Structured equity describes preferred-share investments loaded with downside protection beyond the plain-vanilla 1x non-participating preference: guaranteed minimum returns, cumulative or PIK dividends, multiple liquidation preferences, full-ratchet or aggressive weighted-average anti-dilution, IPO ratchets guaranteeing a return at listing, redemption rights, and senior ranking over earlier preferred. Structure is the price of headline valuation: a company that will not accept a lower number accepts harder terms instead.
The mechanism became famous in the 2021–22 cycle’s aftermath: companies that had raised at peak prices used structured rounds to avoid announcing a down round, keeping the optical valuation flat while transferring real economics to the new money. The cost is paid later and compounds quietly. A 1.5x senior preference plus an IPO ratchet sits on top of the exit waterfall; employees and earlier investors discover at the sale that the “flat round” reduced their proceeds more than an honest down round would have. Diligence rule of thumb: read the waterfall, not the press release — “clean” terms at a lower valuation usually beat structure at a higher one.
Turkish deal practice
Turkish growth-stage deals replicate structure contractually: multiple preferences, cumulative dividend-like returns and ratchets are built in the shareholders’ agreement and, to the extent company law permits, anchored as share-group privileges in the articles (TTK art. 478–479). Two local constraints shape drafting — Turkish capital-maintenance rules limit company-funded exits (which weakens redemption-style features against the company itself), and dividend privileges must respect the statutory framework for preferred shares. The practical consequence mirrors the global one: structure is enforceable mainly at exit, through the waterfall, so modelling the waterfall is the diligence.
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