20VC: VCs are Spreadsheet Monkeys and are Commoditised | Why Fees and Carry Misalign GPs and LPs | Why Founders Will Realise Multi-Stage Funds Damage Seed Rounds | Why We Need European Sovereignty More Than Ever with Taavet Hinrikus

Unknown Source April 28, 2025 58 min

startup artificial-intelligence investment anthropic google

🎧 Listen to Original

75 Companies

118 Key Quotes

3 Topics

9 Insights

🎯 Summary

Comprehensive Summary of 20VC Episode with Tavit Henrikus (Plural)

This episode of 20VC, hosted by Harry Stabbings, features Tavit Henrikus, Partner at Plural, a $500M fund backing ambitious European founders. Tavit’s background as the first employee at Skype, founder of Wise (Europe’s first direct listing), and prolific angel investor provides a unique perspective on the evolution and misalignment within the venture capital industry.

1. Main Narrative Arc and Key Discussion Points

The conversation charts Tavit’s transition from high-volume angel investing to founding Plural, driven by a desire for more mission-aligned, impactful investing. The core narrative then pivots to a critical analysis of the VC industry itself, focusing on misalignment of incentives, the commoditization of traditional investing models, and the necessity of founder-operator experience in early-stage decision-making. Tavit advocates for a more founder-centric, aligned VC model, contrasting it with the perceived “Wall Street-esque” nature of high-volume, spreadsheet-driven investing.

2. Major Topics, Themes, and Subject Areas Covered

• Venture Capital Structure & Alignment: Deep dive into management fees (2.5% standard vs. Plural’s lower fee), “skin in the game” (GP commitment), and the elongated timeline to DPI.
• The Role of Operating Experience: The value of “scar tissue” from building companies versus traditional consulting/banking backgrounds in VC.
• Investment Strategy & Thesis: Backing “really hard shit,” favoring ambitious, often repeat, entrepreneurs aiming for generational impact (e.g., defense, deep tech) over predictable enterprise SaaS.
• Portfolio Construction: Managing fund composition, reserve allocation strategies, and the challenge of balancing ambitious bets with portfolio diversity.
• Founder-Investor Dynamics: Misalignments like investors demanding legal fee coverage and timeline conflicts regarding liquidity.

3. Technical Concepts, Methodologies, or Frameworks Discussed

• Spreadsheet Investing: A pejorative term for models based purely on stacking cohort curves, calculating LTV/CAC, and paying high prices for predictable SaaS growth metrics. Tavit suggests this era is waning or less exciting for truly ambitious bets.
• DPI (Distributions to Paid-In Capital): The metric used to measure realized returns. The discussion highlights the current 15-17 year elongation of the window to achieve meaningful DPI in VC.
• Portfolio Construction Ratios: Plural’s approach to reserves (moving from less than a third in Fund One to nearly half in Fund Two) and the debate over uniform vs. performance-based reserve deployment.

4. Business Implications and Strategic Insights

• VC Fee Structure as Misalignment: The standard 2.5% management fee is fundamentally misaligned with outcomes, as it incentivizes capital deployment over success. Plural’s lower fee structure allows for more shots on goal.
• The Value of Serial Founders: Repeat founders often aim for significantly larger, more complex goals (e.g., gaming to defense), leading to potentially larger outcomes, even if the probability of success remains similar to a first-time founder.
• Liquidity Management for Deep Tech: For “crazy companies,” achieving milestones is crucial to maintaining liquidity, citing SpaceX as a private company that has managed this without liquidity issues by consistently creating value.

5. Key Personalities, Experts, or Thought Leaders Mentioned

• Tavit Henrikus: Guest, Partner at Plural, founder of Wise, early Skype employee.
• Harry Stabbings: Host of 20VC.
• Doug Leone (Sequoia): Mentioned regarding the commoditization of venture capital.
• Bill (Spark Capital): Mentioned regarding the end of the predictable SaaS growth era.
• Max Levchin & Ben Horowitz: Mentioned as insightful investors who advised Wise during its early fundraising.
• Fred Wilson (Union Square Ventures): Mentioned for his vocal stance on taking money off the table (returning capital early).

6. Predictions, Trends, or Future-Looking Statements

• Shift Away from Predictable SaaS: The industry is moving toward more unpredictable revenue strategies and harder technological challenges, making spreadsheet investing less relevant for spotting the next trillion-dollar company.
• Need for Better Liquidity Solutions: The traditional 10-year fund model is too short for deep tech; the industry needs to innovate solutions for long-term liquidity challenges.

7. Practical Applications and Real-World Examples

• Plural’s Alignment: Plural partners are the biggest investors in their own fund and each GP writes a personal check for every deal, ensuring they are not “playing with house money.”
• Wise Employee Compensation: Tavit highlights proudly that every Wise employee, including customer support, received stock options, resulting in significant wealth creation upon IPO.
• Deal Sourcing: Plural’s brand attracts founders building “deep-hard shit,” though their portfolio spans a full spectrum, emphasizing founder character over specific sector focus.

8. Controversies, Challenges, or Problems Highlighted

• VCs Lacking Operating Experience: Tavit asserts that the vast majority of European GPs have never worked in a “real operating company,” leading to an inability to truly assess pre-PMF founders.
• Misaligned Incentives: The 2.5% management fee structure is the fundamental problem, incentivizing deployment over outcome.
• Unfair Deal Terms: The practice of companies paying the investor’s legal fees is highlighted as an outdated, misaligned norm that Plural rejects (they pay their own legal fees from the management

🏢 Companies Mentioned

Data Bricks ✅ Technology/Data & AI

Dalian ✅ finance

Bill ✅ finance

Spark ✅ finance

Marcus ✅ tech

Zelensky White House ✅ unknown

The Germany ✅ unknown

Cold War ✅ unknown

White House ✅ unknown

If Plural ✅ unknown

Y Combinator ✅ unknown

Keith Rabois ✅ unknown

AI SaaS ✅ unknown

No VC ✅ unknown

Can I ✅ unknown

💬 Key Insights

"The new German government has said, say, won't the first, not one, but two fusion power plants to be built in Germany."

Impact Score: 10

"If we can't guarantee that Anduril solution works regardless of what people do in the US, we cannot trust it. And I think if you're thinking about anything else which has access to vast amount of information... we probably want to control who has access to the information we gather and who has access to a kill switch."

Impact Score: 10

"What if they turn this off when they don't feel good about Europe anymore? Do we want US robots roaming around our streets, collecting intelligence information?"

Impact Score: 10

"We're going to be living in a tripolar world. So there's going to be an American version, let's call it Andral. There is a European version, Helsing, a Chinese version."

Impact Score: 10

"Two things which have happened in between [since 2021]: One is the Ukraine war... And I think the second thing which has changed is I think really what happened in the White House in February where Zelensky was taken for a grilling and so ways that the US cannot be trusted anymore to be the protector of Europe."

Impact Score: 10

"Pre-seed and seed is literally just a massively high-velocity option game. 5 million, fine, it's 5 million. We just want to have a chance to write 25 at the A and 100 at the B."

Impact Score: 10

📊 Topics

#startup 84 #artificialintelligence 59 #investment 16

🧠 Key Takeaways

💡 not be entertaining the idea of this deal

💡 start Plural

💡 really think about getting founders who have scarred tissue from building companies to become investors

💡 continue

💡 not continue funding it