We give complete freedom to entrepreneurs.

Enis Hulli
3 min readNov 15, 2021


If you are not interested in reading all this, here is our template term sheet for equity rounds in Turkey.

Every venture capitalist I know in CEE or Turkey invests through SAFE notes in companies that are domiciled abroad, giving close to no governance rights to the investor. But when it comes to startups with local entities (especially in Turkey), the same investors start asking for governance rights that should never be given out to investors at the early stages of a company.

These strict terms and conditions that are only applied to startups with local legal entities punish local startups and push founders to start companies abroad (mainly in the US and Estonia) who fear unfair treatment if they incorporate locally.

Back to basics, why do we all love SAFE?

SAFE Agreements are even simpler than convertible notes that allow investors to invest without actually getting the equity, setting the price, or getting any governance rights. Given its standardized format, neither party need any legal support or much negotiation. Only important provisions such as early exits, dissolution, and conversion to equity are clearly defined, assuring that the signee will be getting the same class of shares as the lead investor during conversion. This brings speed more than anything else.

Honestly, the main reason I like SAFE agreements is that they give complete freedom to entrepreneurs to run their businesses while making sure that investors’ financial rights are fully guaranteed. Over the years, we’ve seen numerous companies and entrepreneurial ventures not reach their full potential due to their unfixable cap tables or governance rights that were hijacked by early investors.

Although most VCs agree and continue to invest through SAFE notes to international companies, when they see a locally domiciled opportunity, either greed or paranoia gets in the way… Let’s stop this hypocrisy.

Say no out of strength, instead of yes out of weakness!

Please don’t let investors take whatever right they want

What an investor can ask for goes beyond my imagination, but I tried to put down some of the rights I often encounter. Some of these rights will naturally be given to investors that are putting much more capital in later rounds, but please don’t yield and let investors get these rights in simple seed rounds (up to ~$2M).

Board: Board composition changes over time and unfortunately in most cases, founders lose control of the Board as the company grows. It is to your benefit to postponing this as much as possible (look at Zuck!), so refrain from giving a Board seat at a seed round.

Protective Provisions: Investors might be asking for their affirmative approval on matters around mergers and acquisitions, share transfers, new share issuances, fundraising, asset sales, budget expenditures, indebtedness, opening up a subsidiary, or flipping up the entity. Requiring an investor’s approval for any of these issues cripple the company, create unnecessary bureaucracy without any real value and often create different conflicts of interest amongst the shareholders.

Drag along: Entrepreneurs (or at least the majority of the shareholders) should always have drag-along rights, and investors should never get drag-along rights or veto rights in case they are dragged to sell. An investor can only get tag-along rights and should be grateful for it.

Audit rights: No, not at the seed stage.

Hiring or firing executives: You’ve got to be kidding me.

This list can go on and believe me I’ve seen worse. If you want me to skim through any term sheet and give you 15-minute feedback, reach out to me directly: enis@500.co

Use our template.

We use SAFE or KISS notes while investing in companies based in the United States or Estonia. Investing in Turkish startups through a convertible note is problematic and has its downsides (we can get into all that later). That’s why we localized the format in the form of an equity agreement that clearly ensures the financial rights we want to have while also giving complete operational freedom to the founders.

You can access our template term sheet for equity rounds in Turkey here. (prepared by 😘 Okan Arican)

Always happy to answer any questions and debate on the right set of terms a seed investor should take.

Learn to say no when you have to or you will be forced to say yes when you don’t want to.

Putting this here as the post preview :)



Enis Hulli