Raphael Stevens

Plural, a venture firm set up by the founders of Wise, Skype and Songkick, raised 400 million euros ($436.4 million) for a new fund.
Plural II will invest mainly in European tech, seeking to find innovative names that haven’t been discovered by mainstream funds like Atomico.
Plural co-founder Taavvet Hinrikus, formerly of Wise, said his fund is different from competitors as it was started by entrepreneurs with “scar tissue.”

The partners of European venture capital firm Plural, from left to right: Ian Hogarth, Taavet Hinrikus, Carina Namih, Sten Tamkivi and Khaled Helioui.

The founders of Wise, Skype and Songkick have raised 400 million euros ($436.4 million) for a new fund to back technology startups in Europe. It seeks to compete with established funds like Atomico, Balderton Capital and Creandum with its founder-led focus.
Plural Fund II, the firm’s second to date, arrives just 18 months after the firm raised its last fund, a 250 million-euro vehicle. Its co-founders include Taavet Hinrikus, co-founder of fintech firm Wise, Ian Hogarth, co-founder of concert discovery service Songkick, Sten Tamkivi, co-founder of communications platform Skype, and Khaled Helioui, former CEO of Bigpoint Games.

Hinrikus told CNBC that Plural could serve as a better partner to startups in Europe than most venture capital funds, given that it was started by people with the “scar tissue” of proven entrepreneurs. Only 8% of VCs in Europe are former founders, he says, much lower than the 60% in the United States.
“If we look at a lot of VC funds, you have lots of people who have done great work with spreadsheets, not with startup life,” Hinrikus told CNBC in an interview. “In our case, it is seen as a core criteria for choosing our partners that they’re totally unemployable.”
“It feels like it’s world war three, and we’re in the trenches together as one of the founders. So, if we look at the track record, and our ability to get the deals done, I think that all seems to say that this is really missing in Europe,” Hinrikus added.
Plural raised the funds from a mix of limited partners, including British and American university endowments, U.S. foundations and insurers, strategic family offices in Europe and the United States. The firm said it saw “significant appetite” from LPs — limited partners, the institutional backers of venture funds — for its new fund and exceeded its own fundraising target, despite being in the “toughest environment” for raising a fund.
“The fact that, in a difficult fundraising environment, we’ve been able to raise a fund of this scale, with a huge amount of appetite from LPs, just shows you that some of the most sophisticated investors in the world are really recognising the opportunity in Europe, and really want to see a fund the shape of Plural,” Carina Namih, partner at Plural, told CNBC in an interview.

“I think it’s a real testament against the sort of macro backdrop that we’ve raised a fund of this size and scale so quickly,” she added.

The ‘unemployables’

Plural plans to invest at a pace of two to three investments per investor per year with its new fund. The firm has five partners in total, whom it dubs the “unemployables,” owing to the fact that they wouldn’t readily join a VC firm, or be employable at a startup. Each of the partners is an active angel investor.
Plural has made 27 investments in total, backing companies including law-focused artificial intelligence firm Robin AI, nuclear fusion power plant developer Proxima Fusion, and most recently drug discovery platform Sano Genetics. Its largest sectors by investment are AI (31%), frontier technology (16%), and climate and energy (14%).

Hinrikus said Plural isn’t interested in finding the next major software-as-a-service name in Europe, referring to companies that make software for businesses to ease the burden of storing data, accessing infrastructure, and carrying out data analytics. It’s more interested in deep tech, focusing on founders looking to solve fundamental scientific problems around energy, unlock AI “superpowers,” and make groundbreaking progress in health care.

Building tech giants in Europe

Plural says it wants to build technology giants in Europe, identifying winners in emerging categories that other funds may tend to ignore, such as deep tech and clean tech.
Carina Namih, a biotechnology entrepreneur-turned-partner at Plural, said she wouldn’t be surprised to see major technology names on a par with U.S. and Chinese giants start to emerge in Europe in the not-too-distant future.
She noted technological breakthroughs are happening much faster now, boosted by key developments around AI and more established pools of capital. 
“Look at how quickly OpenAI burst onto the scene with ChatGPT,” she said, adding it’s taking shorter amounts of time for new technologies to hit major milestones. “Clearly, the big tech companies have a lot of advantages and are entrenched in many ways. But I think now is a time more than ever, where new players and emerging players can come in and dominate entirely new spaces that didn’t exist a year ago.”
Namih previously worked on applying AI to mRNA-based medicine at her former startup HelixNano.
Plural’s new fund launch adds to the wave of startup activity that’s been happening in Europe in the last decade or so. 
A report from venture capital firm Accel late last year showed that $1 billion-plus unicorn firms often serve as catalysts for startup creation, with 1,451 new startups being founded by former employees of European and Israeli unicorns.
Of that new batch of startups, a great deal of them tend to come from fintechs, according to the report, with 70 fintech unicorns producing 423 startups.
“In the last 10 years, the whole ecosystem really has become an ecosystem, whereas before, we were just wild game hunting,” Harry Nelis, partner at Accel, told CNBC. “There was one here, one there, there was no ecosystem.”
“It’s a lot easier to start a company than before. The engineering has been done before, the marketing has been done before,” he added. “That is a flywheel that we have never had in Europe, that we now do have.” More

The world’s top hedge funds raked in record profits last year amid a resurgence in stock markets, new analysis showed.
The 20 leading fund managers made $67 billion in investor profits in 2023, up from the $65 billion recorded during the pandemic-era rally of 2021.
Overall, the fund management industry recorded gains of $218 billion after fees, according to estimates from LCH Investments .

Signage for Citadel Investment Group LLC hangs outside their office in Chicago, Illinois, U.S.
Bloomberg | Getty Images

The world’s top hedge funds raked in record profits last year amid a resurgence in stock markets, new analysis showed.
The 20 leading fund managers made $67 billion in investor profits in 2023, up from the $65 billion recorded during the pandemic-era rally of 2021, according research Monday from LCH Investments, a fund of hedge funds.

Overall, the fund management industry recorded gains of $218 billion after fees, according to LCH Investments estimates.
The top funds — identified as those which have performed best in dollar terms since their inception — accounted for around one-third of annual profits last year, despite managing less than a fifth (19%) of the industry’s assets.
Included among the best performers were Christopher Hohn’s TCI, Ken Griffin’s Citadel and Andreas Halvorsen’s Viking.

Top 20 managers by 2023 profits

Firm
Assets (billion)
Net profits since inception (billion)
2023 profits (billion)
Launch year

TCI
$50
$41.3
$12.9
2004

Citadel
$56.8
$74
$8.1
1990

Viking
$30.5
$40.9
$6
1999

Millennium
$61.9
$56.1
$5.7
1989

Elliott
$62.2
$47.6
$5.5
1977

DE Shaw
$43.8
$56.1
$4.2
1988

Lone Pine
$15.9
$35.6
$4.2
1996

Baupost
$27.4
$37
$3.8
1983

Pershing Square
$17.9
$18.8
$3.5
2004

SAC/Point72
$31
$33
$3
1992

Appaloosa
$17
$35
$2.7
1993

Farallon
$40.4
$35.7
$2.6
1987

Och Ziff/Sculptor
$28.7
$32.2
$2.3
1994

Egerton
$14
$23.9
$2.3
1995

David Kempner
$37
$21
$1.8
1983

King Street
$9.5
$19.5
$0.9
1995

Brevan Howard
$35.6
$28.5
$0.4
2003

Caxton
$13.4
$19.5
$-0.3
1983

Bridgewater
$72.5
$55.8
$-2.6
1975

Soros
N/A
$43.9
N/A
1973

Source: LCH Investments

LCH Investments’ director and head of research, Brad Amiee, said that the leading funds were buoyed by the stock market’s “fantastic run” in 2023. However, he added that many also showcased especially savvy stock selection strategies.
“You could argue that, since shorting is such a challenging sub-strategy, keeping things long-biased and having a concentrated portfolio of high quality positions has been the way to go,” Amiee told the Financial Times.

TCI, the top ranking fund, recorded investor profits of $12.9 billion and ended last year up 33%, beating the S&P 500’s 24% gain.
Included in its largest holders were Alphabet, Canadian National Railway, Visa and General Electric.
Citadel, which ranked second in 2023, made $8.1 billion in profits after bringing in a record-breaking $16 billion in 2022. Its $74 billion in gains since inception rank it as the most successful hedge fund in history.
The research also found that the top 20 funds have made a combined $755.4 billion in profits since inception, well above the $655.5 billion in total managed assets.
A hedge fund is a limited partnership of private investors whose money is managed by fund managers. Hedge funds are typically known for investing in higher risk and more non-traditional assets compared to mutual funds. More

A report released Monday by the Fed’s Office of Inspector General takes issue with trades made by former regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston.
The report concludes that their actions resulted in conflicts of interest that raised issues over impartiality and the proper conduct of central bank officials.

The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.
Valerie Plesch | Bloomberg | Getty Images

A watchdog review into market trading from two former high-ranking Federal Reserve officials criticizes their actions but does not accuse either of doing anything illegal.
The report released Monday by the Fed’s Office of Inspector General takes issue with trades made by former regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston.

Both men left their posts in September 2021 — Kaplan to early retirement and Rosengren for medical reasons — amid criticism over trading that ultimately saw Fed Chair Jerome Powell and Governor Richard Clarida come under question along with Atlanta Fed President Raphael Bostic.
Revelations showed that some Fed officials engaged in market trading at a time when they also were considering important and delicate policy matters in the early days of the Covid pandemic in 2020. The Fed ultimately slashed interest rates and launched a bevy of lending and liquidity programs that helped prop up financial markets as the pandemic crushed the U.S. economy.
While Clarida is mentioned in the OIG report, the details focus on Kaplan and Rosengren’s actions. The report concludes that their actions resulted in conflicts of interest that raised issues over impartiality and the proper conduct of central bank officials.
CNBC has reached out to both former officials for comment. Kaplan, who traded millions in stocks and options and other securities, has said that his actions were in compliance with standards in place at the time.
With regard to Rosengren, the report faults him for not disclosing multiple trades on his 2020 ethics forms. Moreover, the report noted “multiple discrepancies” in brokerage statements and trading data.

Trades he made regarding real estate investment trusts at a time when the Fed was buying mortgage-backed securities “create an ‘appearance of a conflict of interest’ that could cause a reasonable person to question Mr. Rosengren’s impartiality under FRB Boston’s code of conduct,” the report said.
On Kaplan, the report states that the OIG “did not find that his trading activities violated laws, rules, regulations, or policies related to trading activities as investigated by our office.”
However, the OIG faults Kaplan for not disclosing specific information regarding the selling of stock option contracts.
“This lack of information, in our opinion, did not support public confidence in the impartiality and integrity of the policymakers and senior staff carrying out the public mission of the [Federal Open Market Committee’s] work, especially during this critical time period when the Federal Reserve was taking monetary policy actions to address the effects of the COVID-19 pandemic on the U.S. economy,” the report stated.
There is a notation that Kaplan and the Dallas Fed were not specific in the disclosures because they “determined that this approach was permissible because it was consistent with Chair Powell’s reporting” on his disclosure forms.
Since the controversy, the Fed has revamped its trading rules and now prohibits officials from owning stocks, bonds and cryptocurrencies.
The new rules “aim to support public confidence in the impartiality and integrity of the Committee’s work by guarding against even the appearance of any conflict of interest,” said a statement issued when the Fed made the changes in February 2022. More

Every day brings more misery for China’s foreign investors. Some are most worried by China’s souring relations with Western governments. Others fret about the unprecedented slump in the country’s property market. Many are simply tired of losing money. On January 22nd the CSI 300 index of Chinese shares dropped by 1.6%; it is now nearly a quarter below its level of a year ago. Meanwhile, Hong Kong’s Hang Seng index fell by 2.3% on the day, and is more than a third below its level at the start of 2023.Heady optimism about China Inc. is an increasingly distant memory. Just five years ago investors clamoured for exposure to the country’s growth miracle and sought diversification from rich-world markets, which often move in lockstep. Providers of the world’s most important stock indices—FTSE and MSCI—were making adjustments accordingly. Between 2018 and 2020 Chinese stocks listed onshore, known as A-shares, were added to the benchmark emerging-markets index.image: The EconomistAt their peak in 2020 Chinese firms made up over 40% of the index by value. In 2022 foreigners owned $1.2trn-worth of stocks, or 5-10% of the total, in mainland China and Hong Kong. One investment manager describes the challenge of investing in emerging markets while avoiding China as like investing in developed markets while avoiding America. So how will investors do it? And where will their money flow instead?Some investment firms are eager to help. Jupiter Asset Management, Putnam Investments and Vontobel all launched actively managed “ex-China” funds in 2023. An emerging-market, ex-China, exchange-traded fund (etf) issued by BlackRock is now the fifth-largest emerging-market equity etf, with $8.7bn in assets under management, up from $5.7bn in July.A handful of large emerging stockmarkets are benefiting. Money has poured into India, South Korea and Taiwan, whose shares together make up more than 60% of ex-China emerging-market stocks. These markets received around $16bn in the final three months of 2023. Squint and the countries together look something like China: a fast-growing middle-income country with potential for huge consumption growth (India) and two that are home to advanced Asian industry (Taiwan and South Korea).image: The EconomistWestern investors looking for exposure to China’s industrial stocks are also turning to Japan, encouraged by its corporate-governance reforms. Last year foreign investors ploughed ¥3trn ($20bn) into Japanese equity funds, the most in a decade. For those with broad mandates, different asset classes are an option. Asia-focused funds investing in real assets, including infrastructure, have grown in popularity.Yet these various alternatives have flaws of their own. Unlike China’s cheap offerings, Indian stocks are expensive. They have higher price-to-earnings ratios than those in other big emerging markets. Although Japan’s stocks look relatively cheap, they make an odd choice for investors seeking rapid income growth. Likewise, Taiwanese and South Korean stocks are included among emerging markets because of the liquidity and accessibility of their exchanges, but both economies are mature high-income ones.Size is a problem, too. Many of the places benefiting as supply chains move away from China are home to puny public markets. Even after fast growth, India’s total market capitalisation runs to just $4trn—not even a third of Hong Kong, Shanghai and Shenzhen combined. When MSCI released its emerging-market index in 1988, Malaysia accounted for a third of its stocks by value. The country now represents less than 2%. Brazil, Chile and Mexico together made up another third; today they make up less than 10%.And whereas returns on Chinese investments tend to follow their own logic, smaller economies are more exposed to the vagaries of the dollar and American interest rates. According to research by UBS Asset Management, Chinese stocks had a correlation of 0.56 with those in the rich world between December 2008 and July 2023 (a score of one suggests the stocks rise and fall in tandem; zero suggests no correlation). By contrast, stocks from emerging markets excluding China had a correlation of 0.84 with rich-world equities.The emergence and growth of funds that pledge to cut out China will make life easier for investors who wish to avoid the world’s second-largest stockmarket. Without a turnaround in the country’s economic fortunes, or a sustained cooling of tensions between Beijing and Washington, interest in such strategies will grow. They will not, however, evoke the sort of enthusiasm investors once felt about China. ■ More