Do founders make the best investors?

July 11, 2022
Business Growth

A common trait among founders is a natural inner self confidence. Even the least confident among them seems to be graced with a core belief that starts from a position of  “Of course I can”.  

And a great deal of these founders go on to prove that they can indeed achieve whatever they aim to.

There is a large helping of this founder chutzpah in the launch of a new £250m investment fund, Plural. The ambition is to boost the European tech start-up scene. But what’s different about Plural is that it has been started, and will be run, by a bunch of founders. Plural’s founding partners are all successful entrepreneurs who have made substantial amounts from their previous businesses. They feel there is a lesson to be taken from the US model, and in particular that of Silicon Valley, where having made some money, successful founders immediately get involved in helping the next generation onto the scale up ladder.    

And this is about more than just money. Citing the example of the way early Skype employee slater went on to fund both Bolt and Wise (now themselves unicorns),Plural’s founders think that having been through the launch and growth experience themselves, founders who take one business on the journey to maturity can naturally lend their experience and learning to others who follow. While the Skype example is an Estonian success story, Plural’s founders feel it isn’t common enough in Europe.      

Plural wants to disrupt the model of European tech investment the same way its founders have disrupted other established industries. It is the brainchild of Taavet Hinrikus, co-founder of the payments company Wise; Ian Hogarth, co-founder of Song kick; Sten Tamkivi, co-founder of Teleport; and Khaled Helioui, former chief executive of Big point.

Having dumped a fair slice of their own capital into the new fund, they plan to invest in up to25 startups over the next 18 months, with a maximum investment each time of £10m.Where it gets interesting is that if this first batch of investments do well they will seek to expand, not by finding fund managers or investment analysts, whom they decry as mere “spreadsheet jockeys”, but other successful entrepreneurs looking to invest.  

The four Plural founders say that this model of entrepreneur-led funds is much more common in the US, where they say half of the partners in VC firms are themselves entrepreneurs. The appeal of this model is backed up by recent research from Helm, which suggests that the vast majority of respondents (86%) think a blend of professional managers and founders make the best investment teams. The worrying news for Plural is that only 10% felt that the best VC funds are those run 100% by founders, while half as many thought that professional managers alone, without any founder support, were best placed.

In better news for Plural’s founders, and assuming that they at some point will employ some non-founders, when it came to deploying a blend of skills, over half (57%) felt that the ideal combination was for a mix of skills but led by founders.


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