The partners of European venture capital firm Plural, from left to right: Ian Hogarth, Taavet Hinrikus, Carina Namih, Sten Tamkivi and Khaled Helioui.
Plural
The founders of Wise, Skype and Songkick have raised 400 million euros ($436.4 million) for a new fund to support technology startups in Europe. It seeks to compete with established funds such as Atomico, Balderton Capital and Creandum with its founder-led focus.
Plural Fund II, the firm's second to date, comes just 18 months after the firm raised its last fund, a €250 million vehicle. The co-founders include Taavet Hinrikus, co-founder of fintech company Wise, Ian Hogarth, co-founder of concert discovery service Songkick, Sten Tamkivi, co-founder of communications platform Skype, and Khaled Helioui, former CEO of Bigpoint Games.
Hinrikus told CNBC that Plural could serve as a better partner for startups in Europe than most venture capital funds, as it was founded by people with the “scar tissue” of proven entrepreneurs. Only 8% of venture capital firms in Europe are former founders, he says, far less than the 60% in the United States.
“When we look at a lot of venture capital funds, you see a lot of people who have done great work with spreadsheets, not with the startup life,” Hinrikus told CNBC in an interview. “In our case, it is considered a core criterion when choosing our partners that they are totally unemployed.”
“It feels like it's World War III, and we're in the trenches together as one of the founding fathers. So when we look at the track record and our ability to get the deals done, I think everything seems to say that this is really lacking in Europe,” Hinrikus added.
Plural raised the money from a mix of limited partners, including British and American university endowments, American foundations and insurers, strategic family offices in Europe and the United States. The company said it saw “significant interest” from LPs – limited partners, the institutional backers of venture funds – for its new fund and exceeded its own fundraising target, despite being in the “toughest environment” for raising a fund.
'The fact that, in a difficult fundraising environment, we have managed to raise a fund of this size, with huge interest from LPs, shows that some of the most sophisticated investors in the world are embracing the opportunities in Europe, and I very much see a fund in the form of Plural,” Carina Namih, partner at Plural, told CNBC in an interview.
“I think against the macro backdrop it's a real testament that we've raised a fund of this size and scale so quickly,” she added.
The 'unemployed'
Plural plans to invest with its new fund at a pace of two to three investments per investor per year. The firm has a total of five partners, which it calls the “unemployed” due to the fact that they would not simply join a venture capital firm or be employable at a startup. Each of the partners is an active angel investor.
Plural has made a total of 27 investments and is backing companies including law-focused artificial intelligence company Robin AI, nuclear fusion power plant developer Proxima Fusion and most recently drug discovery platform Sano Genetics. The largest sectors in terms of investments are AI (31%), groundbreaking technology (16%) and climate and energy (14%).
Hinrikus said Plural is not interested in finding the next big software-as-a-service name in Europe, referring to companies that make software for businesses to alleviate the burden of storing data, accessing infrastructure and running simplify data analyses. It's more interested in deep tech and is targeting founders who want to solve fundamental scientific problems around energy, unlock AI “superpowers” and make groundbreaking advances in healthcare.
Building technology giants in Europe
Plural says it wants to build tech giants in Europe and identify winners in emerging categories that other funds often ignore, such as deep tech and clean tech.
Carina Namih, a biotech entrepreneur who has become a partner at Plural, said she wouldn't be surprised if big tech names on par with American and Chinese giants emerge in Europe in the not-too-distant future.
She noted that technological breakthroughs are now happening much faster, driven by important developments around AI and more established capital pools.
“Look how quickly OpenAI burst onto the scene with ChatGPT,” she said, adding that it takes less time for new technologies to reach major milestones. “It's clear that the big tech companies have a lot of advantages and are entrenched in many ways. But I think more than ever, this is a time where new players and emerging players can come in and dominate entirely new spaces that didn't exist before. year ago.”
Namih previously worked at her former startup HelixNano on the application of AI to mRNA-based medicine.
The launch of Plural's new fund adds to the wave of startup activity that has taken place in Europe over the past decade.
A report from venture capital firm Accel late last year found that unicorn companies with revenues exceeding $1 billion often serve as catalysts for the creation of startups, with 1,451 new startups being founded by former employees of European and Israeli unicorns.
According to the report, a large portion of this new crop of startups comes from fintechs, with 70 fintech unicorns spawning 423 startups.
“Over the past decade, the whole ecosystem has really become an ecosystem, whereas before we were just hunting game,” Harry Nelis, a partner at Accel, told CNBC. “There was one here, one there, there was no ecosystem.”
“It's a lot easier to start a business than before. The engineering has been done before, the marketing has been done before,” he added. “That is a flywheel that we have never had in Europe, but that we do have now.”