Plural Partner, Taavet Hinrikus: Why Founders Will Realise Multi-Stage Funds Damage Seed Rounds

Summary

• Taavet Hinrikus (Wise builder, first Skype employee, now Plural) says the industry’s core economics are broken: “fundamentally, the idea of collecting 2 and 2.5% management fee does not really make sense. It does not align us with the outcomes.” Plural charges roughly half the standard fee, which bought two extra investments in fund one and an expected four in fund two — “four more shots on goal” — and pairs it with unusual skin in the game: the partners are collectively the biggest investor in their own fund, and the lead partner wires a personal check alongside every deal.
• His most quotable line cuts against VC self-image twice: mid-stage investors who “stack up the cohort curves, take away the CAC, multiply by LTV and pay a very high price” are “spreadsheet monkeys”, and from the founder’s side, “we are a commoditized product. Harry, VCs are a commodity. You can press them down.” The vast majority of European GPs, he claims, have never spent a single day in a real operating company.
• Plural’s filter is a hard 100x test: “If we can’t imagine 100x, we should not be entertaining the idea of this deal.” First checks need no partnership vote — the lead partner decides after a “brutal” IC discussion (~70% proceed) — but follow-ons flip to majority vote because reserves are a finite asset and solo decisions are “marking up your own homework.”
• On the multi-stage giants flooding pre-seed with high-velocity option checks, Hinrikus makes a call: “I don’t think this game will last” — the best founders will realize a seed check on good terms from a multistage firm is “by no means a guarantee of raising money from them in the future.” He concedes excess capital in hot sectors (in 2021 any ex-Wise employee got funded without a meeting) and thinks median venture returns will probably fall as the asset class matures, while the best investors keep outperforming.
• Capital efficiency is his counter-metric to fundraising-as-status: Wise supposedly raised $1bn+, but only $160M was primary and only ~$100M was burned to build >$10bn of value — against companies raising $2.5bn to create $10bn. That’s why he shrugs at early-stage liquidation preferences: “unlimited upside, 1x downside — the difference is purely marginal.”
• The Europe thesis has hardened into an investable macro call: after Ukraine and the February White House grilling, “the US cannot be trusted anymore to be the protector of Europe.” He sees a tripolar world — “an American version, let’s call it likely Anduril; a European version, likely Helsing; the Chinese version” — across defense, space, energy, security, and intelligence, with Taavet saying Germany allocated 1.5-2 trillion after the White House meetings. The recurring screen: who controls the data and “who has access to a kill switch.”
• Quickfire tells: he has never bought a public stock; he highlights Bolt secondaries (bought heavily in 2017) and likely Synthesia (“two crazy guys” doing video generation before the abbreviation AI was even used); he’s become “so much more bullish on Europe” in the past 12 months; and Plural’s success condition is “trillion-dollar European companies in 10 years” — with a pre-written excuse if it fails: “Europe did not have enough ambitious entrepreneurs. It’s them, not us.”

Deep dive

1. Spreadsheet monkeys: venture is commoditized where the math is easy

• Hinrikus’ angel phase — 30-50 deals a year after leaving Wise — performed well but “started feeling a little bit Wall Street-esque high-speed deployment… it wasn’t very missional aligned.” That itch produced Plural: get founders with “scar tissue from building companies” to become investors. A standout move from the period wasn’t even a primary check — he missed Bolt’s seed while running Wise, then spent “a lot of my limited liquidity” buying Bolt secondaries around 2017.
• His “spreadsheet monkeys” barb is aimed at a specific segment: mid-stage SaaS and consumer, “where all you need to do is stack up the cohort curves, take away the CAC, multiply by LTV, and then pay a very high price to win the deal.” Early stage — “looking the founder deep in the eye” pre-metrics — is a different sport, and he pushes back on Nabil from Spark’s claim (relayed by Harry) that the predictable-SaaS era is dead: growth-stage companies will still look spreadsheet-like, but spotting the next trillion-dollar company is harder now because more people are trying.
• The structural indictment: the “vast majority” of European GPs “have not spent a single day working in a real company” — consulting and banking, yes; operating, no. His hedge is notable: does operating experience make Plural better investors? “Frankly, I don’t know. Time will tell — but it makes us better partners.” The evidence he cites is from the other side of the table: raising for TransferWise, “we had the most insightful conversations with the people who had built their own companies” — Max Levchin in the seed, Ben Horowitz.

2. Fees, DPI, and playing with house money

• The core misalignment claim: “fundamentally, the idea of collecting 2 and 2.5% management fee does not really make sense. It does not align us with the outcomes.” Plural charges about half the standard fee, which translated directly into portfolio math — roughly two extra investments in fund one, an expected four in fund two. “That’s four more shots on goal. That is pretty damn important.” GPs should get rich on DPI, not deployment: at Wise, every customer support agent had options, and the early ones “all made a million dollars” at IPO.
• To GPs who plead they need fees for platform teams and benchmark salaries: “Earn your right to do it. You don’t want to hire the people who are coming here for the biggest salary.” On whether to blame VCs for a DPI window that has stretched to 15-17 years: “don’t blame the player, blame the game” — though he concedes SpaceX shows well-capitalized companies hitting milestones create their own liquidity, “a secondary market always open.”
• The skin-in-the-game structure is the episode’s genuine novelty: Plural’s partners are collectively the biggest investor in their own fund, and on every deal the lead partner writes an additional personal check — sized to be “meaningful” for that individual — with “maybe a ritual part as well of wiring from your own account the same time as we wire from the fund account.” The philosophy: “we don’t like the idea of playing with house money.” Harry, ten years into studying venture, had never heard of it.

3. The 100x memo and a no-vote investment committee

• Plural’s process is deliberately formulaic: each partner does only 2-3 deals a year, commits personal money, and writes a memo that opens “why is this company important to me?” Every deal is run through a co-founder test — “all the 49 deals we’ve invested in so far,” the lead partner felt “bloody hell… I would love to be a co-founder of this company.” Then the hard gate: “If we can’t imagine 100x, we should not be entertaining the idea of this deal. There are many great investments which are 5x guaranteed. There are many great investors who should do this. It’s not Plural.”
• First checks aren’t voted on — “the bar for being a GP is super high, so we give them a lot of trust” — which he argues makes IC discussions “very honest, very brutal” because nobody is lobbying for votes. After the IC, the lead partner takes the feedback home; roughly 70% of deals get done, and declined deals sometimes resurface six months later when “the company has done what they promised.”
• Follow-ons invert the rule: reserve checks require a majority vote, because reserves are “a finite asset we need to divide up” and solo approval is “marking up your own homework.” Asked what he’d change about the process: “Absolutely not. We’re brilliant.”

4. Reserves without dogma, and learning to respect fund composition

• Fund one modeled 25-30 companies and closed at 31 with reserves under a third; fund two draws the line “roughly in the middle,” likely slightly under half. On mechanical pro-rata, Hinrikus agrees it is “a copout”; Harry adds, “you either want to do nothing or triple down.” But he keeps the hedge honest: rounds arrive a year later, and on signaling risk, “some days I think it’s real, some days I think it’s not real.”
• Becoming a fund manager changed one operating belief: fund composition is real. He now sympathizes with the VC saying “you have this great carbon capture company, I love you, but we have three already in the fund — we can’t add a fourth,” even though on a deal-by-deal basis the logic never bites.
• On tough conversations, Harry’s observation stands — founders-turned-VCs are blunter with founders than career VCs terrified of “a bad NPS.” Plural’s version: “we promise we’re not going to give up before you, but it doesn’t mean we’re going to write bad money after good money. We’re here to have GDP-level impact — if your company is not doing it, I’m sorry, we should not continue funding it.”

5. Term-sheet heresies: lick prefs, legal fees, and bloated boards

• Liquidation preferences at early stage fail his materiality test: “we are here for unlimited upside, 1x downside — the difference is purely marginal.” The real industry metric should be capital deployed per unit of outcome: Wise “supposedly raised a [__] ton of money,” but primary capital was only $160M, and only ~$100M was burned, to build in excess of $10bn of value — versus companies raising $2.5bn to create $10bn. Founders treating large fundraises as the “ultimate measure of success” is, in his word, “BS.”
• A smaller absurdity he flags: the standard term where the company pays its investors’ legal fees. Harry genuinely didn’t believe him; Plural pays its own, out of the management company. “It comes from the money you give the company… Why does it make sense? I think it’s just the way it’s been done.”
• Boards: “we do not love boards.” The failure mode is five VCs and two founders — “five people with a relatively similar view of the world,” dominated by “the guy with the biggest fund or the guy who wants to be the smartest guy in the room.” His fix: put operating founders on another founder’s board.

6. Multi-stage money is warping seed — and founders will figure it out

• Harry’s worry, stated in full: with $8-10bn multi-stage funds and a firm raising $20bn, pre-seed and seed become “a massively high-velocity option game — five on 50, fine, doesn’t matter” — bought purely for the right to write $25M at the A. Hinrikus’ call: “I don’t think this game will last. The best founders will realize that getting a seed check on good terms from a multistage firm is by no means a guarantee of raising money from them in the future.”
• He answers “is there excess capital?” with a flat yes — in hot sectors: “2021, if you were an ex-Wise employee, everybody would write a check to you without even meeting you. Does that make any sense? No. The same happened to Google employees five years before.” Harry says he made some big losses on 2020-21 deals, though they may have done some together; Taavet calls those winners.
• The return math follows: as the asset class matures, “the best investors will continue generating the best returns, but I think the median is probably going to come down over time.” Dilution advice for founders is correspondingly cold-blooded: “the only person to fight for your ownership is yourself. No VC will ever fight for the founder’s ownership” — but optimize the cap table for people who “pick up the phone when it’s bad times. There are plenty of stories out there of respectable VCs not picking up the phone… Do not be that [__].”

7. The sovereignty trade: a tripolar world and the kill-switch test

• Plural’s 2021 founding theses — European sovereignty and GDP-level impact — got two accelerants: the Ukraine war (“before that, investing in defense felt strange”) and “what happened in the White House in February, where likely Zelensky was taken for a grilling — the US cannot be trusted anymore to be the protector of Europe.” With NATO contributions 75% American, “we massively over-relied on the US,” and the US offering “a 10% worse fighter jet” prompts his rhetorical kill shot: “who is ever going to buy US defense equipment?”
• The resulting map: “a tripolar world — an American version, let’s call it likely Anduril; a European version, likely Helsing; the Chinese version” — spanning defense, space, energy, security, intelligence, “all of the critical services,” which are a vast portion of GDP. The screening question for anything with sensors: “we probably want to control who has access to the information we gather and who has access to a kill switch” — including whether Europe wants US patient-monitoring systems (his portfolio company Teton monitors patients via CCTV) or “US robots roaming around our streets collecting intelligence.”
• The capital is arriving faster than Europe can absorb it: Taavet says Germany allocated between 1.5 and 2 trillion just after the White House meetings… we probably cannot use two trillion today. We need a trillion this year, two next year." On Putin: “a very serious, very real concern — we should be living under the assumption that whatever happens in Ukraine now, Russia will try another country over the next years.”

8. Is Europe too far behind — and what he’d tell its leaders

• To Harry’s “have we already faded into irrelevance” against China’s talent depth and CCP control: not yet, if budgets unlock soon — “the urgency is higher now than it’s ever been.” He accepts the structural worry that four-year re-election cycles can’t fund 10-15-year projects, but counters with speed evidence: Helsing is four or five years old “and they’ve built a lot”; Plural’s space exploration company is two to three years old. “Right talent and right capital — in both, Europe is in a better place than we’ve ever been.”
• His policy list: more early-stage deep-tech capital (Proxima Fusion is “the most advanced fusion company in Europe,” and the new German government wants two fusion power plants built); government as biggest customer for European startups; less regulatory drag. On regulation he holds both positions at once: “no entrepreneur ever has not started a company because of regulation — the best go through walls made out of titanium” — yet Europe’s fragmentation is real, he praises EU Inc.’s 28th-regime push, and asks why Europe needs a stock exchange in Amsterdam (“maybe we could build it on the blockchain”).
• Europe’s soft deficit is marketing, not work ethic: “we’re too humble… maybe we need to hire American marketeers.” Defense spend must go “to three, four, 5% everywhere” — Estonia and Poland were already ahead.

9. London listings, money, and the Estonia flywheel

• No regret about Wise’s London IPO — “Wise is an example of a company that can go public anywhere; a company went public in Amsterdam, whoever knew they have a stock exchange” — and he doesn’t believe Wise would carry a US pricing premium. But structurally the UK market is “subprime”: not enough retail participation, not enough pension-fund institutional money. His rule and his message to Nick: retail products should list where their consumers buy them — “if he wants to build a big business in the US, then he should go public in the US.”
• On personal wealth: financially independent since 2002-03 via Skype options, he didn’t sell a single Wise share “until we were valued at billions,” then sold systematically. The universal threshold: “once you get through the moment of I don’t need to go to work for the monthly paycheck — that is an incredibly powerful moment for everyone.” Startling quickfire admission: “I have never bought a public stock” — for a forced 10-year hold he’d “go the very classic way.”
• Estonia’s secret — “the biggest number of unicorns per capita and nobody knows this” — he attributes to Soviet-era education plus Skype: “the ecosystem acceleration from an early success story is humongous.” Today’s equivalent accelerator in Europe: “maybe today I’d say likely Revolut,” alongside Wise, Monzo, and Spotify. His standout angel bet beyond Bolt: likely Synthesia — backed as “two crazy guys” doing video generation “before the abbreviation AI was used.” End state if Plural works: “Trillion-dollar European companies in 10 years. We will see.”