European VC Plural has built a reputation for itself as one of the few VCs in the region started and led by entrepreneurs who have grown their own startups, with founders including Taaavet Hinrikus from Transferwise/Wise; Tamkivi Strait; and Ian Hogarth, the founder of Songkick, who also recently added a role with the UK government on its AI security strategy. Now, Plural itself is scaling up, with a new €400 million fund to back what Hogarth refers to as “transformational” startups in the region, bringing more business expertise to run as businesses.
As with its investments to date, Plural’s primary focus will continue to be on startups rather than seed rounds, he added.
When Plural first launched in June 2022, the world of business startup companies was in high gear. Just six months ago, Atomico reported in its annual survey that startups in Europe had set a record 100 billion dollars 2021. Plural’s €250m debut fund itself was arguably a product of this: it was actually meant to be €150m.
The fund announced today comes at a very different time.
Venture capital in Europe, battered by a weak economy, has largely been in retreat over the past year. Startup investment dropped in 2023 to $45 billion. Two of the high-profile investors who arrived to set up shop in the area, Omers and Coatue, significantly downgraded or closed their operations. Others stayed but play it cool. Valuations, overall, have fallen due to missed growth targets and investors are driving a tough deal. Even Plural has been sitting on some of its money: Hinrikus said in an interview that it is still making investments from its first fund.
Plural’s latest fund still exceeded its original goal — thanks in part to the participation of one LP in particular, an unnamed UK academic institution, Hogarth said (other LPs included foundations and family funds from the US and Europe primarily ). But it didn’t come without its own struggles.
“It would be wrong to say it was easy,” Hinrikus told TechCrunch.
Plural — whose partners also include co-founder Haled Heliwi (former CEO of gaming company Bigpoint) and more recently Carina Namih (a veteran founder and investor with a background in health tech) — to date has made 26 investments since the first fund. So far activity has been concentrated around a few key categories that have proven strong in Europe as a whole.
Artificial intelligence accounts for nearly a third of its total investments, with “cutting edge technology” (scientific discoveries that have viable pathways to products) taking up 16% and climate and energy-focused start-ups 14% .
Notable investments from the first fund include London-based Robin AI, which raised $26 million earlier this month for a “legal co-pilot;” Isometric, another UK startup, which raised $25 million last year for a new approach to creating a carbon removal registry. a German power generation switch called Proxima Fusion; and Unitary AI, a startup that has created a multimodal technique — reading visual, auditory and text-based cues — to improve video content moderation.
These are some of the same categories that Plural will continue to explore when it invests its latest capital, though it will take a somewhat different partner approach when it does so.
After assuming a role Mr of the AI Foundation’s government working group and help organize the high-profile AI Security Summit in the UK last year, Hogarth is currently Chair of the UK Government’s newly formed AI Security Institute.
As a result, Hogarth has effectively stepped away from investing in and holding AI companies that were part of his portfolio. He declined to elaborate on how that is being done, describing the process as “a series of mitigations” that included divestments and other actions that mean, he said, “there is no way I will benefit financially from taking on this role.”
Artificial intelligence may be the current flavor of the month, but it’s far from the only game or opportunity in town. The tighter market right now has given investors much more clarity, it seems, in the company’s search for what Hinrikus describes as “follow-on businesses.”
So while some may think the consumer ship has sailed, Plural is looking to board that ship. “We think there are some really special consumer opportunities that will emerge over the next few years,” said Hogarth.
“What we’re really interested in is founders following a very unique vision, trying to do something that feels very differentiated,” he added. “[With] AI right now, there’s a huge number of people creating businesses that look identical to 500 other startups. So what’s more interesting is when people have taken a slightly less conventional path and have a stronger view of how the world will develop.”
