Funding Rounds and Documentation
Every funding round, from seed investment to Series A, B and C, closes with a set of legal documents that shape the start-up’s future: the letter of intent, the investment agreement, the shareholders’ agreement and amendments to the articles of association. Acting for the start-up or the investor, we advise from the structuring of the round to closing and prepare the round documentation.
What is a funding round?
A funding round is the process by which a start-up raises funds from one or more investors at a given valuation. Depending on the start-up’s stage, rounds are called pre-seed, seed and then Series A, B and C; with each round, the amount invested, the valuation and the rights investors ask for usually increase.
Under Turkish law, investors usually enter the company through a capital increase, subscribing for newly issued shares. A funding round therefore also involves restricting existing shareholders’ pre-emption rights, amending the articles of association and registering with the trade registry.
What is a term sheet?
A term sheet summarises the key terms of the investment: the valuation, the amount invested, investor rights and closing conditions. Apart from confidentiality and exclusivity, its provisions are usually not binding, but it sets the framework for all subsequent agreements. That is why the most important negotiation often takes place at the term sheet stage.
Scope
- Legal advice and documentation for funding rounds (seed, early stage, Series A–B–C)
- Drafting or reviewing the term sheet, investment agreement and shareholders’ agreement
- Capital increase, amendments to the articles of association and registration
- Coordination of rounds that require moving to an offshore holding structure
How We Work
- Setting the structure of the round: investment instrument, valuation and investor rights
- Drafting or negotiating the term sheet
- Preparing for the investor’s due diligence and organising the data room
- Negotiating the investment agreement, the shareholders’ agreement and amendments to the articles of association
- Closing: general assembly resolutions, capital increase, payment and registration
Team
Frequently Asked Questions
What is the difference between pre-money and post-money valuation?
Pre-money valuation is the value of the company before the investment; post-money valuation adds the amount invested. Because the investor's percentage is calculated on the post-money valuation, it should be made clear in negotiations which valuation is meant.
Does the investor buy existing shares or new shares?
In early-stage rounds, the investor usually subscribes for new shares issued through a capital increase, and the money goes into the company. Buying shares from existing shareholders (a secondary sale) is also possible, but in that case the money goes to the selling shareholder, not to the company.
How long does a funding round take?
After the term sheet is signed, closing, including due diligence and contract negotiations, usually takes from a few weeks to a few months. Keeping company documents, the cap table and intellectual property assignments in order beforehand shortens the process considerably.
Can a foreign investor invest in a Turkish company?
Yes. Foreign investors can invest directly in Turkish companies. Some foreign funds, however, ask for the investment to be made through a holding company set up abroad; changing the structure in that case requires separate legal and tax work.
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