Regulation on Participation in Venture Capital Funds and Venture Capital Practices Published

The Ministry of Industry and Technology (the “Ministry”), jointly with the Ministry of Treasury and Finance, published the Regulation on Participation in Venture Capital Funds and Venture Capital Practices (the “Regulation”) on 28 November 2025.

Issued pursuant to the Law No.5746 on the Support of Research, Development and Design Activities, published in the Official Gazette dated 12 March 2008 and numbered 26814, the Regulation sets out the scope and implementation of the source to be transferred from the Ministry’s budget to venture capital funds to support technology, technological production, and innovation activities.

Fund Selection Process for Capital Support

The Regulation introduces a two-phase invitation based selection process to determine eligible funds. The Ministry will open applications through an official invitation, and submissions meeting the stated criteria will be reviewed by the Venture Capital Fund Evaluation Commission (the “Commission”). The final decision regarding the public capital commitment will be made by the Minister of Industry and Technology, taking into account the Commission’s assessment.

Key Criteria for Fund Selection

The Regulation defines six core criteria for the Commission’s evaluation of fund applications. These include the fund manager’s experience in venture capital or private equity, expertise in priority sectors, returns generated from prior investments and the ratio of those returns to total capital deployed, the fund’s management expenses, the proportion of third-party investor commitments relative to the Ministry’s funding pledge, and any additional benchmarks specified by the Ministry in the official invitation decision.

Investor Agreement for the Selected Fund

Following the selection of the fund eligible for public capital support, the Ministry and the fund manager will sign an investor agreement aligned with the objectives and conditions of the invitation. Key matters including the fund’s duration, potential extensions, liquidation procedures, the disposition of remaining unallocated capital, and the individuals authorized to make related decisions will be determined through this agreement in a manner consistent with the fund’s purpose.

Investments with Allocated Resources 

Investment decisions using fund resources will likewise be made in accordance with the objectives set out in the invitation. These decisions will fall under the authority of the Investment Committee, as constituted by the investor agreement. While technology, technological manufacturing, innovation activities and venture capital funds are identified in the Regulation as eligible investment areas, the invitation decision will serve as the primary determinant of the fund’s investment scope. The Regulation further stipulates that all investments must be aligned with the fund’s purpose. If the fund allocates capital to other venture capital funds, those recipient funds must also meet the specific conditions of the original call.

The regulation ensures that the fund can also obtain resources from external sources, and in this context, both bilateral and multilateral protocols regarding the implementation between third parties, the fund manager, and the Ministry can be signed.

Investment Restrictions for Allocated Resources

The Regulation also sets out specific restrictions on investments that may be financed through the allocated resources. Accordingly, investments cannot be made in companies that (i) produce, trade or provide goods or services in violation of applicable legislation, or (ii) operate in areas considered contrary to the law, public order, or general morality. This prohibition includes, in particular, companies active in tobacco, alcoholic beverages, casino or gambling/betting activities, as well as entities engaged in political or ethnic activities. In addition, companies whose business is exclusively focused on real estate investments are also ineligible for investment.

Audit of Allocated Resources

Oversight of the Ministry’s capital allocation will be conducted through reports submitted by fund managers every three months. The Regulation grants the Ministry the right to take preventive measures, to notify relevant public institutions and to pursue legal remedies when necessary within the powers defined under the investor agreement.