Görkem Gökçe, Founding & Managing Accomplice of Gökçe
The Turkish startup ecosystem has skilled a major enhance within the variety of tech start-ups spearheaded by the gaming, finance, well being and eCommerce sectors, which have attracted home and overseas buyers and grabbed billion-dollar investments by reaching document valuations. At Gökçe Legal professional Partnership, we offer authorized experience to a swath of tech start-ups at each stage of their journeys.
Figopara, a pioneer fintech Turkish firm, is without doubt one of the start-ups to which Gökçe offers its key authorized experience. Figopara gives options for money circulate issues arising from the discrepancy between the funds and collections of firms, performing as an middleman between monetary establishments and suppliers with the Figopara on-line platform. Since Figopara’s institution, Gökçe has been aiding Figopara and its founders in all authorized and monetary processes with its years of expertise within the start-up ecosystem.
Figopara acquired an funding of $11 million at a valuation of $50 million in its newest funding spherical, which was closed within the final quarter of 2022. On this funding spherical, Figopara has secured funding from 11 native and worldwide main buyers, together with the Worldwide Finance Company, the non-public sector arm of the World Financial institution Group, and native and cross-border funding funds.
Görkem Gökçe, the founding and managing companion of Gökçe, goals to switch his deep data of the start-up ecosystem to Turkish start-ups and to contribute to their purpose of changing into influential regional and international actors.
Investments in Turkey
Is there a selected sector in Turkey that has attracted vital funding lately?
It’s simple for me to say that Turkey has risen to a brand new degree and change into a core funding space in many alternative sectors lately. In 2021, greater than 300 start-ups had been established, receiving a complete funding of $1.5 billion from almost a thousand buyers.
Within the final two years, eCommerce, gaming and information analytics in finance (i.e. AI and machine studying) grew to become the rising sectors, receiving probably the most investments. I wish to spotlight that almost all of those investments had been made in start-ups that had simply acquired their first investments, whereas nearly half of those start-ups had been based within the final 2 years.
As such, it’s secure for me to state that eCommerce, gaming and information analytics have acquired vital investments and have proven larger improvement than in different areas lately, though their rankings (when it comes to the variety of transactions) range. It’s as a result of standard manufacturing concepts are being changed by know-how, software program, and even blockchain-based purposes in as we speak’s world. I discover these developments could have optimistic impacts and imagine that the variety of such initiatives will solely enhance within the upcoming years.
What are the explanations behind the current surge in funding in Turkish firms?
Turkey is a regional hub. Having the potential to deal with a big market and having a younger, dynamic, and educated inhabitants will be listed as the explanations for the current enhance in investments in Turkish firms. I imagine, nonetheless, that a very powerful cause for the surge is the rising variety of artistic start-up concepts.
Because the world is shifting away from conventionality in the direction of a technology-centric understanding, the investments in Turkey are according to this international pattern if not sooner. I can simply state that the massive variety of initiatives developed by Turkish entrepreneurs, particularly up to now 5 years, and the variety of incentives and help mechanisms offered by Turkish laws for investments in start-ups, are the primary driving forces behind the event of the start-up sector in Turkey.
How is the Turkish authorities performing to encourage this funding?
Turkish laws offers many incentives and supporting mechanisms for all investments in Turkey, and specifically for investments in start-ups. As an illustration, if the share certificates associated to the shares acquired via an funding in a joint inventory firm are held by the investor for at the least two years, the earnings from the sale of such share certificates is totally exempt from tax for actual individuals and considerably exempt for authorized entities. Additional, the start-ups and corporations finishing up R&D actions have extra tax exemptions.
Turkey is a regional hub. Having the potential to deal with a big market and having a younger, dynamic, and educated inhabitants will be listed as the explanations for the current enhance in investments in Turkish firms.
As for the enterprise capital market, the Turkish capital market laws regulates varied monetary establishments corresponding to enterprise capital funding trusts (VCITs) and enterprise capital funding funds (VCIFs) have many benefits over enterprise capital investments and, thus, over start-ups.
Firstly, the earnings of VCITs and VCIFs arising from their actions, together with the acquisition and sale of shares, are exempt from company and earnings tax.
Secondly, they’ll present a mixture of debt and fairness financing to start-ups, which is a technique offered just for the shareholders beneath Turkish laws and VCITs and VCIFs.
Lastly, carried curiosity and administration charges, that are remuneration incentive mechanisms for the managers, are launched to allow start-ups to obtain skilled administration help for funding processes from specialists of their fields.
What do you understand to be the primary challenges for overseas buyers trying to spend money on Turkish tech start-ups?
It could be finest to reply this query from a monetary and a authorized perspective.
One of many primary challenges that overseas buyers could face in Turkey is discovering enterprise companions with deep data and experience within the start-up sector and professionals who can present brokerage and advisory providers for the funding. In contrast to conventional companies, start-ups have their very own set of dynamics and it’s subsequently vital to work with advisors who perceive the construction, nature, functioning and primary motivations of start-ups, moderately than with advisors having a traditional perspective. On this regard, as a agency that all the time goals to fulfill the wants of its purchasers, we offer authorized help and experience for overseas buyers new to Turkey via our membership in worldwide platforms and establishments working in varied international locations all over the world.
What function do you and your group play in serving to buyers overcome these challenges?
As Gökçe, we’ve deep data and know-how gained from years of working with start-ups. Since our institution, we’ve offered authorized consultancy in all levels of a start-up journey, from their institution to doubtlessly their exits. Additional, as we function on a full-service foundation, having Company, TMC&Privateness and Litigation departments, we are able to simply meet the wants of our start-up and tech purchasers.
One of many very distinctive options of the Gökçe group is being able to construction the authorized deal in probably the most applicable method for the monetary end result that the events intend to achieve. We all the time prioritise understanding the monetary dynamics between the investor and the investee to design the authorized relationship.
Final however not least, the long-established and high-quality community that Gökçe has developed in each authorized and monetary circles through the years performs an lively function via its enterprise companions competent of their respective fields, in offering the experience that overseas buyers and start-ups might have in several fields.
One of many very distinctive options of the Gökçe group is being able to construction the authorized deal in probably the most applicable method for the monetary end result that the events intend to achieve.
Are you seeing any notable tendencies in the best way these tech firms function and the influence they’re having on the Turkish financial system?
The principle aim of tech firms is to offer services and products in a extra sensible, cost-effective and accessible method. Tech start-ups present extra correct, sooner, and extra reasonably priced options than standard instruments in areas in want of improvement starting from the every day wants of individuals to the monetary evaluation requirements of the enterprise world. It’s a lot clearer what the core actions of tech start-ups are and the way they’ll advance these actions via the lens of this willpower. On this context, the primary tendency of tech firms to offer extra correct, quick and reasonably priced providers and to automate these providers is to gather extra information. To attain this goal, information analytics, synthetic intelligence and machine studying actions could also be listed as the primary tendencies noticed within the actions of tech firms.
The second difficulty that I can handle at this level is ’confidentiality‘. In a globalising world, entry to every kind of knowledge is changing into simpler and simpler day-to-day and this has disadvantages in addition to benefits. Information evaluation has reached the sophistication degree to allow persona evaluation, and persona evaluation is a device that can be utilized to direct plenty. Consequently, although information evaluation is important for the development of service industries as of late, confidentiality and privateness considerations embedded in information evaluation are extra related than ever. Nevertheless, the answer for these points is, in flip, know-how itself.
While there have been a number of high-profile privateness violation instances and monitoring of cryptocurrency transactions, blockchain-based options corresponding to decentralised id and zero-knowledge proof show to be helpful in permitting people to have management over their information and privateness. It’s clear that this will probably be on the forefront of the concerns of most monetary actors within the upcoming years.
Life at Gokce
Do you foresee your group engaged on different vital transactions in Turkey within the coming years?
Since our institution, as Gökçe, we’ve performed a key function within the funding rounds and exit transactions of our purchasers’ start-ups in addition to the continuing operational advisory providers. Even in 2022 we had been concerned in a number of transactions of comparable measurement to the funding spherical of Figopara and even bigger, whether or not publicly introduced or not. The variety of investments we offer our authorized experience has been quickly rising up to now few years. It’s no shock that we proceed to play a key function in transactions of such sizes contemplating the variety of start-ups to which we’ve offered our experience up to now, be it within the stage of multinational, pre-seed funding spherical or seed funding spherical.
Have you ever seen any shift in your apply in response to the worldwide financial downturn?
Since our institution, we all the time had a various shopper portfolio together with each standard firms and start-ups.
The continued worldwide disaster and manoeuvres of monetary actors, together with central banks, to curtail money flows have made it troublesome to entry funds in lots of sectors. As a precept related to the markets and financial system on the whole, each disaster incorporates the seed of a chance. Lately, each the financial disaster and different crises, such because the pandemic, have led to a contraction in some standard sectors, whereas paving the best way for others. Figopara is a good embodiment of this precept. Figopara, as a fintech firm mediating options for money circulate issues, has been ready to usher in an answer to the money circulate drawback confronted by market actors. This concept was fortunately welcomed by buyers as an answer to the present disaster and led to one of many largest funding rounds in Turkey in 2022.
Aside from this, the opposite start-ups that we offer consultancy have developed options to shift bodily providers to on-line mediums responding to a urgent necessity in the course of the pandemic; subsequently, they had been capable of develop quick amidst the disaster.
Lastly, as a result of influence of the financial disaster on buyers’ threat notion and behavioural finance attitudes, many buyers have shifted from conventional funding devices to start-up investments.
Figopara, as a fintech firm mediating options for money circulate issues, has been ready to usher in an answer to the money circulate drawback confronted by market actors.
These realities have proven that shifting circumstances create new enterprise areas with new challenges and alternatives for growth inside current enterprise areas. I wish to underline that, by offering consultancy providers to our purchasers working in varied fields, we are able to simply adapt to the brand new conjuncture introduced by the quickly altering and generally shrinking market and, within the meantime, be affected minimally by the floating construction of the financial system.
What are the commonest challenges you encounter in advising start-ups on their funding rounds?
The elemental problem confronted by all start-ups is similar as the essential assumption of economics: the calls for of monetary actors are limitless; nonetheless, the assets are restricted. This elementary assumption is current in all points of on a regular basis and industrial life. The scenario of buyers and start-ups collaborating in funding rounds may also be perceived via this assumption. At this level, the primary problem in all start-up investments is balancing the calls for of the events to the transaction. Contemplating multilateral and cross-border transactions, attaining a typical consensus will be characterised as an goal problem in any transaction.
As Gökçe, we additionally analyse the monetary calls for of the events to the transaction and try to make sure that the calls for of the events are affordable and according to market circumstances and that the transaction is carried out in accordance with the joint and mutual will of all events. With the experience we’ve accrued through the years, we attempt to mirror the financial calls for of the transaction events to the authorized realm, each via the instruments already regulated within the laws and thru new authorized fiction to the extent permitted by the authorized order. Subsequently, this case, which will be characterised as an goal problem, is subjectively manifested as an added worth for us when thought-about along with Gökçe’s depth of expertise.
Ayse Ülkü Yalaz and Nilay Goker Duran, companions at NAZALI
NAZALI is a world full-service regulation agency that gives a broad spectrum of advisory providers to its purchasers with a certified group of legal professionals and different specialists in several apply areas. These apply areas comprise tax, competitors lawantitrust, IP, finance, privateness, customs, social safety and audit. The Company and M&A group at NAZALI is co-led by companions Nilay Göker Duran and Ayşe Ülkü Yalaz. With greater than 15 years of mixed expertise, the group offers advisory providers to its worldwide and native purchasers on all levels of buy-side and sell-side M&A transactions and represents buyers, entrepreneurs, and start-ups in progress finance offers in addition to fund elevating and structuring. Contemplating extremely interdisciplinary processes, such offers are evaluated by a variety of different specialists led by extremely respected companions, making NAZALI the very best match for such transactions. NAZALI displays its deep sectoral data in sector-specific M&A transactions within the healthcare, vitality, fintech and automotive sectors, together with others.
NAZALI’s core goal is to ascertain a long-term and trust-based relation with its purchasers. What distinguishes NAZALI is its potential to judge issues from all associated points beneath one roof to create complete options and to develop strong methods by advantage of interdepartmental communication.
Are you able to inform us extra concerning the work carried out by your self and your group throughout this funding spherical?
We represented the main investor, L2G Ventures, who was referred to us by our current shopper and one of many buyers of this deal, ScaleX. We all the time really feel privileged to work with extremely respected and skilled purchasers. We carried out an intensive authorized and tax due diligence and suggested L2G Ventures on drafting and negotiating the deal paperwork. We additionally assisted our shopper in the course of the signing, closing and post-closing levels.
What obstacles did you overcome in the midst of the spherical, if any?
This was an in-depth authorized due diligence course of that required analysing quite a few rules entangled with each other, together with banking and finance, eCommerce and privateness. But there are some non-regulated points to markets supported by fintech and know-how. In that respect, authorized due diligence was fairly difficult because it additionally concerned sure unregulated issues. To chorus from disrupting the progressive and dynamic nature of this sector and to beat issues encountered, we liaised on such points with the Figopara group to systemise and perceive their operations, which allowed us to establish benefits and dangers precisely with a business-minded strategy. Because of our shopper, we additionally adopted an entrepreneur-friendly strategy with an open dialogue by sharing our due diligence findings with the Figopara group, permitting them to make clear such points in a immediate method forward of closing. With the dear cooperation of Figopara and their authorized counsels, we had been capable of run such a fancy course of swiftly. We imagine that such an strategy offered vital advantages for the opposite buyers as nicely.
Finalisation of the SHA was fairly intricate contemplating Figopara’s comparatively sophisticated shareholder construction and sophisticated clauses accustomed to progress finance offers together with liquidation choice, anti-dilution and others. Since SHA was topic to English regulation, we needed to stop conflicts to make it appropriate with immediately relevant guidelines beneath Turkish regulation. Discovering a stability and reaching a viable SHA and articles of incorporation was very important and difficult. We overcame these challenges and tailor-made the SHA by working along with the counsels of all events, making invaluable contributions.
Moreover, tech M&As are beneath scrutiny in Türkiye. The Turkish Competitors Authority, which has amended its communiqué regarding mergers and acquisitions just lately, is especially enthusiastic about such offers. We established that getting approval from the Authority was additionally very important for this deal. Accordingly, the deal was tailor-made to permit sure management change clauses to be enforced following such approval and therefore these had been handled, designed and tailor-made individually in a method that may very well be legally enforced.
How did you’re employed with Gökçe Legal professional Partnership and different companies to make sure a passable end result for all events concerned?
Representatives of Figopara and Gökçe Legal professional Partnership in addition to different events’ counsels made invaluable contributions to the method with their cooperative, constructive and open strategy. We had beforehand labored with our colleagues on totally different transactions, which allowed us to beat challenges in a extra amicable and immediate method. Such an enormous take care of so many events concerned wouldn’t have been attainable with out the help of all events concerned with nice concord and teamwork.
Are there every other feedback that you just wish to make concerning the operation?
Progress finance offers should not short-term transactions. Processes following the closing are additionally very important as guaranteeing stability is crucial. We additionally put together a ’closing bible‘ that outlines what must be thought-about after a deal is sealed. Accordingly, we proceed to help and help our purchasers for the post-closing actions.
Final however not least, we additionally observe that generally the laws falls behind rising technology-related markets. As authorized practitioners we’re eager to grasp the dynamics of those applied sciences, be rather less conservative by discovering a stability, and decide an applicable perspective for progressive and dynamic sectors with a solution-oriented strategy.
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