Should founders foot the bill for VCs’ legal fees? At Plural, we dislike this industry norm. Why should founders, already navigating a challenging journey, bear the burden of investors’ legal costs?

It’s time for change. Here’s why:

👉 Founders deserve transparency and fairness. It’s a weird power play to kick off a partnership where the investor is wiring money and then clawing back funds before the work has begun.

💰 Investors with a large pot of capital to deploy should be well-equipped to cover their own expenses. Why add immediate and unnecessary strain to the startup’s resources?

⚖ Misaligned incentives from the start hinder progress on legal negotiations. Both parties should be equally incentivised to keep the process efficient, drama-free and cost-effective vs lawyers running up bills.

Sten Tamkivi on our team said it best: “As a founder, I considered it just obnoxious how a VC wires you 2m and then makes the point of taking 20k back with the other hand.”

We were pissed off about this when we experienced it on our own journeys as founders, so it was one of the first “standards” we kicked to the curb when founding Plural – and have consistently heard from founders that it’s something they appreciate.

One of the upshots of scrapping industry behaviours we don’t believe in is that it sets a new high-water mark for founders and encourages our co-investors and follow-on investors to align with what we believe is a healthier, more equitable way to kick off the founder-investor partnership. On a couple of recent investments, the CEOs used Plural’s stance on paying our own legal fees as a precedent to persuade other co-investors to waive their legal fees too.