Crowdfunding was pioneered by Marillion, the British rockband and conduced towards a great thing twenty years ago. The group mailed almost 10.000 fans and asked whether they would fancy buying an album one year prior its release and surprisingly the answer was "yes". That was ahead of time, as there was minimal access to the internet, however worked well, and made Marillion meet its fans. That was the rising of crowdfunding model which has been implemented by many others thereafter, including KickStarter.

Crowdfunding is basically a form of financing promising businesses, projects or ventures by involvement of many with a little bit of money. Today, just contrary to the mainstream business financing, crowdfunding works as a facility to approach as many investors as one can through the internet, rather than wishing for massive funds from a few key investors.

There are mainly four types of crowdfunding which are; donation based, debt based, equity based and reward based crowdfunding, where latter is the most common type in the world of investment. Donation based crowdfunding, as the name implies, includes campaigns in which there is no return to the contributor. In other words the contributors simply donate to support the idea without expecting any return, out of the goodness of their hearts. These work like charities. Debt based crowdfunding mechanism includes campaigns where contributors lend money and expect to be paid back at certain time intervals with a set interest rate. In equity based crowdfunding, the contributors invest money and expect return on their investment by receiving a share of the profit in the form of a dividend, distribution etc. Equity based crowdfunding is very famous in some countries and includes campaigns that are being used commonly by entrepreneurs and start-ups seeking an alternative to traditional venture capital and angel investors looking for a capital infusion to take their business to another level. Reward based crowdfunding includes campaigns in which contributors lend money and expect to receive different types of rewards like albums, t-shirts and gig tickets that correspond to the amount of money they contribute. This type of crowdfunding used to work well for consumer goods or other tangible products.

Different types of crowdfunding, especially the reward based mechanism, has also been carried out through different platforms in Turkey, where such fund-raising was not regulated with laws. However with the Law Amending Certain Tax Laws and Other Certain Laws No. 7061 ("Omnibus Law") published in the Official Gazette on 05.12.2017, crowdfunding has been placed in Turkish legislation. The provisions regarding the crowdfunding mechanism has entered into force on the same day the Omnibus Law published. According to the amendments made under the Capital Markets Law No. 6362 ("the Law"), crowdfunding is defined as a fund-raising mechanism for a start-up or a project by means of crowdfunding platforms within the scope of the rules to be determined by the Capital Markets Board. Although crowdfunding has come into existence with the amendments in the Capital Markets Law, neither different types nor any details have been put under the scope of the Law so that secondary legislation is expected to clarify a bit more.

The Omnibus Law aims to keep the crowdfunding platforms in a free market whereas establishing some protection mechanisms. According to the Omnibus Law, crowdfunding platforms serves in electronic environment and works as an intermediary for crowdfunding. In other words, crowdfunding platforms bring the project owner and investor or contributor together and support fund-raise from individuals. Crowdfunding platforms are required to obtain permission from Capital Markets Board to be established and to carry on serving in electronic environment.

Although crowdfunding evokes public companies based on similarities, the Law exempts crowdfunding from the rules applicable to the publicly held companies. Furthermore, crowdfunding is held exempted from duties such as preparing a prospectus or export document under the Law. 

Capital Markets Board is authorised to take any precaution such as requesting remedy for the unlawful acts and operations of crowdfunding platforms within a reasonable time period, limitation or cancellation of acts and operations and etc. If any fund-raising activities conducted without permission the Capital Markets Board appeals to the Information Technologies and Communications Authority ("ITCA") and so ITCA is authorised to block access to such website.

Crowdfunding provides a revolutionary tool for boosting economy as it may avoid failure of valuable businesses or projects just because the lack of financial support. It enables to approach thousands of investors, and thus to improve promising businesses, projects or ventures with the help of cumulative effort, therefore worth embracing. Turkey has made a major stride in the market with the recent regulation as it paved the way for implementing crowdfunding in its business environment lawfully, however; secondary legislation is reqisite either to stronger regulatory approach to crowdfunding or to properly make use of it.

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