Bringing a new investor into a startup can be one of the most important milestones in the life of a company. Investment can provide the capital required to hire employees, develop technology, enter new markets, increase marketing expenditure and accelerate growth.

However, receiving investment also changes the ownership structure of the startup.

When new shares are issued to an investor, the percentage ownership of the founders may decrease. This process is generally known as equity dilution.

Dilution itself is not necessarily a problem. In many successful startups, founders gradually own a smaller percentage of a significantly more valuable company. A founder may prefer to own 40% of a company worth EUR 20 million rather than 80% of a company worth EUR 500,000.

The real legal issue is therefore not simply:

“How can founders prevent dilution?”

A more useful question is:

“How can startup founders protect their economic and management rights while bringing a new investor into the company?”

Under Turkish startup law, founders can use a combination of statutory shareholder rights, articles of association, shareholders’ agreements, investment agreements, share classes, pre-emption rights, management representation rights, veto mechanisms and carefully negotiated anti-dilution provisions.

The correct structure depends on whether the startup is established as a joint stock company (Anonim Şirket – A.Ş.) or a limited liability company (Limited Şirket – Ltd. Şti.), the percentage being acquired by the investor and the founders’ long-term fundraising strategy.

This article explains how founders can protect their shares and control when receiving startup investment in Turkey.

Why Do Founders’ Shares Become Diluted?

Dilution usually occurs when the company issues new shares.

Consider a simple example.

Founder A owns 50%.

Founder B owns 50%.

The company therefore has two founders collectively owning 100%.

An investor agrees to invest EUR 500,000 in exchange for 20% of the company on a post-investment basis.

After the investment:

• Founder A may own 40%.
• Founder B may own 40%.
• Investor owns 20%.

Neither founder has sold any existing shares.

Their percentages decreased because the company issued equity to a new investor.

This is normal startup financing.

The critical issue is whether the founders understand:

• the company valuation,
• the number of new shares being issued,
• the percentage being transferred,
• whether an employee option pool is included,
• what happens in future investment rounds,
• which voting rights the investor receives,
• and whether the investor receives additional preferential rights.

Founders should therefore analyse both economic dilution and control dilution.

Economic Dilution and Control Dilution Are Different

A founder can lose percentage ownership without losing control.

Likewise, a founder can retain a large percentage of the startup but lose significant decision-making authority.

Imagine a founder who owns 60% of the company.

A new investor acquires only 20%.

However, the investment agreement states that major decisions require the investor’s approval.

The investor may therefore obtain veto rights concerning:

• new investment rounds,
• borrowing,
• sale of intellectual property,
• appointment of senior management,
• changes to the annual budget,
• company acquisitions,
• capital increases,
• dividend distributions,
• or sale of the startup.

The investor owns only 20%, but the founder may no longer be able to make important decisions independently.

For this reason, protecting founder shares requires analysing much more than the percentage shown on the cap table.

Start With the Cap Table Before Signing the Investment Agreement

Before accepting an investor, founders should prepare a clear capitalisation table, commonly referred to as a cap table.

The cap table should show:

• existing founders,
• existing investors,
• number of shares,
• ownership percentages,
• share classes,
• options,
• warrants,
• employee equity,
• convertible instruments,
• and the fully diluted ownership structure.

Founders should calculate the cap table both before and after investment.

This sounds obvious, but startup founders frequently negotiate primarily on valuation without calculating the final ownership consequences.

For example, an investor may say:

“We are investing EUR 1 million at a EUR 4 million valuation.”

The founders must immediately determine whether that means:

• EUR 4 million pre-money valuation, or
• EUR 4 million post-money valuation.

The difference can materially affect the investor’s percentage.

If EUR 4 million is the pre-money valuation:

Company before investment = EUR 4 million.

Investment = EUR 1 million.

Post-money valuation = EUR 5 million.

Investor percentage = 20%.

But if EUR 4 million is the post-money valuation:

Investor percentage = 25%.

That four-percentage-point difference can become extremely valuable if the startup later becomes worth EUR 100 million.

Pre-Emption Rights Are One of the Most Important Founder Protections

A key legal tool against uncontrolled dilution is the pre-emption right, also called a subscription right or right to participate in newly issued shares.

In a Turkish joint stock company, Article 461 of the Turkish Commercial Code provides that each shareholder has the right to acquire newly issued shares proportionately to their existing shareholding.

In other words, if a founder owns 40%, the founder is generally entitled to participate proportionately in a new capital increase in order to maintain that percentage.

The right cannot simply be removed without legal limits. Under Article 461, restriction or removal of the pre-emption right requires just cause and at least 60% of the share capital must vote in favour. The law additionally prohibits using the restriction to unjustifiably benefit or disadvantage a particular person.

This is an important protection against abusive dilution.

Example of Founder Protection Through Pre-Emption Rights

Suppose:

Founder A owns 60%.

Founder B owns 40%.

The company requires new capital.

An investor wants to subscribe for new shares.

If the founders want to preserve their ownership percentages, they may participate proportionately in the capital increase.

For example, if the company issues new shares representing a substantial increase in capital, the founders can exercise their subscription rights to avoid unnecessary dilution.

However, exercising a pre-emption right requires the founder to contribute additional capital.

A statutory right does not mean that the founder can keep the same percentage without paying for the newly issued shares.

This is an important distinction.

If the founder does not have the financial resources to participate in later rounds, contractual and corporate control protections become increasingly important.

Can an Investor Require Founders to Waive Their Pre-Emption Rights?

Yes, this is common in investment transactions.

The investor generally needs new shares to be issued specifically to the investor.

If existing shareholders exercise all of their statutory subscription rights, the investor cannot acquire the intended percentage through the capital increase.

Therefore, founders may agree to limit or waive their rights for the specific investment round.

However, founders should distinguish between:

waiving pre-emption rights for the current investment, and

giving the investor broad control over pre-emption rights in every future financing round.

The first may be necessary to complete the investment.

The second may create serious long-term dilution risks.

The investment agreement should therefore define the scope of the waiver carefully.

Pre-Emption Rights in Turkish Limited Liability Companies

Founders of a Turkish Ltd. Şti. also receive statutory protection.

Article 591 of the Turkish Commercial Code provides that, unless the articles of association or the relevant capital increase resolution provides otherwise, each shareholder has the right to participate in a capital increase proportionately to the existing capital interest.

The restriction or removal of this right requires just cause and the qualified majority contemplated by Article 621. The statute also expressly states that shareholders should not be unjustifiably benefited or disadvantaged through the restriction of subscription rights.

This makes pre-emption rights an important protection in both A.Ş. and Ltd. Şti. startup structures.

Founders Should Negotiate Pro Rata Rights for Future Investment Rounds

Statutory pre-emption rights should be coordinated with contractual pro rata participation rights.

A shareholders’ agreement may provide that founders have the right to participate in future financing rounds to maintain a specified ownership percentage.

This becomes especially important where future financing could involve:

• new share classes,
• convertible instruments,
• option plans,
• warrants,
• SAFE-type instruments adapted to the local structure,
• or other equity-linked investments.

The definition of “new securities” should therefore be drafted carefully.

Otherwise, a founder may technically have rights concerning ordinary share issuances but still become diluted through another financing instrument.

Founders Should Understand the Employee Option Pool Before Investment

One of the most common sources of unexpected dilution is the employee stock option pool, commonly called the ESOP pool.

An investor may require the startup to reserve 10%, 15% or another percentage of the company for future employees.

The important question is:

Is the employee pool created before or after the investor’s investment?

If it is created before the investment, the dilution may fall largely on the existing founders.

Consider:

Founders own 100%.

Investor wants 20%.

Investor also requires a 10% employee pool to be created before the transaction.

The founders may discover that their post-investment percentage is significantly lower than expected.

Founders should therefore never negotiate only the headline investor percentage.

They should calculate the transaction on a fully diluted basis, including the entire proposed option pool.

Protecting Ownership Through Valuation

The best dilution protection is sometimes simply obtaining an appropriate valuation.

Suppose a startup needs EUR 1 million.

At a EUR 2 million pre-money valuation, the investor will receive approximately one-third of the post-money company.

At a EUR 9 million pre-money valuation, the same EUR 1 million investment represents approximately 10% of the company.

Therefore, founder protection begins before legal documentation.

It begins with the economic terms.

Key points include:

• pre-money valuation,
• post-money valuation,
• investment amount,
• option pool,
• convertible instruments,
• existing debts,
• and whether the investor is purchasing newly issued or existing founder shares.

Primary Investment vs Secondary Share Sale

Founders should distinguish between:

primary investment

and

secondary share sale.

In a primary investment, money goes to the company and new shares are issued.

The founders are diluted.

In a secondary sale, the investor purchases existing shares directly from one or more founders.

The purchase price goes to the selling founders rather than the company.

There may also be a combination.

For example:

Investor pays EUR 3 million.

EUR 2.5 million goes into the company.

EUR 500,000 is used to purchase part of the founders’ existing shares.

The ownership and economic consequences differ significantly.

A startup financing agreement should therefore clearly define which part of the transaction is primary and which part is secondary.

Share Classes Can Protect Founder Rights

In a Turkish A.Ş., different share groups may provide different rights within the framework permitted by the Turkish Commercial Code.

Article 478 permits privileges to be granted through the initial articles of association or an amendment. Privileges may concern rights such as dividends, liquidation proceeds, pre-emption and voting, or may involve another superior shareholder right recognised within the statutory framework.

This creates an important structuring opportunity.

Founders do not necessarily need every share to carry exactly the same rights.

A startup might, for example, create:

• Founder Shares,
• Investor Shares,
• Employee Shares,

with appropriately designed rights.

However, creating share classes requires careful legal drafting.

The founders should not simply import “Series A Preferred” terminology from a US template and assume that every American venture capital feature automatically produces the same corporate effect in a Turkish A.Ş.

Voting Privileges Can Help Founders Maintain Control

Voting rights can also be structured through privileged shares.

Article 479 of the Turkish Commercial Code allows voting privileges by giving different numbers of votes to shares of equal nominal value.

As a general statutory rule, a single share may carry no more than fifteen votes, subject to legally recognised exceptions requiring additional conditions. Certain decisions, including amendments to the articles of association and decisions concerning discharge and liability proceedings, cannot benefit from voting privileges in the same manner.

This can allow founders to maintain significant corporate influence even after their economic percentage falls.

For example:

Founders collectively own 45% of the economic equity.

Investors own 55%.

Properly designed voting privileges may still provide founders with substantial control over certain ordinary shareholder decisions.

However, voting privileges should be designed carefully and cannot override mandatory Turkish company law.

Board Representation Is Often More Important Than Percentage Ownership

Founders should also protect their position at board level.

Article 360 of the Turkish Commercial Code allows the articles of association of an A.Ş. to grant specific share groups, shareholders forming a defined group or minority shareholders the right to be represented on the board or to nominate candidates under the statutory conditions.

This mechanism can be particularly useful in investment transactions.

For example, after a financing round the board might contain five members:

• two founder representatives,
• two investor representatives,
• one independent member.

Alternatively:

• three founder representatives,
• one investor representative,
• one independent member.

The correct structure depends on the investment.

Founders should avoid giving an investor disproportionate board control simply because the investor requests a board seat.

One board seat and board control are very different things.

Reserved Matters and Founder Consent Rights

Another important protection involves reserved matters.

Reserved matters are decisions that cannot be taken unless specified shareholders approve them.

Possible reserved matters may include:

• issuing new shares,
• changing the articles of association,
• creating new share classes,
• selling the company,
• changing the main business activity,
• selling important intellectual property,
• taking debt above a defined threshold,
• granting security over company assets,
• acquiring another company,
• entering related-party transactions,
• approving unusually large expenditures,
• appointing or removing the CEO,
• approving an employee equity pool,
• or liquidating the company.

A founder may negotiate that certain decisions require founder consent even after the founder no longer holds an absolute majority.

This can provide stronger practical protection than merely trying to preserve a particular ownership percentage.

Founders Should Be Careful With Investor Veto Rights

Reserved matters can protect founders.

They can also protect investors.

Institutional investors frequently request veto rights to protect their capital.

Some investor protection is commercially normal.

The problem begins when the investor receives veto power over ordinary operations.

For example, investor approval should not necessarily be required every time the startup:

• hires a junior employee,
• purchases ordinary software,
• signs a routine customer contract,
• or spends a modest amount within an approved budget.

Excessive veto rights can make the company impossible to operate.

A good investment agreement distinguishes between:

fundamental corporate decisions

and

ordinary day-to-day management.

Anti-Dilution Clauses: What Are They?

Anti-dilution provisions are frequently requested by investors, particularly in venture capital transactions.

They generally protect an investor where the startup later issues shares at a lower valuation.

Suppose Investor A invests at a EUR 10 million valuation.

One year later, the startup experiences financial difficulties.

Investor B invests at a EUR 4 million valuation.

This is a down round.

Investor A may request an adjustment intended to compensate for the lower price.

Common international approaches include:

• full ratchet anti-dilution,
• broad-based weighted average,
• narrow-based weighted average.

These formulas can produce dramatically different economic outcomes.

Founders should therefore model them mathematically before signing.

Full Ratchet Anti-Dilution Can Be Dangerous for Founders

Full ratchet protection is generally the most aggressive form.

Under a simplified model, the investor’s effective conversion or economic position is adjusted as though the investor originally invested at the lower price used in the later down round.

This can cause substantial founder dilution.

Suppose the investor originally invested at EUR 10 per share.

A later round occurs at EUR 2 per share.

Full ratchet protection could produce a significant adjustment benefiting the investor.

The founders and employees may bear most of the resulting dilution.

For this reason, founders should not accept the phrase “standard anti-dilution” without understanding the exact formula.

There is no single standard mechanism that produces the same economic outcome.

Weighted Average Anti-Dilution Is Usually More Balanced

Weighted average formulas generally consider both:

• the lower price, and
• the number of shares issued in the down round.

This can produce a more proportionate adjustment.

For example, a small emergency financing round at a reduced price should not necessarily create the same dilution effect as a major financing round conducted at the same low valuation.

Weighted average structures are therefore often viewed as more balanced between founders and investors.

However, their implementation in a Turkish startup must be coordinated with:

• share capital rules,
• corporate approvals,
• share class rights,
• articles of association,
• and shareholders’ agreement provisions.

Contractual terminology alone does not replace corporate implementation.

Founders May Also Need Anti-Dilution Protection

Anti-dilution is usually discussed as an investor right.

However, founders can negotiate protections of their own.

For example, the agreement can provide that:

• no new shares may be issued below a specified valuation without founder consent;
• certain founders must consent to the creation of a new privileged share class;
• founders retain contractual participation rights in future rounds;
• founder-designated board approval is required for capital increases;
• an employee pool above a specified percentage requires founder approval.

These provisions do not eliminate dilution, but they give founders negotiating power before it occurs.

Shareholders’ Agreement and Articles of Association Should Work Together

One of the most important principles of Turkish startup law is that the shareholders’ agreement and articles of association are not the same legal instrument.

A shareholders’ agreement primarily creates contractual obligations between its parties.

The articles of association operate within the corporate structure of the company.

Therefore, founders should ask:

Which protections should remain contractual, and which should also be reflected in the articles of association?

This is particularly important for:

• share classes,
• voting privileges,
• board representation,
• transfer restrictions,
• and other rights intended to have corporate effect.

A beautifully drafted investment agreement may still create practical problems if the necessary corporate implementation has not been completed.

Protect Founders Against Uncontrolled Future Share Issuances

A major risk begins after the first financing round.

Suppose the investor owns 25%.

The founders own 75%.

The shareholders’ agreement gives the investor strong rights over future capital increases.

Two years later, the company conducts another financing round.

If the founders have not protected themselves, their percentage may fall dramatically.

The agreement should therefore regulate:

• who can propose future financings,
• what approvals are required,
• whether founders may participate,
• minimum valuation conditions,
• creation of new share classes,
• option pool expansion,
• issuance of convertible securities,
• and whether existing investors receive preferential rights.

A startup should plan not only for the current investor but also for Series A, Series B and future rounds.

Do Not Give Away Founder Control Through the Term Sheet

Many founders focus heavily on valuation while negotiating a term sheet.

This can be a mistake.

Two investment offers can have the same valuation but very different consequences.

Investor A

Invests EUR 1 million for 20%.

Receives one board seat.

Has limited reserved matter protection.

No aggressive anti-dilution rights.

Investor B

Invests EUR 1 million for 20%.

Receives two board seats.

Has broad veto rights.

Receives full ratchet anti-dilution.

Obtains strong liquidation preference.

Requires a large pre-money employee option pool.

Although both investors receive “20%”, the second transaction may be significantly more burdensome for founders.

Therefore, founders should evaluate the entire investment package rather than only valuation.

Liquidation Preference Can Affect Founder Economics

Liquidation preference is another important venture capital concept.

It determines how proceeds are distributed if:

• the company is sold,
• liquidated,
• merged,
• or another defined exit event occurs.

For example, an investor may receive a 1x liquidation preference.

If the investor contributed EUR 2 million, the agreement may provide that the investor first receives EUR 2 million from exit proceeds before the remainder is distributed according to the agreed formula.

More aggressive structures may include:

• multiple liquidation preferences,
• participating preferences,
• cumulative returns,
• or preferential dividends.

These mechanisms can significantly reduce the amount founders receive on a modest exit.

Therefore, protecting founder shares also means protecting the economic value attached to those shares.

Owning 60% of a company does not necessarily mean receiving 60% of the sale proceeds if investor preferences apply first.

Tag-Along Rights Protect Founders During Investor Share Sales

Founders should also consider what happens if the investor later sells.

A tag-along right may permit founders to participate in a proposed share sale under specified conditions.

Suppose a strategic company offers to purchase the investor’s significant stake.

The founders may want the right to sell some or all of their shares on comparable terms.

Without tag-along protection, the investor may exit while leaving the founders with a completely new shareholder.

Tag rights should therefore be considered during the original investment negotiation.

Drag-Along Rights Must Be Negotiated Carefully

Investors frequently request drag-along rights.

A drag-along provision may allow specified shareholders to require other shareholders to participate in a company sale.

The mechanism can be useful.

Without it, a small minority shareholder could block a buyer that wants 100% ownership.

However, founders should carefully negotiate:

• who may trigger the drag,
• minimum approval thresholds,
• minimum valuation,
• whether founder consent is required,
• whether all shareholders receive the same economic terms,
• treatment of warranties,
• and liability caps.

An investor holding only 20% should not necessarily be able to force founders owning 80% to sell the startup whenever the investor chooses.

Founder Share Transfer Restrictions Can Preserve Long-Term Control

Investment agreements frequently restrict founders from selling shares for a specified period.

This is often called a founder lock-up.

Investors may reasonably want assurance that the founders will remain committed.

However, founders should negotiate exceptions allowing transfers in appropriate circumstances.

Examples may include:

• transfers to a founder-controlled holding company,
• estate planning transfers,
• family transfers,
• permitted secondary sales,
• or transfers approved by other shareholders.

The lock-up should not make founder equity effectively impossible to monetise indefinitely.

Limited Company Founders Should Pay Particular Attention to Voting Structure

For Turkish Ltd. Şti. structures, the company agreement can regulate voting rights within statutory boundaries.

Article 618 of the Turkish Commercial Code contains rules concerning how voting rights are calculated and allows certain alternative structures to be created through the company agreement. Article 621 additionally subjects important decisions—including capital increases, restriction of pre-emption rights and creation of voting-privileged capital interests—to qualified voting requirements.

Accordingly, founders of a limited company should analyse:

• existing capital percentages,
• voting arrangements,
• qualified majority thresholds,
• and the investor’s ability to block important decisions.

The investor’s nominal ownership percentage alone does not reveal the complete governance structure.

Example: Protecting Two Founders During a Seed Investment

Consider a Turkish software startup established as an A.Ş.

Before investment:

Founder A: 50%

Founder B: 50%

A venture capital investor proposes to invest EUR 1 million for 20% post-money ownership.

After investment:

Founder A: 40%

Founder B: 40%

Investor: 20%

The founders have accepted economic dilution.

However, their legal protections might include:

• statutory and contractual participation rights for future share issues;
• one board seat designated by Founder A;
• one board seat designated by Founder B;
• one investor board seat;
• founder consent for major capital increases;
• founder consent for a sale below an agreed valuation threshold;
• no expansion of the employee option pool above a defined level without approval;
• weighted-average rather than full-ratchet anti-dilution;
• proportionate tag-along rights;
• carefully limited drag-along rights;
• restrictions on creating superior new investor share classes;
• and appropriate reserved matters.

The founders now own 80% rather than 100%, but they have created a legal structure capable of protecting both economic participation and management influence.

This is far more useful than attempting to prevent all dilution.

Common Mistakes Founders Make When Accepting Startup Investment

One of the biggest mistakes is focusing only on the valuation.

Other common errors include:

• failing to prepare a fully diluted cap table;
• ignoring the employee option pool;
• misunderstanding pre-money and post-money valuation;
• waiving pre-emption rights too broadly;
• accepting excessive investor veto rights;
• accepting full-ratchet anti-dilution without modelling the consequences;
• creating investor board control disproportionate to ownership;
• failing to protect founder board representation;
• ignoring liquidation preference;
• failing to regulate future share classes;
• accepting an unrestricted drag-along clause;
• failing to negotiate tag-along rights;
• failing to coordinate the shareholders’ agreement with the articles;
• ignoring future investment rounds;
• and signing a foreign investment template without adapting it to Turkish law.

Any one of these mistakes can become expensive once the startup’s valuation increases.

Founder Investment Protection Checklist

Before admitting a new investor, founders should answer the following questions:

1. What is the pre-money valuation?
2. What is the post-money valuation?
3. What percentage will the investor receive?
4. Is the investment primary or secondary?
5. Is there an employee option pool?
6. Is the option pool calculated pre-money or post-money?
7. What will the fully diluted cap table look like?
8. Are founders preserving future participation rights?
9. Are statutory pre-emption rights being waived?
10. Is the waiver limited to the current transaction?
11. Will the investor receive privileged shares?
12. Will the founders retain voting privileges?
13. Who appoints board members?
14. What matters require investor approval?
15. What matters require founder approval?
16. Is there anti-dilution protection?
17. Is it full ratchet or weighted average?
18. What liquidation preference applies?
19. Can the investor force an exit?
20. Do founders have tag-along rights?
21. Are drag-along thresholds reasonable?
22. Can a new superior share class be created later?
23. What happens in the next financing round?
24. Are the corporate documents consistent with the shareholders’ agreement?
25. Have the founders modelled a down round before signing?

If the founders cannot answer these questions, the investment documentation should not be treated as complete.

Conclusion: How Can Startup Founders Protect Their Shares When Accepting a New Investor in Turkey?

Startup founders in Turkey cannot realistically expect to raise substantial investment while permanently maintaining 100% of their original ownership.

Dilution is a normal part of startup financing.

However, uncontrolled dilution is not inevitable.

Founders can protect their position through careful use of:

• statutory pre-emption rights,
• contractual pro rata rights,
• appropriate valuation,
• carefully structured share classes,
• voting privileges,
• board representation,
• founder consent rights,
• reserved matters,
• limitations on future share issuances,
• balanced anti-dilution provisions,
• tag-along rights,
• carefully negotiated drag-along rights,
• and coordinated articles of association and shareholders’ agreements.

Turkish law already provides important statutory protections.

In joint stock companies, Article 461 of the Turkish Commercial Code grants shareholders proportional rights to subscribe for newly issued shares and restricts the circumstances in which those rights may be removed.

Articles 478 and 479 permit different forms of privileged shares and voting privileges within statutory limits, while Article 360 allows qualifying shareholder groups or minorities to receive board representation rights through the articles of association.

Limited liability company shareholders also benefit from proportional subscription rights under Article 591, while important decisions concerning capital increases and restriction of pre-emption rights are subject to qualified decision-making requirements under Article 621.

However, statutory protection alone is rarely sufficient for a venture-backed startup.

The founders must also negotiate the investment agreement carefully.

Perhaps the most important principle is that founders should protect value and control, not merely percentages.

A founder may own 35% of a highly successful startup and retain substantial management influence, exit rights and economic protection.

Another founder may own 60% but have accepted investor veto rights, aggressive liquidation preferences, board control and anti-dilution mechanisms that dramatically weaken the practical value of that ownership.

Therefore, the question should never be limited to:

“What percentage will I own after the investment?”

Founders should also ask:

“What rights will be attached to my shares after the investment?”

“Who will control the company?”

“What happens in the next financing round?”

“What happens if the valuation falls?”

“Who can force a company sale?”

“How will sale proceeds actually be distributed?”

“Can another share class later become superior to mine?”

A startup investment should be viewed as the beginning of a long-term shareholder relationship rather than a simple transfer of capital.

When founders structure that relationship correctly, accepting a new investor does not have to mean losing control of the startup.

The objective should be to create a structure in which investors receive reasonable protection for their capital while founders retain sufficient economic incentive and corporate influence to continue building the company.

For startups planning to raise angel investment, seed financing or venture capital in Turkey, the cap table, term sheet, investment agreement, shareholders’ agreement and articles of association should therefore be designed together as a single legal architecture.

The best time to protect founder equity is before the investment documents are signed and before the capital increase is completed.

Once the investor has entered the company and the rights have been granted, renegotiating them can be considerably more difficult.