliant with Turkish law. Feel free to contact us for more information.