5-Minute Interview with Enis Hulli, 500 Emerging Europe

In this series of 5-minute interviews, I shine the spotlight on up-and-coming fund managers in private markets across the globe. All geographies. All strategies. All sectors.

Here's my conversation with Enis Hulli, General Partner at 500 Emerging Europe.

Quick facts about 500 Emerging Europe:

• Sector/thematic focus: Generalist, emerging global talent focus from CEE, Baltics and Turkey
• Investment stage: Pre-seed, Seed
• Geo focus: CEE, Baltic and Turkish nexus
• Year established: 2016
• Location: San Francisco (US), London (UK), Budapest (Hungary) and Istanbul (Turkey)
• AUM: c.€81m
• Number of funds closed:?2
• Current fund size:?€70m (closed)?
• Current fund life:?10 + 1 + 1 + 1
• Equity size invested in companies: $250k-$2m

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Q: What is 500 Emerging Europe’s investment strategy?

A: Our strategy is to source top founders rising from Emerging Europe at the inception stage, and to arm them with a significant lead investment, supported by a structured approach of connecting them to the San Francisco ecosystem from day 0.?

Q: What are the drivers for investment growth in CEE/ Baltics/ Turkey?

A: Barring one or two exceptions, historically all Emerging European unicorns are truly global due mainly to the limited market potential in local/regional markets.

In 2022 alone, the region produced eight unicorns, all of which are global companies with CEE as their main production hub. This is in contrast with Western Europe, where we see a high number of “copy-cats” of companies that arise from the US.

Emerging European founders have a unique mindset of building for the global markets right from the onset, due to a legacy of being a top outsourcing destination for big tech US, as evidenced by the swathes of US companies opening up development centres here.

Q: Even as a generalist, do you find you lean towards particular sectors?

A: Although we are a generalist fund, we tend to focus on B2B startups, where most of the biggest global success stories have emerged. Our current portfolio is skewed towards devtool, AI and Infrastructure Software companies targeting the US market.?

Q: How do you source these deals?

A: We go above and beyond in multiplying our connections to private circles in a given ecosystem. We host private events with specific themes to get to some of the gate-keepers in burgeoning environments, and truly immerse ourselves in the local environment.?

We also have 25 ex-entrepreneur LPs, 15 Scouts and Venture Partners on both sides of the Atlantic and are employing data-driven sourcing strategies crawling platforms like Linkedin and Github where the top under-the-radar talent lies in many cases. This also enables us to do more talent mapping and meet with talented people who are looking to become founders.

Q: What hands-on expertise do you have?

A: I previously launched a mobile app studio that’s been quite successful, leveraging the dynamics explained above in building global products from our region.?

We invested very early on in 3 unicorn stories – Carbon Health, BillionToOne and Insider – and have had 7 exits so far. We also facilitated some of these later-stage rounds and exits with introductions and strategic advice. Additionally, we have provided Go-To-Market support for these companies, when expanding into new geographies.

Q: For the unicorn Insider, for example, what is behind its success?

A: Unicorn Insider, while garnering only a minority of its revenue from outside of Turkey at the time of our investment, now books an overwhelming majority of its revenue from outside of Turkey, with offices in 25 countries and became a top 3 player in all of these countries.?

This builds a different moat for the company, where it makes it almost impossible for a player to come and beat Insider in dozens of markets at the same time. Insider paved the way for a lot of B2B SaaS founders to follow in expanding globally.

Q: How are you building your team?

A: Inspired by Netflix’s “no rules” rule, we champion ownership over everything else in building our culture; the set of responsibilities for our team members can scale infinitely based on what’s valuable to our portfolio.?

Q: That’s an interesting approach. How do you see your business scaling?

A: The focus is on broadening our geographical reach. Many founders are eager to launch their ventures in the US right from the start, and in the future we may plan to not only serve the Baltics, CEE and Turkey but also extend our support to Southern Europe.?

We’re also actively looking to diversify into various asset classes, including exploring the introduction of a venture debt vehicle. Down the line, we aspire to establish an evergreen fund.

Q: What's your secret sauce?

A: 500 Emerging Europe is in a unique position as the sole global institutional pre-seed investor with a founder-first decision-making culture and a global-first mentality. We also benefit from the asymmetric information, stemming from being a truly global investment house with over 2,600 investments globally. This fact has been proven with our track-record, in return fuelling our feeder fund positioning in the eyes of San Francisco-based top-tier later-stage funds.

We have a unique value proposition as a fund in Europe with a truly global footprint. Today, we have a physical triple presence in Emerging Europe (Istanbul, Warsaw and Budapest), Western Europe (London) and in San Francisco.

Q: What’s the biggest challenge you have had to overcome?

A: One of the main challenges for early-stage technology startups in the Turkish and Eastern European markets is access to downstream capital in post-seed rounds from global investors. Less than 10% of companies that have raised seed rounds of less than $1m were able to raise $1m+ over the past 8 years.?

In response, we built the most integrated local fund catering into the US funding value-chain. Fund I companies raised $2bn in additional capital, all coming from global investors.

Q: That’s an impressive amount. What valuable lesson have you learnt that helps drive your approach?

A: Key to our success is our ability to facilitate a value-chain arbitrage where founders that raised their initial rounds from us tend to raise their Seed or A’s from the US. We rely on introductions to key people in destination countries, thus fostering strong and unique connections to US investors.

That credibility is key in scaling those connections and sustaining them. Meaningful connections create purposeful and robust introductions to portfolio companies.?

Q: What advice would you like to share with our readers?

A: Your first customers determine your destiny; not only in startups but in any business. They mold your vision, team and product.

Enis Hulli 500 Emerging Europe

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