Investment

The first thing an investor wants to see is a clear cap table, intellectual property owned by the company and material contracts in order. Missing written IP assignments between founders and developers, incomplete general assembly resolutions or informal share promises are what slow a round down most. Closing these gaps before the investor's due diligence both speeds up the process and protects your negotiating position.

Turkish law has no direct equivalent of a SAFE. The same economic result can be achieved by combining contractual arrangements with capital increase mechanisms, but the structure must be built carefully according to the company type. Using a foreign standard form as it is can lead to provisions that cannot be enforced at the moment of conversion.

Vesting is not a concept regulated by Turkish statute either; it is structured through share transfer undertakings, buy-back rights and provisions in the shareholders' agreement. Founder vesting is frequently requested by investors because it determines in advance what happens to shares if a founder leaves early. For employee share plans, the tax and employment law aspects should be assessed separately.

It is not mandatory, but it is often preferred. In a joint stock company share transfers are easier and preferred share classes and capital increases can be structured more flexibly, which matters for start-ups planning several funding rounds. The conversion can be carried out while preserving the company's legal personality and is usually less costly before the first round.

In this structure the shares of the Turkish company are transferred to a company established abroad, and the investment is made into that company. It is preferred because it gives investors a familiar legal system and standard documents; however, the tax consequences, which company will hold the intellectual property, and the effect on employee share plans in Turkey should be planned from the start. Unwinding the structure later is far harder than setting it up.