Interview with Enis Hulli, GP, 500 Startups Istanbul

"What has worked really well for me is to prioritize what is best for the company and not for any individual or institution (including ourselves) who holds a board seat".


Enis Hulli is a Partner at 500 Startups Istanbul with a focus on helping Turkish and Eastern European entrepreneurs to succeed at the global stage. 


Portfolio ventures that are going great need almost no support, and the ones that are in the bottom aren’t worth helping. Apart from the two extremes, how do you know how much effort, time, persistent to put in the ones that are somewhere in the middle?

It is vital for VCs to rightly allocate their time and capital to maximize portfolio returns. I tend to spend the most time with the mid-performers since I believe that’s where I can have the most impact for the fund. Rather than looking at market signals (ie what other investors are thinking), market outlook or business traction; I try to spend the most time (and potentially most capital) with the founders that I believe in the most. 

Throughout the past 5 years that I’ve been actively investing, I have seen over and over again how the right founder can ultimately fix all other things that are not quite right about the business. And your deep knowledge of the founder’s abilities is the main information asymmetry that can lead to outsized returns.

How do you balance your time between (1) sourcing quality prospect ventures (2) doing due diligence for prospective investments and (3) helping current entrepreneurs? Which of these are you comfortable outsourcing to principals/analysts and which do you absolutely have to do yourself?

This changes depending on the fund lifecycle, yet I try to track it quarterly by pulling data from my calendar. Instead of focusing on sourcing quality prospects, I focus on increasing our exposure to make sure that we have access to the best deals in the market. I try to delegate pipeline management, keeping track of and getting updates from prospective leads, and due diligence for prospective investments to others in the team.

Our relationship with our portfolio companies is a ‘pull’ relationship rather than ‘push’. Yet, we work closely with entrepreneurs to identify areas in which we can help with introductions whether that’s for downstream capital, potential customers, potential partners, mentors or hiring. As GPs of the fund, we are personally involved with the founder and yet rely on our portfolio associate to dig into our network and facilitate the introductions. 

On average, assuming we are not fundraising, I spend 40% of my time building exposure for better deal flow, 30% on processing prospective leads (including due diligence) and another 30% managing the portfolio.

Many GPs are good investors but don’t master one of the core skills – adding value as a board member. What do you think are some tricks to a productive relationship with founders? What should the culture be for the board and CEO for a quality relationship?

There are often conflicts of interest between your responsibility as a board member of the company and as the GP of the fund. The same exists for the founder and it is important to dissect those motivations to better assess your and other’s positions. What has worked really well for me is to prioritize what is best for the company and not for any individual or institution (including ourselves) who holds a board seat. Starting the board relationship with an honest foundation makes it more sustainable and healthy for the company.

Although that professional framework works well during board conversations, the lines blur when it comes to personal relationships and I tend not to keep them just professional. Having close personal relations with the founders from the get-go has so many benefits that in the long run definitely outweigh the potential troubles that these blurred lines might cause.

Nowadays, mental health is more present than ever, with things like burnout, stress, depression, among others. What do you think of external intervenients like executive coaches, both for a founder and for a VC partner? Do they usually add value?

VC is a lifestyle business that, of course, has its ups and downs but eventually shouldn’t cause burnout, stress or depression. This is definitely not the case for founders, no matter what stage they are at. I believe the best executive coaches are other founders who have been there before. Founder to founder interaction is key to build these relationships early on and have this trust network that you can leverage from in every aspect. This interaction and introductions to other founders is an easy way for a VC to add value.

How do you solve important conflicts with CEOs, such as lack of alignment on exits, strategy, or just the CEO being in denial about things like performance? Does the resolution begin with a private conversation or with involving other board members in a decision?

I start the relationship assuming that the founder’s understanding of their business is miles ahead of myself, given that they have given their lives to it. Thatis why,  as an early-stage investor, all I can do is give my advice to the CEO and back his/her decision, even if it isn’t what I desired. Although I can never get to the founder’s level of understanding of the business, investors are like a database of business stories and are great at pattern matching. I try my best to provide relevant examples and offer introductions to dig deeper into various cases.

Radical candor is a must for a healthy relationship, so my principle is to confront in person first, even if I’ll then include others (ie board members) into the conversation. Transparency wins in the long run, even when the incentives are not fully aligned.

When raising money from LPs, what is the thing you emphasize the most when “selling” the fund? Past returns? Team expertise (domain and/or entrepreneurial expertise)? Unique angle?

I first have to convince myself, and our LPs, that we do have access to the best deals in the market. Normally, I shouldn’t have to convince that the market we operate in is ripe for returns, but given our emerging market investment thesis, questions around market attractiveness come off often as well. However, I truly believe that, as long as you have access to the best deals in the market, doesn’t matter how well the overall market does, the returns will be great. This is not the case for other alternative assets (private equity or real estate) but is the case for venture capital and there are great such examples.

Anyhow, our previous fund has top-tier returns and is a good indication of our potential. We walk over our previous fund portfolio thesis, step by step, to show how we were able to generate these returns consistently for Fund I. We then briefly point out to the changing dynamics of the market and our learnings over the past 4 years, to better explain our shifting strategy with the new fund and how we are expecting to beat the market with a wide margin again. 

We had to pitch our personal backgrounds and expertise much more heavily in the first fund. With the second fund, the results speak for themselves and investors want to assess the strength of the overall team – not just the GPs.

Key Lessons from Enis

  • Focus on the founders you believe versus market signals. The market changes and has ups and downs. But founders with potential can perform regardless. As a GP, Enis focuses on the founder potential and not the market vicissitudes;
  • When you have results, show LP results, otherwise show personal background and expertise. After raising a successful first fund with results, that is what Enis naturally sells to LPs – as well as proven access to the best dealflow – but, up that point, he would sell the personal background and expertise of the team;
  • Prioritize what is best for the company. As with many roles in other sectors, there always conflicts of interest both for the VC GP and for the founder in a board. No matter how small. Enis focuses on making decisions that maximize value for the company and guides his decisions as a board member on that;

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