Crowdfunding in Turkey is revolutionizing the way individuals and businesses raise capital for their innovative projects. This new-generation funding model has become increasingly popular in Turkey, offering an alternative to traditional financial institutions that often perceive innovative projects as highly risky. As a result, crowdfunding platforms are becoming a vital part of the innovation ecosystem, providing a win-win situation for both entrepreneurs and investors.
However, there are challenges and potential risks associated with crowdfunding, such as fraud and misinformation. To ensure the reliability of this funding model and to prevent potential risks, competent authorities like the Capital Markets Board of Turkey (CMB) have implemented regulations to govern crowdfunding activities in the country.
This comprehensive guide, compiled by the expert Turkish lawyers at Han & Partners Law Firm, will explore crowdfunding in Turkey, its legislative framework, and its potential benefits and challenges.
Table of Contents
ToggleCrowdfunding in Turkey
Crowdfunding allows various individuals to invest in a project in exchange for shares or interest. It creates 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
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 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
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.
To date, five different platforms have been established by the CMB, and several successful projects have been funded through these platforms. While there is no specific regulation on donation-based crowdfunding, there are also donation-based crowdfunding platforms operating in Turkey.
Entrepreneurs and Venture Companies
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 Crowdfunding Communique also regulates specific investment thresholds for investors that 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.
Crowdfunding and Innovation in Turkey
Crowdfunding is closely related to innovation, as it provides an accessible platform for innovative projects to secure funding. According to a quantitative study on crowdfunding awareness and its relationship with innovativeness in Turkey, there is a significant positive relationship between being innovative and intention to use crowdfunding. The study found that innovative individuals are more likely to support projects offered on crowdfunding platforms.
The Role of Turkish Lawyers in Crowdfunding
Navigating the intricacies of crowdfunding legislation in Turkey can be complex. For this reason, it’s crucial to seek professional legal help. At Han & Partners Law Firm, 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, including Law no 6735, Law no 4875, Law no 6458, Law no 5901, and Law no 2547. We can guide you through the process of setting up a crowdfunding campaign, 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. 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.
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 Han & Partners Law Firm provide for crowdfunding?
Han & Partners Law Firm offers comprehensive legal services for crowdfunding, including guidance on setting up a crowdfunding campaign, ensuring compliance with regulations, and avoiding potential legal pitfalls.
How can I contact Han & Partners Law Firm?
You can reach out to us via our contact page for any queries or assistance related to crowdfunding.
Conclusion
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 Han & Partners Law Firm, 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.
