A convertible loan agreement (CLA) is a debt instrument — common in Europe and frequently used for Turkish startups — that lends money to a company and converts into shares at the next qualifying round, typically with a discount and/or a valuation cap. Until conversion it is a loan that may bear interest.
The CLA defers the valuation debate to the priced round while giving the startup fast capital. In Türkiye, convertible structures must be reconciled with Turkish Commercial Code rules on capital increases and the legal treatment of the loan, which is why bespoke drafting is important.
Related practice areaStartup Law →