European VC Plural has made a name for itself as one of the few venture capital firms in the region started and led by entrepreneurs who have successfully grown their own startups. Among its founders are notable names such as Taaavet Hinrikus from Transferwise/Wise, Sten Tamkivi, and Ian Hogarth, the founder of Songkick. Hogarth has also recently taken on a role with the UK government, focusing on AI safety strategy. Now, Plural is taking its growth to the next level with a new €400 million fund, aimed at backing “transformational” startups in the region and offering valuable operational knowledge to help them succeed as businesses.
When Plural initially launched in June 2022, the startup venture industry was booming. Just six months earlier, Atomico reported a record $100 billion raised by European startups in 2021. Plural’s debut fund of €250 million was, in fact, intended to be only €150 million but was able to secure additional funding thanks to the positive market conditions.
However, the recent fund announcement comes at a very different time. The European venture capital scene has been struggling due to a weak economy, resulting in a significant decrease in startup investments to $45 billion in 2023. High-profile investors, like Omers and Coatue, have scaled back or closed their operations in the region while others have taken a more cautious approach. This has led to lower valuations and a more challenging environment for startups to secure funding. Even Plural has been conservative with its investments, with Hinrikus stating in an interview that the firm is still investing from its first fund.
Despite these challenges, Plural’s latest fund surpassed its initial target, thanks in part to the participation of one particular Limited Partner (LP), an unnamed academic institution in the UK. Other LPs included institutions and family funds from the US and Europe. However, the process was not without its struggles, as Hinrikus told TechCrunch, “it would be wrong to say it was easy.”
The Plural team, which also includes co-founder Khaled Helioui (former CEO of gaming company Bigpoint), and recent addition Carina Namih (a seasoned founder and investor in health tech), has already made 26 investments from its first fund. The firm has focused on several categories that have proven to be strong in the European market, including artificial intelligence (30% of investments), “frontier tech” (16%), and climate and energy startups (14%).
Some notable investments from the first fund include London-based legal AI startup, Robin AI, which raised $26 million earlier this month, and Isometric, a UK startup that raised $25 million for its unique approach to building a carbon removal registry. Plural also invested in German energy disruptor Proxima Fusion and Unitary AI, a startup using AI to improve video content moderation by combining visual, audio, and text-based cues.
The firm will continue to focus on these categories with its latest fund, but with a slightly different approach. Ian Hogarth, who has played a key role in the firm’s AI investments, is currently the Chair of the UK government’s AI Safety Institute. As a result, he has recused himself from investing in or being involved with AI companies in his portfolio. While this may limit Plural’s involvement in the hot AI market, it opens up opportunities in other areas. Hinrikus explains, “With the current market conditions, we are looking for startups that have a singular vision and are tackling a unique problem. Many AI startups are all competing in the same space, and we are looking for companies that stand out with a more defined perspective on how the world is changing.”
Plural sees potential in the consumer market, which may seem saturated to some. However, the firm believes there are still opportunities for highly differentiated and successful startups. As Hogarth states, “[We are looking for] founders who have a very singular vision and are doing something that feels highly differentiated. With AI, there are many startups doing the same thing as 500 others. But what’s truly interesting is when someone takes a less conventional route and has a strong point of view on how the world will develop.”
