The government, which has eased the real sector by providing loans, is getting ready to make another important move. The draft for crowdfunding, which is applied in developed countries like the U.K., the U.S. and France and reaches $35 billion in volume worldwide, is coming to Parliament in October.

With a new generation of funding system that will be available for small businesses with a project but no money, entrepreneurs will be able to reach larger masses. Since the partnership can be established online, the necessary money can be obtained from the "online community." With this method, difficulties experienced by companies in reaching bank loans will be prevented and innovative ideas and projects will be financed by citizens online.

Deputy Prime Minister Mehmet Şimşek said that the draft, to be submitted to Parliament in October, includes many subjects for strengthening crowdfunding, research and development innovation and the entrepreneurship ecosystem. In the Turkish system, crowdfunding websites operate in the form of funding in exchange for rewards or funding through grants. Funding in exchange for stocks or borrowing is not legally possible due to banking, capital markets and trade law regulations.

The Treasury has conducted a comprehensive study on legislation and infrastructure in efforts to regulate crowdfunding. In addition to the qualifications of the investor, the conditions for realization of sales are also regulated, especially when the return is stock in the funding.

Turkey will be the third country to adopt crowdfunding legislation after the U.S. and the U.K., with the entry into force of the legislation. This way, it will be possible to establish partnerships online with this system which will support small businesses with projects but no money.

Under the said regulation, certain platforms will be authorized for crowdfunding. While entrepreneurs reach large masses of people, the system will also contribute to directing the savings of these people away from the investment environment to the projects.

Entrepreneurial companies and project owners will be able to raise money via this platform, making it possible to reach larger masses through websites operated via funding platforms. The shareholding status of companies seeking funds for their projects on their websites will also be closely monitored.

What is crowdfunding?

Crowdfunding is a funding method that provides capital for an initiative or project proposed over the internet by individual investors in cooperation with family or friends. The system operates in three ways, depending on the fund's returns: Reward, share and borrowing (loans).

The funding of entrepreneurial projects is in question here, rather than those companies which seek to serve as mediators by setting up a crowdfunding platform in what is becoming an increasingly rapidly growing process in Turkey.