Crowdfunding Platforms Under Capital Markets Law

Res. Asst. Defne Kahveci*

Crowdfunding is a financing method that enables persons to obtain funds for a project via internet, by collecting small amounts from a relatively large number of individuals, without traditional intermediaries (such as banks) for profit, cultural or social purposes.

This financing model has three actors: (i) the person who needs funding (entrepreneur), (ii) the person who provides the fund (investor) and (iii) the crowdfunding platform that brings the parties together. Equity crowdfunding, debt-based crowdfunding, donation-based crowdfunding and reward-based crowdfunding are the four main crowdfunding methods.

Unlike traditional financing methods such as public offering or obtaining bank loans, crowdfunding is a faster, less expensive way to finance projects, which makes it attractive for all types of entrepreneurs and investors. On the other hand, there is a high risk of using crowdfunding for fraudulent purposes or money laundering, because crowdfunding is done online, and the investors often do not have much experience. For this reason, crowdfunding regulations entered into force in many countries including Turkey. Crowdfunding is regulated under capital markets regulations in Turkey and the Capital Markets Board oversees the crowdfunding process and relationship between entrepreneurs and investors.

This blog post aims to briefly discuss this new financing method and introduce crowdfunding platforms, within the framework of Turkish capital markets regulations.

For the full text of this blog post in Turkish, please click here.

Keywords: Crowdfunding, Crowdfunding platforms, Investors, Investor protection

* Doğuş University Law School, Department of Commercial Law