Receiving investment is one of the most important turning points in the lifecycle of a startup. A successful financing round can provide the capital required to develop technology, recruit employees, expand into new markets, acquire customers and transform an early-stage business into a scalable company.

However, investment is not simply a transfer of money from an investor to a startup.

Once an investor enters the shareholding structure, the relationship between the founders, the investor and the company changes fundamentally. Questions that may have been relatively unimportant when the company was owned entirely by its founders can suddenly become critical.

Who controls the company after the investment?

What percentage does the investor actually receive?

Can the founders issue additional shares in the future?

Can the investor prevent another investment round?

Who appoints the board of directors?

What happens if the company is sold?

Does the investor receive its investment back before the founders receive any exit proceeds?

What happens if the next financing round takes place at a lower valuation?

Can a founder leave the company while retaining all shares?

Can the investor force the founders to sell the startup?

These matters should be addressed through carefully structured startup investment documentation.

For startups established in Turkey, the legal framework generally involves not only an investment agreement, but also a combination of the company’s articles of association, shareholders’ agreement, capital increase documentation, share subscription documents and, depending on the transaction, a share purchase agreement.

Under Article 26 of the Turkish Code of Obligations, parties are generally free to determine the contents of their contracts within the limits established by law. However, Article 27 makes contractual provisions invalid where they conflict with mandatory law, morality, public order, personality rights or concern an impossible subject. This distinction is particularly important for startup investment agreements because commercial provisions negotiated between founders and investors must also be compatible with mandatory Turkish corporate law.

Accordingly, foreign venture capital templates should not simply be translated into Turkish and signed. Concepts developed for Delaware corporations, English companies or other foreign corporate systems must be adapted to the structure of a Turkish joint stock company (Anonim Şirket – A.Ş.) or limited liability company (Limited Şirket – Ltd. Şti.).

This article explains the essential clauses that should be included in a startup investment agreement in Turkey and the legal issues founders and investors should consider before completing an investment round.

1. Identification of the Parties and the Investment Structure

The investment agreement should first identify exactly who the parties are and what transaction is taking place.

The parties may include:

• the startup company,
• existing founders,
• existing shareholders,
• the new investor,
• affiliated investment entities,
• and, in some transactions, key managers.

This may appear straightforward, but the investment structure can become complicated where the investor uses a special purpose vehicle or where several funds invest together.

The agreement should also clarify whether the transaction consists of:

• a capital increase,
• a sale of existing founder shares,
• a combination of primary and secondary investment,
• a convertible investment,
• or another financing structure.

This distinction is essential because the destination of the investment money changes depending on the transaction.

In a primary investment, the investor generally subscribes for newly issued shares and the money enters the startup.

In a secondary transaction, the investor purchases existing shares from one or more founders or shareholders and the purchase price goes to those selling shareholders.

A financing round may contain both.

For example:

Investor invests EUR 2 million.

EUR 1.7 million is paid to the company as new capital.

EUR 300,000 is used to purchase part of a founder’s existing shares.

The investment agreement should make this allocation completely clear.

2. Investment Amount

The agreement must specify the exact amount being invested.

This should include:

• currency,
• payment method,
• payment date,
• bank account,
• whether payment will occur in a single instalment,
• whether investment is conditional,
• and what happens if the investor fails to pay.

Where the transaction involves more than one investor, the agreement should identify each investor’s individual commitment.

It should also explain whether all investors must complete simultaneously or whether separate closings are possible.

For international investment transactions, foreign exchange, banking and regulatory considerations should also be reviewed.

3. Pre-Money and Post-Money Valuation

One of the most important clauses in any startup investment agreement concerns valuation.

The parties should clearly determine:

• the pre-money valuation, and
• the post-money valuation.

Consider an investor contributing EUR 1 million.

If the startup has a EUR 4 million pre-money valuation:

Pre-money valuation: EUR 4 million.

Investment: EUR 1 million.

Post-money valuation: EUR 5 million.

Investor ownership: 20%.

If EUR 4 million is instead the post-money valuation, the investor receives 25%.

That difference can become extremely valuable if the startup later grows substantially.

For this reason, the agreement should never simply state that “the company is valued at EUR 4 million”.

It should specify whether the number is pre-money or post-money.

4. Number and Percentage of Shares Acquired

The agreement should state precisely what the investor receives.

This includes:

• number of shares,
• nominal value,
• share class,
• percentage ownership,
• and percentage on a fully diluted basis.

The phrase fully diluted basis is particularly important.

A startup may have outstanding:

• employee options,
• convertible securities,
• warrants,
• rights to acquire shares,
• or future equity commitments.

The investor may negotiate ownership based on the assumption that all such instruments have already converted.

Accordingly, founders should verify that the agreed investor percentage corresponds with the cap table.

A mathematical inconsistency between the investment agreement and cap table can create significant disputes later.

5. Capitalisation Table

The investment agreement should usually include or refer to an agreed capitalisation table, commonly known as a cap table.

The cap table should show the ownership structure:

Before Investment

For example:

Founder A: 50%

Founder B: 50%

After Investment

Founder A: 40%

Founder B: 40%

Investor: 20%

If an employee option pool or other convertible rights exist, these should also appear.

Founders should carefully review not only their percentage immediately after the investment but also the fully diluted cap table.

This helps prevent unexpected dilution.

6. Conditions Precedent to Closing

Professional investment transactions usually contain conditions precedent, meaning requirements that must be satisfied before the investor is required to transfer the investment funds.

Possible conditions include:

• satisfactory legal due diligence,
• execution of the shareholders’ agreement,
• amendment of the articles of association,
• intellectual property transfer to the company,
• founder employment or service agreements,
• corporate approvals,
• capital increase resolutions,
• cancellation of problematic existing agreements,
• regulatory approvals,
• resolution of litigation,
• completion of tax or accounting requirements,
• and confirmation of the company’s ownership structure.

The agreement should identify which conditions must be satisfied and who is responsible for satisfying them.

It should also establish a deadline.

If the conditions have not been completed by the long-stop date, the parties should know whether the transaction terminates or may be extended.

7. Representations and Warranties

Representations and warranties are among the most important clauses for investors.

The investor is providing capital based on information supplied by the founders and the company.

The investor therefore wants contractual confirmation that certain statements are true.

Typical representations and warranties may concern:

• valid incorporation of the company,
• ownership of shares,
• capital structure,
• authority to enter into the investment agreement,
• financial statements,
• liabilities,
• taxes,
• litigation,
• employees,
• intellectual property,
• data protection,
• material contracts,
• regulatory compliance,
• licences,
• related-party transactions,
• customer agreements,
• and absence of undisclosed liabilities.

For a technology startup, intellectual property warranties are especially important.

The investor may require confirmation that:

• the company owns the source code,
• founders have assigned relevant IP,
• employees and contractors have signed appropriate agreements,
• no third party owns critical technology,
• and the company is not knowingly infringing third-party rights.

8. Disclosure Letter

Representations should usually be considered together with a disclosure mechanism.

Suppose the agreement states:

“The company is not involved in any litigation.”

However, the company has a pending employment claim.

The founders should not sign an inaccurate representation.

Instead, the litigation may be properly disclosed.

A disclosure letter allows the founders and company to identify exceptions to the representations and warranties.

This is important because investment agreements should not become traps in which founders make broad statements that they know are technically inaccurate.

Proper disclosure reduces future warranty disputes.

9. Indemnification

An investment agreement should determine what happens if a representation or warranty is breached.

An indemnification clause may require the responsible party to compensate losses arising from defined breaches.

However, founders should negotiate limitations carefully.

Relevant issues include:

• maximum liability cap,
• minimum claim threshold,
• aggregate basket,
• claim notification procedure,
• limitation period,
• tax claims,
• fraud exceptions,
• and whether founders are jointly or individually responsible.

An unlimited personal guarantee by founders for every company warranty may create disproportionate risk.

Investors need meaningful protection, but founders should avoid converting a limited-liability investment into unlimited personal liability without understanding the consequences.

10. Use of Investment Proceeds

The investor may want the agreement to regulate how the investment funds will be used.

Possible categories may include:

• software development,
• hiring,
• international expansion,
• marketing,
• product development,
• regulatory compliance,
• capital expenditure,
• and working capital.

A reasonable use-of-proceeds provision can provide transparency.

However, founders should avoid excessive restrictions that require investor approval for every ordinary expense.

The company must remain operationally flexible.

11. Founder Vesting

Professional startup investors frequently require founders to be subject to vesting.

The purpose is to ensure that founders remain committed after the investor enters.

For example, a founder may hold 30% but become subject to a four-year reverse vesting arrangement.

If the founder leaves early, part of the shares may become subject to a contractual transfer or call-option mechanism.

The agreement should address:

• vesting period,
• cliff period,
• vesting start date,
• treatment of previously completed founder service,
• vested shares,
• unvested shares,
• good leaver events,
• bad leaver events,
• transfer price,
• and acceleration following a company sale.

International vesting terminology should be adapted carefully to Turkish corporate law. A statement that “unvested shares automatically disappear” may not produce the intended legal result unless an appropriate share-transfer mechanism has been established.

12. Good Leaver and Bad Leaver Provisions

The investment agreement or shareholders’ agreement should define what happens if a founder leaves the startup.

A good leaver may include a founder leaving under contractually accepted circumstances.

A bad leaver may involve serious misconduct such as:

• fraud,
• serious breach of confidentiality,
• deliberate damage to the company,
• intellectual property misuse,
• prohibited competition,
• or substantial breach of founder obligations.

Different financial consequences may apply.

For example, a good leaver may retain vested shares, while unvested shares become subject to a purchase option.

A bad leaver may face less favourable contractual treatment.

These clauses must be drafted carefully and proportionately.

13. Founder Commitment

Investors are usually investing partly because they believe in the founders.

The investment agreement may therefore require founders to devote a defined level of time and attention to the company.

Possible obligations include:

• full-time involvement,
• restrictions on other business activities,
• minimum management responsibilities,
• compliance with confidentiality duties,
• intellectual property obligations,
• and prohibition of unauthorised competing activities.

Existing outside businesses should be disclosed and expressly permitted where appropriate.

14. Intellectual Property Ownership

For technology startups, this is one of the most important provisions in the entire transaction.

The investor should confirm that all commercially necessary intellectual property belongs to the company or is properly licensed.

Relevant assets may include:

• software,
• source code,
• algorithms,
• AI models,
• trademarks,
• domain names,
• databases,
• designs,
• patents,
• technical documentation,
• and trade secrets.

If the original source code is still personally owned by a founder, the investor may require the founder to assign those rights before closing.

This should normally be treated as a condition precedent rather than postponed indefinitely.

15. Confidentiality

The investment process itself involves highly confidential information.

The agreement should regulate confidentiality concerning:

• financial information,
• technology,
• investor materials,
• business strategy,
• source code,
• customer data,
• investment terms,
• and transaction documents.

The confidentiality clause should also identify permitted disclosures.

Examples may include disclosures required by:

• law,
• courts,
• regulatory authorities,
• tax authorities,
• auditors,
• legal advisers,
• and professional advisers.

16. Non-Compete and Non-Solicitation

Investors may require founders not to establish or participate in competing businesses.

The agreement may also restrict:

• solicitation of employees,
• solicitation of customers,
• misuse of confidential information,
• and diversion of business opportunities.

However, competition restrictions should not be drafted without limits.

Their duration, scope, activity and geographic application should be proportionate and compatible with Turkish law.

An attempt to prohibit a founder from participating in any technology business worldwide for an excessive period may create enforceability concerns.

17. Pre-Emption Rights for Future Capital Increases

Founders and investors should determine what happens when the company raises its next financing round.

For an A.Ş., Article 461 of the Turkish Commercial Code gives shareholders a statutory right to acquire newly issued shares in proportion to their existing participation. Restriction or removal of this right requires just cause and at least 60% of the share capital, and the restriction cannot be used to unjustifiably benefit or disadvantage particular persons.

The investment agreement should address whether shareholders also receive contractual pro rata rights.

This is particularly important for institutional investors who want to maintain their percentage in future rounds.

Founders should carefully distinguish between:

• allowing an investor to participate proportionately,

and

• giving the investor control over whether future investments may occur.

18. Anti-Dilution Protection

Investors may request protection if a future investment takes place at a lower valuation.

This is known as anti-dilution protection.

The two most commonly discussed methods are:

• full-ratchet anti-dilution,
• weighted-average anti-dilution.

Full-ratchet protection can significantly dilute founders in a down round.

Weighted-average formulas are usually more proportionate because they consider both the new price and the number of shares issued.

Founders should never accept a term simply described as “standard anti-dilution protection”.

The actual mathematical formula should be reviewed and modelled.

19. Employee Stock Option Pool

The investor may require establishment or expansion of an employee equity pool.

The agreement should determine:

• pool percentage,
• whether the pool is created pre-money or post-money,
• who bears the dilution,
• who approves grants,
• vesting schedules,
• eligibility,
• and treatment on employee departure.

A 10% option pool created before investment may effectively dilute founders while leaving the investor’s negotiated percentage unchanged.

This issue should therefore be negotiated together with valuation.

20. Share Classes and Privileged Shares

Turkish joint stock companies may create privileged shares through the articles of association.

Article 478 of the Turkish Commercial Code allows privileges concerning matters including dividends, liquidation proceeds, pre-emption rights and voting rights, as well as other superior shareholder rights recognised within the statutory framework. Article 479 separately regulates voting privileges.

This allows startups to establish different economic or governance rights for founders and investors.

However, international terms such as “Series A Preferred Shares” should not simply be copied into Turkish documentation without determining how the underlying rights will be implemented under the Turkish Commercial Code.

21. Board Representation

An investor may request the right to appoint or nominate a member of the board of directors.

The investment agreement should determine:

• number of board members,
• founder representatives,
• investor representatives,
• independent directors,
• chairman appointment,
• voting rules,
• quorum,
• meeting procedures,
• and replacement rights.

Article 360 of the Turkish Commercial Code allows the articles of association of an A.Ş. to grant specific share groups, defined shareholder groups or minority shareholders a right of board representation or nomination within the statutory framework.

Where the investor’s board right is intended to have a corporate effect, the investment agreement and articles of association should be coordinated.

22. Reserved Matters

Investors generally want protection against fundamental corporate changes occurring without their approval.

The agreement may therefore contain reserved matters.

Examples may include:

• capital increases,
• issuing new shares,
• creating new privileged share classes,
• changing the articles,
• selling significant company assets,
• selling intellectual property,
• borrowing above an agreed threshold,
• granting security,
• acquiring another business,
• entering related-party transactions,
• changing the main business activity,
• appointing senior management,
• approving unusually large expenditure,
• paying dividends,
• liquidating the company,
• or selling the startup.

Reserved matters can provide legitimate investor protection.

However, the list should not convert the investor into the day-to-day manager of the startup.

Founders should retain operational flexibility.

23. Information and Reporting Rights

Professional investors typically require regular information.

The agreement may require the company to provide:

• monthly management reports,
• quarterly financial statements,
• annual accounts,
• annual budgets,
• cash-flow forecasts,
• KPI reports,
• cap table updates,
• litigation notices,
• material contract information,
• and notification of significant adverse events.

Information rights help investors monitor their investment.

However, reporting obligations should remain realistic for the size of the startup.

A five-person seed-stage startup should not necessarily be required to operate reporting systems equivalent to those of a listed company.

24. Investor Inspection Rights

The agreement may also allow the investor to inspect company books and records subject to reasonable procedures and confidentiality requirements.

The clause should consider:

• prior notice,
• timing,
• confidentiality,
• commercially sensitive information,
• competitor investors,
• and data protection obligations.

An investor who is commercially connected to a competitor may require additional safeguards.

25. Budget and Business Plan

Some investors require annual budgets or business plans to be approved by the board.

This can be reasonable because the investor wants visibility concerning how capital will be deployed.

However, the agreement should determine what happens if the board fails to approve the next annual budget.

Without a fallback mechanism, a budget disagreement could paralyse operations.

A possible solution is for the previous budget to continue temporarily with defined adjustments until a new budget is approved.

26. Founder Salaries

Startup investment agreements may regulate founder remuneration.

Before investment, founders may pay themselves very little.

After financing, reasonable salaries may become appropriate.

The investor may want limits preventing founders from extracting investment capital through excessive salaries.

The founders, on the other hand, should not be required to work indefinitely without reasonable compensation.

A balanced clause can establish:

• initial salary levels,
• approval procedures for increases,
• bonuses,
• benefits,
• and reimbursement policies.

27. Liquidation Preference

Liquidation preference is one of the most important economic clauses in venture capital transactions.

It determines how proceeds are distributed when certain exit events occur.

Suppose:

Investor invests EUR 2 million for 20%.

The agreement grants the investor a 1x non-participating liquidation preference.

If the startup is later sold for a relatively low price, the investor may be entitled to receive the amount specified under the preference before the remaining proceeds are distributed according to the agreed structure.

Founders should understand concepts including:

• 1x preference,
• multiple preference,
• participating preference,
• non-participating preference,
• and deemed liquidation events.

The headline share percentage alone does not determine how sale proceeds will be distributed.

28. Dividend Rights

The agreement should determine whether the investor receives any preferential dividend rights.

For most high-growth startups, profits are reinvested rather than distributed.

However, investor share classes may still contain:

• preferred dividends,
• cumulative dividends,
• or other economic rights.

Founders should understand whether such rights accumulate even when no cash dividend is paid.

29. Right of First Refusal

A right of first refusal, or ROFR, may prevent founders from selling shares freely to an outside party without first giving existing shareholders or the investor an opportunity to purchase.

For example:

Founder A receives an offer for shares from a third party.

Before completing the sale, Founder A must offer those shares to other shareholders on equivalent contractual terms.

This helps control who enters the shareholding structure.

However, the procedure should include clear deadlines.

Otherwise, the restriction can make share transfers unnecessarily difficult.

30. Founder Lock-Up

Investors often want founders to remain financially committed to the startup.

A founder lock-up may therefore prevent founders from selling their shares for a defined period.

The agreement should consider exceptions for:

• approved secondary sales,
• estate planning,
• transfers to founder-controlled entities,
• family transfers,
• or transfers approved by the investor.

A perpetual prohibition on founder liquidity may be commercially unreasonable.

31. Tag-Along Rights

A tag-along right protects shareholders where another shareholder sells shares.

Suppose a founder owns 60% and an investor owns 40%.

A third-party purchaser wants the founder’s controlling stake.

The investor may want the right to participate in the transaction and sell its own shares on the same or equivalent terms.

Tag rights can also protect founders where a large investor sells to another strategic investor.

The agreement should determine:

• triggering threshold,
• percentage permitted to tag,
• price,
• transaction terms,
• and procedural deadlines.

32. Drag-Along Rights

A drag-along right can prevent minority shareholders from blocking a company sale.

Suppose a buyer wants to acquire 100% of the startup.

Founders and investors holding 90% agree to sell.

A 10% shareholder refuses.

A properly drafted drag provision may require that minority shareholder to participate in the transaction.

However, founders should carefully negotiate:

• who may trigger the drag,
• minimum voting threshold,
• minimum valuation,
• founder consent,
• equal treatment of shareholders,
• liability under sale warranties,
• and limitations on personal liability.

An investor holding a relatively small minority stake should not necessarily be able to force founders to sell the entire company unilaterally.

33. Exit Rights

The agreement should address the investor’s long-term exit strategy.

Possible exit events include:

• strategic company sale,
• sale to another investor,
• merger,
• secondary transaction,
• initial public offering,
• or other liquidity event.

Investors may seek obligations requiring the founders and company to cooperate with an exit after a certain period.

Founders should ensure that exit provisions do not create an unconditional obligation to sell the company at an economically unacceptable price.

34. Put and Call Options

The agreement may include contractual put or call options.

A call option gives a party the right to purchase specified shares.

A put option gives a party the right to require another party to purchase specified shares.

These mechanisms may be triggered by:

• founder departure,
• material contractual breach,
• deadlock,
• failure to complete an investment commitment,
• prohibited competition,
• or another specified event.

Price determination and transfer mechanics should be clearly defined.

35. Deadlock Mechanism

A startup can become paralysed if founders and investors cannot agree on an important matter.

The agreement should therefore consider a deadlock mechanism.

Possible stages may include:

1. board negotiation;
2. escalation to founders and investor principals;
3. mediation;
4. expert determination for financial or technical issues;
5. buy-sell arrangements;
6. company sale procedures;
7. or another agreed exit mechanism.

The mechanism should not give the financially stronger party an unfair opportunity to force the weaker party out.

36. Confidential Exit and Public Announcement

Investment rounds are commercially sensitive.

The agreement should determine:

• whether the investment may be publicly announced,
• timing of the announcement,
• wording,
• use of investor name and logo,
• and confidentiality of valuation.

Founders should not assume they can immediately publish every detail of the investment on social media.

37. Costs and Expenses

Legal, accounting, due-diligence and transaction costs can be substantial.

The investment agreement should state who bears:

• investor legal fees,
• company legal fees,
• accounting fees,
• tax advice,
• registry expenses,
• notary expenses,
• and other transaction costs.

Some investors require the startup to reimburse reasonable transaction expenses, often subject to an agreed cap.

38. Termination Rights

The agreement should explain when the investment transaction may be terminated before closing.

Possible termination events include:

• failure of conditions precedent,
• material breach,
• inaccurate representations,
• failure to obtain corporate approval,
• material adverse change,
• or failure to complete before the long-stop date.

The effect of termination should also be clear.

Certain clauses, particularly confidentiality and dispute resolution, may survive termination.

39. Governing Law

The agreement should identify which law governs the contract.

For a Turkish startup receiving foreign investment, the parties may consider different options.

However, choosing foreign law for a contractual document does not automatically eliminate mandatory provisions of Turkish corporate law applicable to a Turkish company.

The investment structure should therefore be analysed as a whole.

40. Dispute Resolution

The final major issue is how disputes will be resolved.

The parties may choose:

• Turkish courts,
• arbitration,
• or another legally permissible dispute-resolution structure.

International investors frequently prefer arbitration.

The Istanbul Arbitration Centre provides a model clause under which disputes arising from or connected with a contract can be finally resolved under the ISTAC Arbitration Rules, and the parties may additionally specify the seat, language, number of arbitrators and substantive law.

However, startup agreements should not contain an arbitration clause simply because arbitration appears sophisticated.

The parties should consider:

• arbitrability of the relevant disputes,
• seat,
• language,
• costs,
• interim measures,
• confidentiality,
• and enforceability.

The dispute-resolution clause should also be coordinated across the investment agreement and shareholders’ agreement to prevent parallel proceedings in different forums.

Startup Investment Agreement Checklist

Before completing an investment round, founders should ensure that the transaction documents address at least the following:

• investment amount;
• pre-money valuation;
• post-money valuation;
• investor percentage;
• fully diluted cap table;
• share class;
• capital increase structure;
• primary and secondary components;
• closing conditions;
• due diligence;
• representations and warranties;
• disclosure;
• indemnification;
• use of proceeds;
• intellectual property;
• founder vesting;
• good leaver and bad leaver;
• founder commitment;
• confidentiality;
• non-compete obligations;
• employee option pool;
• pre-emption rights;
• pro rata rights;
• anti-dilution;
• board representation;
• reserved matters;
• information rights;
• inspection rights;
• budget approval;
• founder salaries;
• liquidation preference;
• dividend rights;
• right of first refusal;
• founder lock-up;
• tag-along;
• drag-along;
• put and call options;
• exit rights;
• deadlock;
• transaction expenses;
• termination;
• governing law;
• and dispute resolution.

If any of these issues are commercially important but remain unanswered, the investment documentation may be incomplete.

Conclusion: What Clauses Should a Startup Investment Agreement Contain?

A startup investment agreement in Turkey should never be viewed simply as a document stating how much money an investor will contribute and what percentage of the company the investor will receive.

A professional investment agreement defines the legal relationship that may govern the startup for many years.

It determines not only ownership, but also:

• control,
• management,
• future financing,
• founder commitment,
• investor protection,
• exit rights,
• dilution,
• and the economic distribution of value.

Turkish law gives parties significant contractual freedom, but this freedom exists within statutory limits. Contractual provisions must therefore be structured consistently with mandatory Turkish corporate rules.

For a Turkish A.Ş., important corporate mechanisms such as statutory pre-emption rights, privileged shares, voting privileges and board representation rights are specifically regulated by the Turkish Commercial Code.

This is why the investment agreement should not be prepared in isolation.

For many startup investment transactions, the following documents must work together:

• term sheet,
• investment agreement,
• shareholders’ agreement,
• articles of association,
• capital increase documents,
• intellectual property assignments,
• founder agreements,
• and employee equity documentation.

Perhaps the most important practical rule for founders is to evaluate rights rather than percentages alone.

An investor acquiring 15% of a startup may obtain very significant influence if that investment also includes:

• broad veto rights,
• multiple board seats,
• aggressive liquidation preference,
• full-ratchet anti-dilution,
• strong exit rights,
• and unilateral drag-along power.

Conversely, an investor acquiring a larger percentage may have a much more balanced contractual position.

Founders should therefore ask not only:

“How much of my company am I giving away?”

They should also ask:

“What rights am I giving with those shares?”

“What happens in the next financing round?”

“Who controls major decisions?”

“What happens if the company is sold?”

“What happens if the next valuation is lower?”

“What happens if I leave the company?”

“What happens if the investor wants to exit but I do not?”

These questions should be answered before the investment closes.

Once the money has entered the company and the investor has received the agreed rights, renegotiating the relationship can be considerably more difficult.

A carefully prepared startup investment agreement can create a sustainable balance: the investor receives sufficient protection for the capital invested, while the founders retain enough ownership, motivation and decision-making authority to continue building the company.

That balance is one of the most important objectives of effective startup investment documentation under Turkish law.