Overcoming Challenges in the Venture Capital Industry
Enis Hulli discusses his journey from entrepreneur to venture capitalist, his investment philosophy, and the unique opportunities and challenges within Emerging Europe’s startup ecosystem.
In the ever-evolving landscape of global entrepreneurship, few individuals stand out as beacons of innovation and strategic foresight. Enis Hulli, General Partner at 500 Emerging Europe, is one such luminary. With a robust engineering background and a keen eye for technological advancements, Enis has carved a niche for himself in the venture capital world, particularly within the dynamic startup ecosystems of Emerging Europe.
Before his tenure at 500 Startups, Enis founded first seed, an influential network of early-stage investors. His journey from a young entrepreneur to a pivotal figure in venture capital is a testament to his resilience, vision, and unwavering commitment to fostering innovation. At 500 Emerging Europe, Enis plays a crucial role in empowering talented entrepreneurs from the region and the diaspora, helping them build ground-breaking businesses with the potential to integrate seamlessly with Silicon Valley.
500 Emerging Europe, a key player within the 500 Global networks, is dedicated to backing seed-stage technology companies with the ambition to scale globally. Since its inception in 2016, 500 EE has supported 60 portfolio companies, collectively raising over $1 billion from international investors. Under Enis’s leadership, the fund has become a cornerstone of the startup ecosystem in Emerging Europe, driving the region’s transformation into a hub of global innovation.
In this exclusive interview with Entrepreneur Prime Magazine, Enis Hulli shares his remarkable career journey, insights into the venture capital industry, and his unique investment philosophy. He also discusses the opportunities and challenges within the Emerging Europe start-up ecosystem and offers invaluable advice for entrepreneurs seeking to secure funding and grow their startups. Enis’s story is not just one of personal success but also of his profound impact on the broader entrepreneurial landscape, making him a true visionary in the world of venture capital.
Can you share a bit about your career journey and what led you to become a General Partner at 500 Emerging Europe?
Bored during my college years, I found myself wondering about different business ideas and eventually co-founded a startup while I was only 20. Looking back, I definitely was not cut out for it and the company eventually failed. I tried my luck joining Rocket Internet for a brief timeframe but they soon decided to shut down that venture entirely. This experience pushed me in a more risk-averse direction, as I started to make money installing HVAC systems for a few years – leveraging my Civil Engineering degree only to feel unfulfilled and hungry to be able to spend my time at a job where I can learn and grow more.
This is the core reason why I delved into books and podcasts about entrepreneurship and started angel investing after I made some money. It eventually turned into an angel network and around the same time I met with 500 Startups. The opportunity to be able to take a stab at building my own venture capital fund was just too good to refuse so I slowly winded down the HVAC operations and jumped ship to build my own fund as a 25-year old.
What were some of the biggest challenges you faced when you first entered the venture capital industry, and how did you overcome them?
As a 25-year-old with no substantial track record and a failed startup experience, it was challenging to gain people’s trust. It took me two years to gather a few supporters to help build an angel network. Angel networks are different from VC funds since their investors do have a say in how the money is allocated. For a young person with a contrarian thesis and strong self-belief, the most significant hurdle is earning enough trust initially to build upon. The initial believers are crucial as they pave the way to success. Building trust, demonstrating strong commitment, and showing momentum are critical to gaining enough support to overcome that first major hurdle.
Can you elaborate on your investment philosophy and the criteria you look for when evaluating potential startups?
Emerging Europe is distinct from other emerging markets, or even European funds, in that all unicorns are globally oriented companies. The successful companies in Emerging Europe generate revenues from international markets, raise capital from international VCs, and plan for exits or IPOs in international markets. The thesis revolves around betting on local talent potential while hedging against other market factors, from early customers to scaling revenue to fundraising. This necessitates a different investment thesis than a typical VC, who is making a significant bet within their geography across multiple dimensions.
Our thesis on finding global success stories from Emerging Europe turns traditional scouting on its head. Instead of simply seeking the best entrepreneurs in the region, we look for the best entrepreneurs globally who are from Emerging Europe and are inclined to build their technology teams here. The number of opportunities is much more limited when you aim for all your companies to compete globally, but the potential scale of these opportunities is much higher. Given this finite nature of opportunities, our thesis revolves around maximizing access to the best deals.
What are some unique opportunities and challenges you see in the startup ecosystem of Emerging Europe?
To hedge against the liquidity crunch in the region, we aim to find entrepreneurs with a global focus who can secure their next round of financing from international investors. This creates a financing value chain drift, where a startup initially engaging with VCs from Emerging Europe can eventually attract Silicon Valley investors. Historical success stories from the region validate this thesis, as all unicorns have raised the majority of their funding from US investors. Similarly, our portfolio has raised over $1 billion, predominantly from the US.
This presents a significant challenge for founders, who sometimes have to relocate prematurely at the pre-seed stage to build a network in the Bay Area. Starting with the right early customers and design partners, they quickly move into fundraising mode, aiming to onboard US VCs. While this strategy has obvious long-term benefits, it also involves compromises in the short term concerning team culture, product development speed, and foregoing easily attainable customers in the region.
The biggest opportunity lies in the exceptional talent available in Emerging Europe. We anchor ourselves to this belief and invest in founders who are looking to capitalize on that.
How do you see 500 Emerging Europe contributing to the broader startup ecosystem in the region?
We position ourselves as a bridge between Emerging Europe and Silicon Valley. This is crucial because start-ups in Emerging Europe strive to emulate Silicon Valley despite being away. The increase in the number of funds with a similar thesis to ours following our success is crucial for the region. 70% of all founders we backed are in Silicon Valley, having moved either before or shortly after our investment.
Strengthening this bridge can first create multiple ecosystems in Emerging Europe that resemble those of Israel, and eventually even position Emerging Europe as a true competitor to Silicon Valley. This approach leverages the region’s advantages while fully hedging against its disadvantages.
What advice would you give to entrepreneurs who are looking to secure funding and grow their startups?
Founders often make many unconscious decisions, especially at the beginning, and choosing which region to focus on is one of these. Concentrating on customers from your first or second-degree connections might position you as a regional startup, which would later limit your fundraising options.
Fundraising is a proximity game, especially at the early stages, and a local or regional positioning would drastically reduce the pool of potential investors. We back founders who aim to position themselves and their startups on a global scale, opening the door to attracting international funds. This strategy increases their flexibility to fundraise and maximizes their upside potential.
