Turkey’s KOSGEB opened the first 2026 application window for its Business Development Support program on January 3, offering eligible young companies up to TRY 2 million for personnel, software, machinery, tooling and selected purchased services. The measure is modest beside a multinational’s capital budget, but strategically important for foreign investors because it can lower the cost of developing Turkish suppliers, technology partners and early-stage portfolio companies at a time when expensive credit remains a major constraint on business expansion.
A Targeted Response to the Financing Constraint
Applications for the first 2026 round were accepted until January 31. Announcing the call, Industry and Technology Minister Mehmet Fatih Kacır said the program was intended to move more entrepreneurs into production and innovation, particularly in manufacturing, information technology and scientific research.
Kacır reported that KOSGEB, Türkiye’s Small and Medium Enterprises Development Organization, had approved TRY 2.4 billion of support for 1,699 projects during 2025. That represents an average approved amount of approximately TRY 1.41 million per project, although actual awards and disbursements depend on eligible expenditure, project evaluation and subsequent compliance.
The intervention addresses a persistent weakness in Türkiye’s otherwise active entrepreneurial economy: viable smaller businesses frequently struggle to finance the period between establishing a company and reaching commercially sustainable scale. The OECD’s “Financing SMEs and Entrepreneurs 2026” report identifies KOSGEB as the principal institution implementing Turkish SME policy. It recorded TRY 12.4 billion of KOSGEB disbursements to 54,262 SMEs in 2024, illustrating that the agency operates across a much wider field than the January entrepreneurship call alone.
Credit conditions make such programs especially consequential. The Central Bank of the Republic of Türkiye entered 2026 with its one-week repo rate at 38 percent, after reducing it from 39.5 percent in December 2025, according to Governor Fatih Karahan’s February 2026 inflation briefing. Even when policy rates decline, commercial borrowing costs, collateral requirements and cautious bank underwriting can leave recently incorporated companies short of investment capital.
The International Monetary Fund’s 2025 Article IV assessment, published in 2026, forecast year-end inflation of 23 percent for 2026, compared with the Turkish government’s Medium-Term Program projection of 16 percent. That gap underlines the uncertainty facing companies preparing multi-year budgets. Machinery prices, wages and imported software or components can move substantially between project application, procurement and reimbursement.
What the Support Actually Covers
The January announcement focused on four broad categories: personnel, software, machinery and equipment, molds and qualifying service purchases. These are productive inputs rather than general corporate expenses. The logic is to help a newly established enterprise build operational capacity, technical capability and employment, rather than subsidize rent, real estate or vehicles.
KOSGEB’s program rules distinguish support from an unconditional cash grant. Business Development Support has generally operated with an 80 percent support ratio and on a repayable basis. This means an approved company must normally finance its own share of expenditure, follow the authorized project budget, document procurement and meet monitoring conditions. KOSGEB decides which requested items, quantities, amounts and technical specifications qualify.
This distinction matters for investors constructing a financing plan. A headline ceiling does not equal cash available on incorporation. The applicant needs sufficient working capital to cover its contribution, non-eligible expenditure, taxes where applicable and any timing gap before payment. Exchange-rate exposure also remains with the company when machinery, licenses or components are priced in euros or dollars but the support ceiling is denominated in lira.
The program subsequently evolved during 2026. KOSGEB’s updated October framework raised the standard Business Development Support ceiling to TRY 2.25 million, with an additional TRY 250,000 available where the entrepreneur is young, female, disabled, a veteran or a first-degree relative of a fallen service member. The current framework applies an 80 percent ratio over a 24-month project and states that repayment starts 12 months after the program period ends, without interest or commission.
KOSGEB also introduced a separate working-capital financing option for qualifying young or female entrepreneurs. Under that mechanism, the credit ceiling is TRY 1 million and KOSGEB covers 50 percent of the interest or profit-share cost on a non-repayable basis, subject to the program’s conditions. The direct Business Development Support and the interest or profit-share facility cannot be used simultaneously.
The revision demonstrates why investors must work from the rules applicable to a particular call, rather than relying on an earlier headline. Ceilings, project duration, eligibility exceptions and evaluation procedures can change during the year.
Eligibility Depends on the Turkish Operating Structure
The current KOSGEB framework restricts Business Development Support to companies generally between zero and three years old in specified NACE activity groups. These include manufacturing, telecommunications, computer programming and consultancy, data infrastructure and hosting, other information services, and scientific research and development. Companies holding Türkiye’s “technoventure badge” can receive an exemption from the ordinary age condition.
Applicants must be active in the KOSGEB database and maintain an up-to-date SME declaration. Türkiye broadened its SME definition in August 2025 by increasing the annual turnover or balance-sheet ceiling from TRY 500 million to TRY 1 billion, according to the OECD. The change potentially expanded the population able to access SME-oriented instruments, although each support program retains its own narrower eligibility rules.
Ownership is another critical issue. KOSGEB’s current frequently asked questions state that the qualifying entrepreneur normally must hold at least 50 percent of the applicant and remain individually authorized to represent it. The shareholding cannot fall below the threshold during the support period. Exceptions can apply to businesses holding the technoventure badge and, for certain establishment support, companies meeting the official digital-company definition.
For a foreign investor, this can create a structural trade-off. Acquiring control of a young Turkish company before its application or during the support period could affect eligibility if the founder’s holding drops below the required level. Conversely, postponing an investment solely to preserve public support may leave the company undercapitalized or create governance risks.
The solution is not artificial ownership. It is coordinated sequencing. Incorporation, shareholder agreements, capital increases, board and representation powers, intellectual-property ownership and the support calendar need to be examined together. This is where company incorporation and corporate structuring intersect directly with investment-incentive analysis and legal and tax compliance.
Foreign ownership does not by itself establish eligibility or ineligibility. The decisive questions include the applicant’s Turkish legal status, NACE registration, age, SME classification, founder qualifications, shareholding, representation authority and compliance with the specific call. Those matters should be verified before costs are incurred.
Public Support and Foreign Capital Are Complementary
KOSGEB’s program arrives as foreign capital plays an outsized role in Türkiye’s technology market. KPMG Türkiye and 212 reported that the country recorded 360 startup transactions worth $1.4 billion in 2025, compared with 331 deals worth $2.6 billion in 2024. Seed investments accounted for 269 transactions, nearly 75 percent of the total count.
Domestic investors participated in 318 deals, while foreign investors appeared in only 42. Yet international investors supplied approximately $1.145 billion, compared with $227 million from local participants. The figures show a market in which local capital supports much of the early pipeline, while foreign money dominates transaction value and later-stage scaling.
Artificial intelligence led 2025 by transaction count, followed by software as a service, health technology, financial technology, gaming and biotechnology, according to KPMG and 212. These sectors overlap substantially with KOSGEB’s emphasis on software, information infrastructure and research. Notable foreign-backed rounds included Midas’s $80 million financing and Sipay’s $78 million round. Uber’s acquisition of an 85 percent interest in Trendyol Go for approximately $700 million was the year’s largest transaction and drove delivery and logistics to the top of the sector ranking by value.
The broader FDI picture also improved. Central bank balance-of-payments data reviewed by MYD Partners put Türkiye’s 2025 inflows at $13 billion, 11.5 percent higher than in 2024. Gross foreign equity inflows reached $9.7 billion, their highest level in five years, while real estate’s contribution continued to decline. Information and communication attracted about $1.3 billion, nearly five times its 2024 total.
KOSGEB support therefore should not be read as a substitute for venture capital or strategic FDI. It can finance defined development costs at the beginning of the company-building process. Foreign equity can then fund commercialization, acquisitions, export expansion and regional scaling that fall outside the public program.
Execution Risk Matters as Much as Approval
A credible application requires more than describing an attractive product. KOSGEB first checks formal eligibility and document completeness, then uses sector-based boards, juries and ranking procedures. Under the updated October system, the top 1,000 projects nationally, together with the six highest-scoring projects in each province, can proceed to jury review. The highest-ranked 500 nationally and the top three in each province can qualify for support.
That competitive structure rewards projects with a clear market, realistic expenditure schedule, defensible technology and measurable employment or productivity effects. It also increases the cost of inconsistent documentation. A business plan forecasting export sales, for example, should align with production capacity, import requirements, staffing, certifications and the applicant’s registered activity codes.
Foreign investors should conduct incentive due diligence alongside commercial and legal due diligence. A target company may have an approval but lack the liquidity to implement it. It may have purchased equipment outside the authorized period, changed suppliers without approval or altered its ownership in a way that affects compliance. Potential repayment obligations should be treated as liabilities during valuation.
For manufacturing projects, the execution plan can extend into import-export facilitation, customs classification, conformity assessment and installation. Regulated technologies may also require government relations and regulatory liaison. Companies using exhibitions to acquire customers should coordinate expo representation and marketing expenditure with the approved project budget. On-the-ground project management is needed to track procurement, invoices, payroll records, milestones and reporting.
What This Means for Foreign Investors
The January KOSGEB call, and its later expansion in 2026, signal that Türkiye is concentrating public resources on young companies in manufacturing, digital infrastructure and research-intensive activities. For international investors, the opportunity is less about collecting a subsidy and more about combining public support with disciplined capitalization to build a stronger Turkish operating platform.
The practical process begins with market entry analysis: confirming demand, selecting the correct activity and determining whether the operation belongs in manufacturing, software, telecommunications, data services or R&D. Incorporation and corporate structuring must then preserve commercial control while accounting for founder-shareholding and representation requirements.
Investment-incentive work should map KOSGEB against other instruments, including TÜBİTAK research programs, investment incentive certificates, development-agency support and credit guarantees, while preventing duplicate financing of the same expenditure. Legal and tax compliance should cover SME declarations, payroll, procurement records, related-party transactions and repayment obligations.
Finally, government relations, import-export planning and project management should be integrated into implementation rather than added after approval. An FDI advisory firm such as fdiconsultancy.com can coordinate those workstreams, verify current rules and align the support timetable with equity investment, equipment purchasing, hiring and market launch. In Türkiye’s inflationary and highly regulated environment, that sequencing often determines whether an approved incentive becomes productive capital or merely an unused entitlement.