Vircon Legal Managing Partner Erdem Mümtaz Hacıpaşaoğlu joined the founder cohort at Week 5 of the APY TEKMER HUB Investment Program, run with BASEHUB and GEN Türkiye. The session covered the documents that carry most early-stage rounds to a priced financing: the SAFE and convertible instruments.
Note or loan? The distinction matters more than it looks
The session opened with a distinction the market routinely blurs: a convertible note and a convertible loan are not the same instrument. The note comes from American practice with a securities logic — standardised, and written to convert into equity from day one. The loan is, at its core, a credit agreement: maturity, interest and the repayment claim are serious, and conversion is a possibility. In Türkiye the distinction has a local edge: a structure built around a genuine repayment expectation can invite the unlicensed money-lending debate (usury, Turkish Criminal Code Art. 241). Knowing which instrument you hold is not terminological pedantry — it is risk classification.
Why Y Combinator invented its own instrument
The SAFE was born in 2013 precisely as a reaction to the note’s problems: maturity-date pressure, accruing interest, and the “is this debt or investment?” ambiguity. YC deleted maturity and interest entirely, leaving only the conversion promise, and in 2018 switched to the post-money version to simplify the maths. Standardisation’s real value is lower negotiation cost — everyone argues over the same handful of variables. Three of those variables got their own treatment in the session: the valuation cap (a ceiling on the conversion price — the investor’s dilution insurance), the discount (a haircut on the next round’s price), and the MFN clause (any better term given to a later investor flows back to the earlier one — the provision that propagates quiet side letters across the whole table).
The real Turkish-law obstacle — and the 4 June 2026 legislation
Nothing stops a Turkish company from signing a SAFE as a contract; the obstacle sits at the instrument’s heart, in automatic conversion. Under the Turkish Commercial Code, conversion never happens by itself: it requires a capital increase, a general assembly and registration, and the closest native mechanism — conditional capital (TCC Arts. 463–472) — is a rigid, narrow-purpose regime. The development that may change this picture is fresh: Article 11 of the omnibus law published in the Official Gazette on 4 June 2026 adds a paragraph to Law No. 5746 exempting non-public companies holding the Ministry of Industry’s Teknogirişim Badge from the TCC’s conditional-capital regime for capital increases based on convertible-debt agreements, with the procedure left to the Ministry. The gaps were discussed just as openly: the scope covers badge-holders only, the secondary regulation does not yet exist, and a clear criminal-law safe harbour (usury) is still missing. Our full analysis: Is the SAFE enforceable in Türkiye?
Is automatic conversion mandatory?
The cohort’s sharpest question got the clearest answer: no — which is exactly why the document must import the conversion mechanism rather than assume it. The Turkish structure that works stands on three legs: groundwork laid in advance in the articles of association, conversion pre-commitments collected from every shareholder, and enforcement backed by a penalty clause against the holdout.
The most common mistakes in Türkiye-style SAFEs
| Mistake | What it costs |
|---|---|
| Translating the American template and signing — without importing the conversion mechanics | On conversion day the document becomes a wish, hostage to shareholder goodwill |
| Writing the cap in USD and never discussing currency risk | A very different dilution two years later; the number-one seed of founder-investor disputes |
| No stacking rule across overlapping instruments | The priced round opens three negotiations at once |
| Leaving interest and repayment clauses in “for comfort” | Pushes the instrument toward a loan — and invites the usury debate |
| Collecting pre-commitments from the founder only | The minority shareholder returns at conversion holding leverage |
Our thanks to the APY TEKMER, BASEHUB and GEN Türkiye teams for the invitation, and to the cohort for sharp questions. Event highlights are on LinkedIn.
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