Setting Up a Venture Capital Fund (GSYF) in Türkiye (Turkey)

To set up a venture capital fund in Türkiye (Turkey) - a girişim sermayesi yatırım fonu, or GSYF - you do not incorporate anything, and as a foreign sponsor you cannot lodge the application in your own name: the fund must be founded for you by a portfolio management company that already holds a licence from the Capital Markets Board. What you are creating is a pool of assets with no legal personality, sold only to qualified investors, and required to raise total capital commitments of at least TRY 50,000,000. That one constraint reorders the whole plan, because it means the first item on the timetable is finding or acquiring a licensed founder, not drafting fund rules. What follows is the regime as it stands under the Capital Markets Board's Communique III-52.4: who may found a fund, who may invest, the statutory clocks, the portfolio limits, the sliding allocation ladder that opens up as foreign ownership rises, and how the vehicle is taxed.

What is a GSYF, and can a foreign sponsor found one?

Start with what the vehicle actually is, because the legal form drives everything downstream. Under Article 4 of the Capital Markets Board's Communique on the Principles Regarding Venture Capital Investment Funds (III-52.4), a GSYF is a pool of assets with no legal personality, created for a fixed term by a set of fund rules, holding money or participation interests collected from qualified investors on their behalf under fiduciary ownership principles.

The founder of the fund, called the kurucu, can only be a portfolio management company, a venture capital portfolio management company, or a real estate and venture capital portfolio management company that already holds an operating licence from the SPK. A foreign VC firm cannot lodge the application in its own name. In practice you either partner with a licensed founder, or you acquire or establish one and take it through SPK licensing first, which is a separate project with its own timetable.

The founder also has to look the part organisationally. Article 11 requires at least one member of its board to have five years of venture capital experience, plus an investment committee including that director, the general manager, and a person with a four-year degree and five years of venture capital experience - a seat the qualifying director may fill himself. Where the portfolio is managed by someone other than the founder, that structure sits with the manager instead.

What you get in exchange is real insolvency protection. Article 5 keeps the fund's assets separate from those of the founder, manager and custodian: they cannot be pledged outside defined purposes, cannot be attached even for public receivables, cannot be made subject to an interim injunction, and cannot be drawn into a bankruptcy estate.

Who can invest in a Turkish venture capital fund?

Only qualified investors. Article 13(1) is a single sentence and it does not bend: participation units may be sold to qualified investors alone. There is no retail tranche and no friends-and-family carve-out.

The Communique borrows the definition rather than writing its own. A qualified investor is anyone falling within the SPK's rules on the sale of capital markets instruments, plus a person holding an angel investor licence under the Regulation on Individual Participation Capital. Those thresholds are set by the Board's own rules and revised from time to time, so confirm the current figure in our guide to how foreign investors access Turkish investment funds rather than working from an older memo.

Two documents govern the relationship. The fund rules are the adhesion contract between unit holders on one side and the founder, custodian and manager on the other. Separately, Article 13(13) requires a fund issue agreement, signed with investors individually or collectively, before units are sold to a qualified investor - investors who buy units on the exchange are outside the requirement. Annex 4 sets its minimum contents, and it may not contain terms that seriously prejudice investor rights, grant the founder one-sided extraordinary rights, or shift the burden of proof onto the investor.

Liquidity is contractual, not statutory. Under Article 16(6), units may be transferred between qualified investors, but the fund issue agreement may make transfers subject to the approval of the founder or the manager, or prohibit them altogether, and the issue document may provide that units are only converted to cash at the end of the fund's term. Article 13(11) also allows different unit classes within the same fund, which is where differentiated LP economics belong.

How much must a GSYF in Turkey raise, and by when?

Article 22 sets the floor. The founder asks qualified investors for capital commitments payable in one instalment or several, and the total commitment must be at least TRY 50,000,000, stated in the issue document. It has to be collected within one year of the date sales to qualified investors begin, then deployed within the period stated in the issue document, which can never exceed two years.

Miss the floor and the fund does not simply carry on smaller: Article 22(2) requires investment activity to stop and an application for permission to liquidate within six months. One qualification matters for planning - Article 22(5) lets the Board re-determine the amount every year and announce the revised figure in its Bulletin, so treat TRY 50 million as the Communique's number and check the figure currently in force.

Two of these deserve a diary entry rather than a footnote. If the issue application is not filed within six months of registration, the founder must strike the fund rules from the registry itself. And if sales have not begun within a year of receiving the approved issue document, the founder has six business days to apply to the Board either for liquidation or for extra time.

What can the fund actually invest in?

Article 19(1)(a) is the test the whole structure turns on: at least 80% of the fund's total value must consist of one or more venture capital investments. Everything else is a residual bucket with its own caps.

What qualifies as a venture company is defined in Article 18. The company must have growth and value-creation potential and be capable of reaching its objectives with financial or institutional support. It must be established, or to be established, in Türkiye - or established abroad but with at least 51% of its assets, per its most recent financial statements, made up of subsidiaries or participations established in Türkiye. Funds may invest only in joint stock and limited liability companies, and a Turkish limited company must complete its conversion into a joint stock company within one year of the first investment, a corporate restructuring exercise worth pricing into the deal rather than discovering later.

Article 18(3) then lists what counts as a venture capital investment - equity taken directly or through a special purpose company, non-listed debt instruments and lease certificates issued by venture companies, units in other venture funds, securities of venture capital investment trusts, and hybrid debt-and-equity financing. The 2024 amendment added investments made through contracts that grant, or will grant, the right to become a shareholder in future, which is what brings a convertible instrument inside the perimeter rather than leaving it in the residual bucket.

Compliance is tested by the custodian on the year-end total value table, not daily. Article 19(3) gives some room on the maxima: where a breach arises incidentally, because an investment was realised or a valuation moved, no cure is required as long as no new investment is made. Breaches of the minimum are harder - the founder must apply to the Board, which may grant up to one year from the end of the relevant accounting period, after which investment activity stops and liquidation follows.

How much can a Turkish venture capital fund invest outside Turkey?

Here is the provision that decides whether a GSYF can hold your regional portfolio or only the part of it that sits in Turkey. Article 23(3) allows the fund to put a maximum of 15% of its total value into non-listed foreign companies with growth potential, and only through the routes in Article 18(3)(a), (b) and (f) - equity, their non-listed debt instruments and lease certificates, and hybrid financing. Those investments do not count towards the 80% venture capital test, so they consume the residual bucket twice over.

Article 23(5), added in September 2024, replaces that cap with a sliding scale keyed to how much of the fund is held by non-residents.

The tiering is more generous than the headline percentages suggest, for two reasons. From the 20% tier upwards those foreign investments are included within the venture capital investment limits rather than excluded from them, which is what makes a genuinely regional strategy workable. And the same tiers apply where the amount paid for the units is documented as originating abroad, so the test can be met by the source of the money as well as by the residence of the holder.

The compliance mechanics are strict. The custodian checks the non-resident ownership ratio at each accounting period end and, if the portfolio no longer fits the applicable tier, informs the founder and the Board within ten business days of that period end; the founder then has ten business days to apply for time to cure. In a fund whose foreign LP base can shrink through a redemption or a transfer, the tier is a live covenant rather than a one-off structuring choice at launch, and it belongs in the fund issue agreement and in your side-letter and shareholder arrangements.

How is a GSYF taxed?

Favourably, and by design. Article 5/1-(d)(3) of Corporate Tax Law No. 5520 exempts the income of venture capital investment funds and trusts established in Türkiye from corporate tax. A paragraph added at the end of Article 5/1-(d) by Law No. 7524 of 28 July 2024 attaches one condition to the whole exemption: funds and trusts other than pension funds must distribute, as a dividend, at least 50% of the income they derive from immovables they own, by the end of the second month following the month in which the corporate tax return is due. For most venture funds this is dormant, since Article 18(8) keeps real-estate-heavy companies out of the portfolio anyway, but a fund that ends up holding immovables directly needs it in the compliance calendar.

A second layer sits underneath. Article 15(3) imposes a 15% withholding at fund level on the income covered by Article 5/1-(d), whether or not it is distributed, and Article 15(4) empowers the President to reduce that rate as far as zero and to differentiate it by fund type or portfolio composition. For venture capital funds the rate has been set at zero by Council of Ministers Decision No. 2009/14594. Rates fixed by decision can be changed by decision, so confirm the rate in force before you model net returns.

For a non-resident LP, none of this settles the investor-level question. How distributions and exit proceeds are taxed in your hands turns on where you are resident and on any applicable double taxation treaty, and it should be worked through with Turkish tax advice, alongside home-country advice, before subscription documents are signed rather than after the first distribution.

GSYF, GSYO or an offshore private equity fund: which fits a foreign investor?

An offshore fund remains the default for a purely international LP base with no Turkish tax appetite, and it keeps you outside the SPK perimeter entirely. What it does not give you is the exemption regime, the Article 325/A deduction for Turkish corporate LPs, or a domestic vehicle that Turkish institutional investors can allocate to without a cross-border mandate. It also leaves each portfolio investment to be structured as an ordinary inbound acquisition, with the share purchase and post-closing mechanics that go with it.

A GSYF earns its regulatory overhead when one of three things is true: you want Turkish qualified investors in the LP base, you want the fund-level tax treatment, or you want the Article 5 ring-fence around portfolio assets held in Turkey. Where none of those apply, a foreign investor running a private equity strategy across the region is usually better served by an offshore vehicle.

Where do foreign sponsors get caught out?

The provisions that cause trouble are almost never the headline ones. These five recur.

• Assuming you can be the founder. You cannot, unless you hold or acquire an SPK portfolio management licence. Sponsors who plan backwards from a first closing date without solving this risk losing a year.
• Treating the 80% test as continuous. It is measured by the custodian on the year-end total value table, which under Article 19(2) may be prepared up to the end of the third month after period end where year-end venture company values are used. That timing shapes when a deal must actually close to count.
• Misreading the valuation rules. Article 20(2) splits funds in two. Where only capital-commitment investors may join and units cannot be redeemed before the end of the term, paragraph (a) lets year-end value be fixed by a founder board resolution on an investment committee report. Every other fund falls under paragraph (b), where a report from an SPK-approved valuation firm is mandatory at intervals that tighten as the ticket grows - every third accounting period below TRY 25 million, every second between TRY 25 and 50 million, every period above TRY 50 million. Which side of that line your fund documents put you on is a budget decision taken at drafting.
• Forgetting the fund cannot be reshaped later. Article 33(2) provides that a fund cannot be merged with another fund or converted into one. Whatever you get wrong in the fund rules travels with you.
• Leaving the exit unplanned. Article 21 requires a shareholding agreement with the venture company's controlling shareholders, but only the governance of the company and the parties' rights and obligations have to be in it. Exit routes, pre-emption, tag-along, dividend policy and put and call options are listed as permitted content, not required content, so they appear only if you put them there. Article 21(3) drops the requirement altogether where the fund acquires all the shares or takes management control - a share transfer agreement is then enough. If a listing is the plan, the SPK offering process should inform how those clauses are drafted at entry.

Lexin Legal advises fund sponsors and foreign limited partners through establishment and licensing, fund rules and issue documentation, side letters, portfolio company investment and shareholding agreements, and the ongoing limits that keep the vehicle compliant. If you are still deciding between structures, our capital markets and funds practice is the right place to begin; our US Desk handles the same work alongside US counsel for American investors. Tell us who your investors are and where the portfolio will sit, and the structure usually chooses itself.

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