Regulation on Participation in Venture Capital Funds and Venture Capital Practices Has Been Published

The Regulation on Participation in Venture Capital Funds and Venture Capital Practices (“Regulation”), prepared by the Ministry of Industry and Technology (“Ministry”) and the Ministry of Treasury and Finance, was published in the Official Gazette dated 28 November 2025 and numbered 33091, and entered into force on the date of its publication.

The Regulation establishes the procedures and principles for the transfer of public funds to venture capital funds and the procedures and principles for venture capital practices.

The Regulation sets out the procedures for calls for proposals governing the transfer of resources from the Ministry’s budget to venture capital funds to support technology, technological production, and innovation activities, as well as the application procedures for fund managers, evaluation criteria, the principles of investor agreements, and the obligations related to the monitoring and auditing of funds.

Venture capital funds supported or to be supported by the General Directorate of Development Agencies and development agencies are not included in the scope of the Regulation.

1)       Call for Proposals and Application

The Ministry issues one or more calls per year to determine the funds to be transferred. These calls announce the application requirements, necessary information and documents, the upper limit of the amount to be transferred, the purpose of use of the allocated funds, and other matters related to the implementation. In addition, the Ministry is authorized to determine specific application requirements and evaluation criteria for each call.

2)     Evaluation of Applications

Applications that meet the specific conditions set out in the Ministry’s call are reviewed by the Fund Evaluation Commission, consisting of five members. Criteria such as the fund manager’s experience, fund management expenses, committed amounts, and the suitability of the fund strategy are taken into account in the evaluation of the application.

3)     Investor Agreement and Investment Decisions

Pursuant to the Regulation, an investor agreement shall be signed between the manager of funds whose applications are deemed suitable and the Ministry.

The investor agreement shall include provisions relating to at least the following matters:

1. the purpose of the fund,
2. the fund’s powers, management, and representation in relation to its business and transactions with third parties,
3. The responsibilities of the Ministry and the fund manager,
4. Restrictions and calculation methods regarding the use of resources,
5. Representation of investors in the fund’s governing body,
6. Methods and financial instruments that may be used in investments,
7. the fund term, investment period, exit period from investments, and liquidation of the fund,
8. management fees and expenses,
9. the condition, term, period, and method of resource transfer by investors under the commitment,
10. the custody and management of the fund’s assets,
11. reporting and audit obligations.

In addition, the fund’s investment decisions are made by the investment committee, and investments can be made directly to the start-ups as well as to venture capital funds from the fund’s resources to support technology, technological production, and innovation activities. Additionally, other venture capital funds invested in through the relevant fund must meet the specific conditions announced in the call. Investors other than the Ministry may also provide resources to the relevant fund, and bilateral or multilateral protocols may be concluded between the Ministry, the fund manager, and investors.

Furthermore, under the Regulation, the relevant fund cannot invest in ventures that are contrary to legislation, law, public order, or general morality, or in ventures involved in tobacco, alcohol, casinos, betting games, exclusively real estate investments, or political or advocacy-based activities.

4) Audit and Monitoring

Fund managers are required to submit regular reports to the Ministry every three months regarding the fund’s performance, the status of investments, financial transactions, and the obligations stipulated in the Regulation. In addition, at the end of each accounting period, an annual audit report is prepared by an independent audit firm deemed appropriate by the investment committee from among the options determined by the fund manager. Additionally, the Ministry may assign one or more members and/or observers at least at the level of department head to the investment committee of the relevant fund. In addition, the fund manager is obliged to provide any information and documents requested by the Ministry regarding the fund.

As a result of the audit and monitoring activities we have described, the Ministry informs the fund manager of any measures it deems necessary regarding the operation of the fund. Furthermore, if the Ministry directly or indirectly determines that the resources transferred to the fund have been used improperly or for purposes other than those intended, it shall have the authority, within the scope of the powers granted to it by this Regulation and the investor agreement, to take the necessary measures, including the suspension or non-fulfillment of the Ministry’s resource commitment and liquidation of the fund, to notify the relevant public institutions and organizations, and to resort to legal remedies.

5) Exit from Investments

The amount obtained from the partial or complete disposal of the shares of the companies in which the fund has invested is returned to the fund and, if the investment period continues, this source is redirected to investment. If the investment period has ended, the amount in question is transferred to the collection account of the Ministry’s central accounting unit at the Central Bank of the Republic of Türkiye to be recorded as revenue in the general budget.

The Regulation aims to strengthen public-private cooperation and increase financing capacity for startups by facilitating the transfer of public resources through professional fund structures within the venture capital ecosystem. In this context, it is important for fund managers to carefully monitor the application and compliance processes.

The full text of the Regulation can be reached via this link. (Only available in Turkish)