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Entrepreneurship Ecosystem in Türkiye

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Entrepreneurship Ecosystem in Türkiye

The entrepreneurship ecosystem in Türkiye is growing rapidly and new generation entrepreneurs are embarking on an exciting journey. In this exciting journey, entrepreneurs face many unknowns and obstacles that need to be overcome. At this point, the fact that entrepreneurs and sector stakeholders have knowledge about this discipline, which is referred to as “startup law” or “entrepreneurship law”, will reflect positively on the success of their initiatives.

What is Startup Law?

Startup law is a branch of law that covers a wide range from the establishment of startups to the stage of receiving investment, from the protection of intellectual property rights to their relations with employees. This field is located at the intersection of different branches of law such as corporate law, commercial law, intellectual property law, investment law, labour law, IT law, in other words, it is in a horizontal relationship with other branches of law.

Establishing the right legal infrastructure plays an important role in protecting your startup from legal risks, defending its rights, attracting investors, establishing collaborations and growing the company.

Let’s look for answers to the questions that entrepreneurs often ask.

  1. Which type of company should I establish my startup?

According to the Turkish Commercial Code, a company is a contract in which two or more persons undertake to combine their labour and capital to achieve a common purpose. Company types in Türkiye are as follows:

  • Ordinary Partnership (regulated under the Turkish Code of Obligations. It has no legal personality).
  • General Partnership
  • Limited Partnership
  • Joint Stock Company
  • Limited Liability Company
  • Co-operative

It is very important to choose the most suitable company type for the type of startup and business plan. Criteria such as company setup time, cost, liability regime should be meticulously evaluated. Limited liability companies and joint stock companies stand out as the most suitable type of capital companies due to their limited liability and favourable structure at the point of receiving investment. We once again underline the importance of determining a strategy in line with your company’s goals.

  1. What is a Shareholders Agreement?

I can hear you asking questions such as “There is already a company’s articles of association, isn’t this a shareholders’ agreement…”. Let’s start by clearing up this confusion. The articles of association of the company, in other words, the articles of association of the company, is mandatory according to the Turkish Commercial Code and is signed in the presence of a notary public and registered in the trade registry gazette. On the other hand, the shareholder agreement is the contract concluded between the shareholders that determines how situations such as profit share, share distribution, rights and obligations, decision-making and governance, and termination of the partnership will take place in the company. The classical point of view of our country is generally “we know each other well, what is the need for a contract…” however, we would like to state that while everything is going well today, tomorrow it will be a saviour contract in the slightest dispute. It would not be a wrong definition if we say a contract that determines the fate of an enterprise.

  1. How can I get investment?

You have established your company, made the shareholder agreement and now you are growing. Everything is great, but there is a problem: Financing! Let’s talk about what can be done at this point.

Finding investment is very important for the growth and development of your startup. By providing capital to the company, investors can help you develop new products, expand your marketing and sales activities, and recruit.

Investment Finding Methods:

  • Angel Investors: Angel investors are individuals who usually invest in early-stage startups. Angel investors not only provide financial resources to the company, but can also contribute to the company with their experience and knowledge.
  • Venture Capital: Venture capital investors are professional investment firms or funds. Venture capital investors usually invest in more mature startups and can provide more capital to the company.
  • Incubation Programmes: Incubation programmes are programmes that provide mentoring, training and financing support to startups. These programmes can help startups grow rapidly in a short time.
  • Government Incentives: Governments offer various programmes and incentives to encourage startups. These programmes can provide startups with opportunities such as grants, loans and tax deductions.
  • Crowdfunding: Crowdfunding is a method of collecting small amounts of investment from a large number of people through a platform. Startups can reach a wide audience and collect investments through crowdfunding platforms.

 

Things to Consider When Finding Investment:

  • Finding the Right Investor: Investors are not suitable for every startup. It is important to find investors that are compatible with your company’s vision, goals and market.
  • Preparing Investor Presentation: It is important to prepare a presentation that tells investors about the company and explains why the investment should be made. First impressions are always valuable.
  • Investor Agreements: You should protect your rights in the best way in contract negotiations during the investment process. At the end of the process, your venture is no longer your venture if you do not take the necessary precautions.
  1. What is a Term Sheet?

Term Sheet, which we find it correct to translate into Turkish and Turkish legal terminology as a preliminary protocol, is generally associated with startups. It is the first serious document that the entrepreneur faces because it is a contract in which the basic terms and conditions of the investor’s intention are written, which in most cases are not legally binding; however, it may be binding according to the provisions within the contract. In essence, it is a legally binding document to be organised later. In essence, it serves as a template for later legally binding contracts. However, it should be emphasised that the conditions here are often unchangeable. Therefore, you should be very careful at this negotiation stage. Let’s say that we will have another article where we will explain the Term Sheet in detail and let’s put the point here for now.

  1. I have an idea but I am afraid of it being stolen, what should I do?

Almost every entrepreneur’s fearful dream is that their idea is stolen. Let’s look at the subject from a slightly different perspective and then come to our main point. Cinema has a history of more or less 100 years and since the beginning of cinema, films have been shot and continue to be shot in many genres such as love films, horror films, thrillers and many more. Do you think the idea of a man and a woman kissing in these films came to the mind of only one person? Or did he give up shooting that scene so that no one would steal that idea and started thinking about other things? While you are busy with these questions, it is useful to state the following immediately: Probably the idea that came to your mind and that you think of as a brilliant idea came to someone else’s mind before that, or someone else thought of it at the same time as you. For this reason, it is useful to think about questions such as how you can realise your idea and how to protect it legally rather than these unnecessary concerns. At this point, protecting your intellectual property rights is one of the legal instruments to be used in the first place. If your idea can be protected by intellectual property rights such as patent, trade mark or design registration, it is important to register these rights. Intellectual property rights help to legally protect your idea and prevent it from being used by third parties. If you need to share your idea with potential investors or business partners, it is important to sign a non-disclosure agreement (NDA). A non-disclosure agreement ensures that your idea remains confidential.