With an era of start-up boom in the 21st century, raising money is the main concern while launching a product or services. While family or friends round investment stage, start-up accelerators and incubation centers may help, it is not always easy to get into these programs. Online crowdfunding, on the other hand, first appeared in 1997, in the Artishare project, appears to be an alternative financing method for mainly start-ups looking for financing from the crowd1 and it is an alternative financing options for entrepreneurs.

While these developments occurred around the globe, crowdfunding regulation has been recently enacted in Turkey. While donation-based crowdfunding has been carried out by Turkish platforms for years and there have been a regulation as to equity-based crowdfunding in Turkey with the Communiqué on Equity based Crowdfunding numbered (III – 35/A.1) dated 3 October 20192 new regulation as to the Communiqué on Crowdfunding numbered III-35/A.2 (the "Regulation") dated 27 October 20213 has been published in the Official Gazette and has abolished the former regulation.

This Regulation regulates the crowdfunding regulation in Turkey mainly the establishment process of the crowdfunding platforms, the regulatory process, and the procedures as to crowdfunding through either equity-based crowdfunding or debt-based crowdfunding. Most of the provisions of the Regulation are in line with the Regulation 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European Crowdfunding Service Providers for Business and Amending Regulation (EU) 2017/1129 and Directive (EU) 2019/19374 such as providing information sheet and due diligence requirement by the platforms.

What are the requirements of local and foreign crowdfunding platforms?

This Regulation addressing both the debt-based crowdfunding and equity-based crowdfunding requires crowdfunding platforms to be listed by the Capital Markets Board of Turkey (the "CMB") as crowdfunding platforms. The procedure as to the registration and application to the CMB is detailed in the Regulation and requires multiple documents to be drafted by crowdfunding platforms.

While Platforms are defined as digital electronic platforms intermediating the crowdfunding projects through a web site, they are required to have i. at least 1 million TRY paid capital, ii. an investment committee consisting of 3 members with experience in finance, entrepreneur, business management, legal consultancy, technology, industrial or trade experience ("Investment Committee"), iii. a board of directors, each members meeting the requirements of the Regulation, and iv. the company name consisting of Crowdfunding Platform under the Regulation.

Platforms located abroad but providing marketing operations to Turkey or providing a Turkish website are also subject to the provisions of the Regulation. The foreign platforms breaching the Regulation can be subject to content blocking in Turkey and other sanctions to be determined by the CMB.

Who can invest in start-ups and entrepreneurs and what is the monetary limit for non-qualified investors?

Both qualified and non-qualified investors may invest in the crowdfunding through entering into agreement with the platforms and registering with the crowdfunding platforms' website. They are also required to review the risk notification form confirming that they are aware of the risks contained in investment into the platforms.

Under the Capital Markets regulations, qualified investors are as defined as banks, insurance companies, intermediary institutions, pension funds, portfolio management companies, funds established according to temporary Article 20 of Social Securities Law, other investors to be accepted as similar to these organizations by the CMB and individuals and legal entities that have total asset amount equal to TRY 1 million in terms of cash in Turkish and/or foreign currencies and capital markets instruments.

In principle, a non-qualified investor may invest up to TRY 50,000, while this limitation can be applied as TRY 200,000 on the condition that this amount does not exceed 10 % of its yearly net income stated by the investor. The Regulation also sets another limitation for investors investing in a debt-based crowdfunding campaign whereby a non-qualified investor can only invest a maximum of TRY 20,000 for each debt-based crowdfunding campaign.

What are the requirements for entrepreneurs and the campaign process?

Under the Regulation these start-ups looking for raising capital are required to either i. having an activity of technology, or ii. having an activity of manufacturing goods and services and required to have a crowdfunding agreement drafted in written form. The platforms are required to create a campaign page where they can publish periodic statements regarding the campaigns and their activities.

Although preparing and publishing a prospectus is not mandatory, there are some requirements for both equity-based crowdfunding and debt-based crowdfunding campaigns. Investment Committee is, under the Regulation, responsible for the determination of the accuracy of the documents and the investment processes. While debt-based crowdfunding campaigns have certain limitations as to maturity and interest rate, equity-based crowdfunding campaigns have a requirement of hiring an independent audit and are required to provide early termination right to investors.


1. https://medium.com/@taodust/the-history-of-crowdfunding-1cb71b86716c (last accessed: 22.11.2021)

2. Official Gazette dated Official Gazette dated 03.10.2019, available at: https://www.resmigazete.gov.tr/eskiler/2019/10/20191003-5.htm (last accessed: 22.11.2021)

3. Official Gazette dated Official Gazette dated 27.10.2021, available at: https://www.resmigazete.gov.tr/eskiler/2021/10/20211027-3.htm (last accessed: 22.11.2021)

4. Official Journal of the European Union dated 20.10.2020, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R1503 (last accessed: 22.11.2021)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.