Apr 28, 2025 · 1h 2m · 20vc
Plural Partner, Taavet Hinrikus: Why Founders Will Realise Multi-Stage Funds Damage Seed Rounds · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings interviews Wise co-founder and Plural partner Taavet Hinrikus about how operator-led venture capital funds can disrupt the industry by aligning incentives with founders and backing highly ambitious deep-tech startups that secure European geopolitical sovereignty.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 26.2% of the talking time here. How this is scored →
Harry as informed peer 5.9 Guest teaching 4.2 Guest disagreement 3.0 Harry pushing back 3.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:51 Taavet dismisses VC management fee justifications
Taavet aggressively pushes back on Harry's defense of VC management fees, telling GPs to earn their right through DPI rather than collecting guaranteed fees.
Hardest push from Harry ▶ 39:57 Harry challenges Taavet on multi-stage funds destroying seedHarry forcefully asserts that multi-stage mega-funds are ruining seed rounds by treating $5M checks as high-velocity option plays, refusing to accept Taavet's milder view.
Biggest teaching moment ▶ 34:57 Taavet schools VCs on true capital efficiencyTaavet breaks down Wise's extreme capital efficiency ($100M burned for $10B+ value) to show Harry how inefficient most venture-backed startups actually are.
Harry holds his own ▶ 4:55 Harry demonstrates market knowledge on AI growth modelsHarry cites Spark's Nabil along with specific breakout companies like Midjourney and Lovable to counter Taavet's premise that SaaS investing remains predictable spreadsheet work.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| From Skype to Wise: Taavet Hinrikus's Angel Investing Journey | 5 | 3 | 2 | 2 | Harry establishes strong context by quoting Doug Leone on venture shifting from a boutique community to a commoditized industry. Taavet politely reframes the premise by breaking venture down into sub-components. | |
| Spreadsheet Monkeys vs. True Operating Scar Tissue | 7 | 4 | 3 | 5 | Harry demonstrates deep market knowledge by citing Spark's Nabil and naming companies like Lovable, Midjourney, and Bolt to challenge Taavet's critique of predictable SaaS spreadsheet investing. Taavet clarifies how spotting trillion-dollar companies differs from mid-stage SaaS. | |
| How Operator Mindset Shapes True Partner Dynamics | 6 | 3 | 2 | 3 | Harry structures the discussion around sourcing, selecting, securing, and servicing to test whether operator background grants a real advantage. Taavet explains how founder scar tissue creates better partner alignment. | |
| The Power of Repeat Founders and the Enterprise SaaS Injustice | 7 | 2 | 2 | 4 | Harry quotes Delian from Founders Fund to question repeat founders who play it safe with enterprise SaaS instead of tackling grand challenges. Taavet agrees with the critique while Harry playfully defends his ongoing passion for SaaS. | |
| Disrupting the Traditional Management Fee Model | 6 | 6 | 5 | 5 | Harry pushes the standard GP counter-argument that high management fees are needed to pay competitive salaries and build platform teams. Taavet forcefully rejects this framing, telling VCs to earn their keep through DPI rather than deployment fees. | |
| The Limits of the 10-Year Fund Lifecycle | 6 | 5 | 3 | 3 | Harry brings up Fred Wilson's take on liquidity while Taavet explains Plural's unusual practice of partners writing personal checks and paying their own legal fees. Harry expresses genuine surprise at Plural's legal fee policy. | |
| Timeline Misalignment: The Ultimate Founder-Investor Conflict | 5 | 4 | 2 | 3 | Harry asks incisive questions about portfolio construction and reserve strategies. Both host and guest agree that standard pro-rata reserve allocation is an analytical cop-out. | |
| The Tough Love of Founder-Investors | 6 | 3 | 3 | 3 | Harry observes that former founders deliver much direct, unvarnished feedback to founders compared to traditional VCs who worry about NPS. Taavet concurs, detailing Plural's 100x return requirement and consensus-free IC. | |
| Partner Collaboration, Peer Feedback, and GP Autonomy | 6 | 3 | 2 | 4 | Harry identifies a major structural flaw in ICs where partner knowledge asymmetry ruins discussion quality. Taavet explains Plural's process of partner autonomy combined with honest, brutal peer feedback. | |
| The Danger of Compressed Timelines and Fomented Processes | 5 | 4 | 3 | 3 | Harry probes how Plural handles compressed term sheet timelines driven by founder urgency. Taavet rejects the premise for deep tech deals, noting that rush processes mostly belong to momentum spreadsheet investing. | |
| Ditching Scoring Systems for Direct Peer Calibrations | 6 | 4 | 4 | 4 | Harry advocates for formal scoring systems to track partnership picking history over time. Taavet playfully dismisses changing their process, humorously claiming they are already brilliant. | |
| Rejecting Liquidation Preferences and Championing Capital Efficiency | 6 | 6 | 3 | 3 | Harry brings up US trends eliminating liquidation preferences and board seat expansion. Taavet delivers a masterclass on capital efficiency, contrasting Wise's $100M burn for $10B+ value with capital-inefficient venture peers. | |
| VCs as a Commodity: The True Test of Partnership in Bad Times | 6 | 5 | 5 | 3 | Harry cites Keith Raboy on founder value-add. Taavet forcefully reframes VCs as a commodity, warning investors against ghosting portfolio companies during bad times. | |
| How Multi-Stage Funds Damage Seed and the Future of Venture Returns | 7 | 5 | 5 | 6 | Harry presents a robust argument that multi-stage mega-funds are destroying seed rounds by treating early checks as cheap call options. Taavet firmly pushes back, arguing founders will realize multi-stage checks offer no guarantees. | |
| The Imperative of European Sovereignty and Tech Independence | 6 | 5 | 4 | 6 | Taavet outlines the geopolitical imperative for European tech sovereignty post-Ukraine war. Harry pushes back strongly against complete decoupling, pointing out the economic realities of global trade. | |
| The Critical Need for European Alternatives to American Tech | 6 | 5 | 4 | 6 | Taavet argues against relying on US technology with kill switches. Harry directly questions whether top-down state capital declarations, like Germany's trillion-euro announcement, are effective. | |
| Geopolitical Concerns in the Baltics | 7 | 4 | 3 | 6 | Taavet highlights Baltic defense concerns while Harry presses on political structural barriers, arguing 4-year election cycles impede long-term technology strategy. | |
| Overcoming Barriers: Early-Stage Capital and Ambition | 6 | 5 | 4 | 4 | Harry brings up standard critiques regarding European ambition and work ethic. Taavet reframes this as European humility versus American bragging and dismisses regulatory excuses. | |
| Wise's London IPO & Public Markets Strategy | 6 | 5 | 2 | 4 | Harry shares insights from interviewing London Stock Exchange CEO Julia Hoggart and asks about US valuation premiums. Taavet provides a nuanced breakdown of public listings. | |
| Personal Wealth, Skype, and Financial Independence | 5 | 4 | 2 | 2 | Harry asks personal questions about how wealth alters personal mindsets. Taavet clarifies he achieved financial independence early via Skype, enabling a pure focus on upside. | |
| Quick Fire: Estonian Ecosystem & Next Big Accelerators | 4 | 3 | 1 | 1 | Harry conducts a quickfire round covering Estonian tech, public equities, and Synthesia. Taavet reveals he has never bought a public stock, picking Berkshire Hathaway as a sole exception. |
Statements from this episode (59)
Hinrikus: Standard 2% VC management fees misalign investors from startup outcomes
“Fundamentally, the idea of collecting a two, two and a half percent management fee does not really make sense. It does not align us with the outcomes.”
Hinrikus: Plural rejects startup investments lacking 100x potential
“If we can't imagine a hundred X, we should not be entertaining the idea of this deal.”
Taavet Hinrikus made 30 to 50 angel investments annually after Wise
“I went into overdrive once I stopped running wise, doing 30, 40, 50 deals a year.”
Taavet Hinrikus deployed significant liquidity into Bolt secondaries in 2017
“I spent a lot of my limited liquidity buying up secondaries in, in Bolt in like, 2017.”
Hinrikus: The vast majority of European VC partners lack operating experience
“I, you know, I've said many times is that if you look at the European landscape, majority, vast majority of the European GPs have not spent a single day working in a real company. They've worked in consulting firms, banks, but they haven't worked in a real ope…”
Taavet Hinrikus: Venture capital is fundamentally a brand game
“Frankly, I think venture is a brand game.”
Hinrikus: Half of Plural's backed founders are repeat entrepreneurs
“Approximately half of the founders we back are repeat entrepreneurs.”
Hinrikus: Repeat Founders Target Bigger Goals, Yielding Larger Potential Outcomes
“So repeat founders, they typically go for a much bigger goal. You know, Torsten did a gaming company, then he went into defense. And we can talk about Danny Alecke as the first company was e-commerce. And then he took on a massive challenge of building Spotify…”
Hinrikus: Unexcited to back repeat founders building in their previous category
“Like, I don't think I would be that excited to back a founder who built Fintech company one and then goes on to build Fintech company two.”
Hinrikus: It is hard to get excited about traditional enterprise SaaS
“There are many great founders building great enterprise SaaS companies, but for me personally, it's pretty hard to get excited about the good old SaaS company.”
Hinrikus: Investor alignment depends on investing personal capital alongside LP funds
“I think there is one thing if you're a rich investor and you play with only other people's money, there's a different thing if you're a rich investor and you're investing your own money. So I think it's a question of alignment and hopefully we'll talk more abo…”
Hinrikus: Plural charges half the traditional VC management fee
“At Plural, we charge about half the management fee, and we think we are much better aligned.”
Hinrikus: Early Wise customer support agents made $1M at IPO
“And I think the customer support agents who joined in the beginning, they all made a million dollars when Wise went public.”
Hinrikus: VCs shouldn't make big money just for deploying capital
“I don't think people in venture should make a lot of money just because they are deploying capital.”
Hinrikus: SpaceX Has Faced Zero Liquidity Issues as a Private Company
“You know, the best example of all is maybe SpaceX today. It's a private company has had zero liquidity issues. So there is a secondary market always open.”
Hinrikus: Deep Tech Startups Require 10 to 15 Years for Liquidity
“And maybe for deep tech companies, it's 10 to 12. You know, if you hit the bad patch in the markets, it becomes 15.”
Hinrikus: Venture Investors Must Be More Disciplined About Returning Capital Early
“I think also maybe at some point people just need to be more disciplined in returning some capital early.”
Plural partners are collectively the largest investor in their fund
“We are the biggest investor in the fund ourselves.”
Plural lead partners write personal checks for every fund deal
“And additionally, every deal we do, the lead partner of the deal writes a personal check.”
Plural covers its own legal fees instead of charging portfolio startups
“Well, we pay our own legal fees. Vast majority of venture deals, as in the term sheets, that you pay your investors legal fees.”
Hinrikus: Timeline misalignment is the main under-discussed founder-investor conflict
“Timeline misalignment. Investors wanting their money back before the founder, which is a kind of a hard one.”
Hinrikus: Plural doesn't believe funds can control sector composition
“You know, in plural, We really don't think we have much control over fund composition.”
Hinrikus expects Plural Fund II reserves to be under half the fund
“Fund two. We kind of drew the line roughly in the middle. I think probably we end up with slightly less than half for reserves.”
Hinrikus: Uniformly exercising pro-rata rights is a VC cop-out
“Fundamentally, I agree with the idea that just doing your prorata is a cop out. You either want to do nothing or triple down.”
Hinrikus: Plural will not write follow-on checks without GDP-level impact
“We kind of 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've told our founders, we're here to have GDP level impact. If your company's not doing it, I'm sorry, We should not continue fundi…”
Plural caps each partner at two to three investments per year
“Every investor can only do a limited number of deals per year. You know, it looks at two to three deals per year is the right pacing.”
Plural does not vote on deal decisions in investment committee
“And given that we don't vote on deals, the committee discussions are very honest, very brutal.”
Hinrikus: Plural partners do not all need to meet founders before investing
“No, absolutely not. And I think there is probably no company where all the partners met the founders before the deal. It's typically one or few partners that meets, meets a company.”
Hinrikus: Top VC firms shouldn't force GPs to seek IC approval for deals
“So we give them a lot of trust, and we kind of felt that it doesn't make sense to hire someone brilliant and tell them you have to come on Mondays to ask permission to do a deal.”
Hinrikus: Plural lead partners frequently pull deals after peer feedback
“We have many cases where after hearing the feedback, the lead partner is like, hey guys, you know, Ian, you raised great points. Karina, what you said about your experience in the market is very true, and I'm not gonna do the deal. Many cases where this happen…”
Hinrikus: Fast-tracked personal investments in 2020-2021 resulted in big losses
“20, 20, 21, there was a lot of deals done, you know, under the gun basically. I did some myself personally, made some big losses.”
Hinrikus: Exceptional startups rarely push hyper-fast investment timelines
“I don't see the crazy companies moving so quickly. That's the momentum spreadsheet investing, which starts moving way quicker.”
Hinrikus: Founders mistakenly treat large fundraising as ultimate success metric
“I think founders too often think fundraising and large fundraisers is ultimate measure of success.”
Hinrikus: Wise built over $10B of value while burning $100M primary capital
“Wise only raised hundred sixty million primary capital, and we only burned through about a hundred million of primary capital. Hundred million primary capital to build in excess of ten billion of value.”
Hinrikus: Startup boards dominated by VCs are ineffective
“The things that I don't like about boards, they oftentimes become way too big, way too quickly. You know, your C round investor takes a board seat, your A round investor takes a board seat, your B round investor takes a board seat, your C and D. So you end up …”
Hinrikus: Active founders should serve on other startup boards
“Also, founders who are building companies, at some point it might be good for them to be on one board of another person building a business. You know, I think it's good for both.”
Hinrikus: Venture capital is a commodity, so founders can negotiate lower dilution
“We are a commoditized product, Harry. VCs are a commodity. You can press them down.”
Hinrikus: No venture capitalist will ever fight for a founder's equity ownership
“No VC will ever fight for the founder's ownership. You need to fight for it.”
Hinrikus: Multi-stage firms' high-volume seed strategy will fail as founders wise up
“I don't think this game will last. I think the best founders will realize that getting a check on good terms from a multistage firm is by no means a guarantee of raising money from them in the future.”
Hinrikus: Median Venture Capital Returns Will Decline as the Asset Class Matures
“The best investors will continue generating best returns, but I think the median is probably gonna come down over time.”
Hinrikus: Plural Was Created to Drive European Sovereignty and GDP-Level Impact
“Even zooming out when we were starting to think about plural in 20, 21. So we raised our first one in 20, 22. So thinking of creating plural, we were, we had two things which were really important. European sovereignty and GDP level impact.”
Hinrikus: The US Can No Longer Be Trusted to Protect Europe
“And the ways that US cannot be trusted anymore to be the protector of Europe.”
Hinrikus: Critical Tech Sectors Will Divide into a Tripolar World
“A lot of sectors where I think we're going to be living in a, It's a tripolar world. Is that a word? Did I make it up? So there's gonna be an American version. Let's call it Android. There is a European version, Helsing, a Chinese version. Defense, space, ener…”
Hinrikus: The world is entering a period of technological decoupling
“I think we are going into a world of decoupling for a while. I'm kind of hopeful that Western world will come closer together after going through a rough patch, but you know, this is these are complex topics.”
Hinrikus: Europe cannot trust tech solutions vulnerable to US interference
“If we don't, if we can't guarantee that the Android solution works, regardless of what people do in the US, we cannot trust it.”
Hinrikus: Europe must control data access and kill switches for robotics
“If we talk about anything that gets visual audio information, robots, cameras, we probably want to control who has access to the information we gather, and who has access to a kill switch.”
Hinrikus: European countries must raise defense spending to 3–5% of GDP
“Defense contributions, you know, we were not at two percent in Europe before Estonia was ahead, but in, and Poland was ahead, but, you know, we need to get to three, four, five percent everywhere. And same in other critical industries.”
Hinrikus: Russia will attempt to attack another European country
“I think it's a very serious, very real concern. We should be living under the assumption that whatever happened in Ukraine now, Russia will try in another country over the next years, and we need to be ready for this.”
Hinrikus: Regulation never prevents top entrepreneurs from starting companies
“No entrepreneur ever Has not started a company because of regulation. So best entrepreneurs say goes through walls made out of titanium to make it happen. So I think, you know, in some sense, you know, it's an excuse.”
Hinrikus: Wise would not have received a pricing premium in the US
“I don't believe Wise would have a pricing premium in the US.”
Hinrikus: The UK stock market is subprime due to weak institutional backing
“We don't have enough retail participation in the UK. We don't have enough institutional participation from the pension funds. So I do think UK stock market is subprime in that sense.”
Hinrikus: Revolut should list in US if expanding there
“If he wants to build a big, I think here's, here's what I would tell Nick. If he wants to build a big business in the US, then he should go public in the US.”
Hinrikus didn't sell Wise secondary shares until valuation hit billions
“Not until we were valued at billions. I didn't sell a single, single share of second secondary, but after that I've done it in a, I would say systematic way.”
Hinrikus has been financially independent since 2002 via Skype options
“I was also lucky to make money from being the first employee at Skype from stock options. So in that sense, I've been financially Independent since 2002, three.”
Taavet Hinrikus: European Governments Should Be Largest Customers for Local Startups
“More capital for deep tech investment. Look at encouraging entrepreneurship. Look at reducing the regulatory burden. And I think the way we do government purchasing decisions, whether it's in defense or other areas, the government should be the biggest custome…”
Hinrikus: Estonia Has the Highest Number of Unicorns Per Capita Globally
“We have the biggest number of unicorns per capita, and nobody knows this.”
Hinrikus: Revolut Is Likely Europe's Next Major Startup Ecosystem Accelerator
“I mean, I have to say there seems to be a lot of companies coming from Revolut today, which is pretty, pretty cool to see. I don't know how many of them are doing exciting things compared to do, trying to do fintech widgets, but maybe today I'd say Revolut.”
Shorts cut from this episode
▶ VCs Who Invest Their Personal Money! 😮 · 20VC with Harry St (@18:14)
▶ Millionaires: Wise’s First Employees 💸 · 20VC with Harry St (@14:14)
▶ Europe Needs Independence from US Defense ⚔️ · 20VC with Har (@47:14)
▶ Do European VCs Have The Right Experience? 🤔 · 20VC with Ha (@4:31)
▶ If We Can't See 100x, We Don't Do The Deal 🚀 · 20VC with Ha (@0:17)