Start-up Society #95: 27V
Keeping the American Dream Alive
Welcome to the 95th edition of Start-up Society! This blog highlights some of the most exciting start-ups in the country striving to keep the American Dream alive.
Make sure you check out the previous issue, if you have not already, here!
Today, we are proud to present our latest article and podcast special with Meet the Investor #3 featuring Atin Batra, Founder & Solo General Partner of 27V (Twenty Seven Ventures).
This article provides a summary of the conversation. For the full details, tap into the podcast here!
Tell us about 27V and why the focus of the fund is on learning and labor?
Atin was an entrepreneur and in his own words he “failed spectacularly at it” but learned a lot from his experiences. He realized he loved entrepreneurship and over time he felt that his best value-add to the start-up ecosystem was as an investor. He started his investing career as the head of a corporate accelerator, moved into earlier stage investing, and eventually decided that he wanted to even earlier. In order to achieve his goal of investing in seed and pre-seed, he decided to raise his own fund.
The focus on education comes from a deep-rooted involvement in education that Atin already had. He has been involved with an educational non-profit for the last 15 years. In fact, it was his wife who originally founded the organization when she was in high school. As he was launching his fund he knew that education would be a primary focus. Atin evolved the education thesis to include labor after realizing that the Gig Economy/Future of Work movement has significant overlap with education.
27V has an average check size of around $150,000 and almost always as the first check. Atin spends more than 50% of his time directly supporting the portfolio companies. The fund has a portfolio of 24 companies with 18 in North America and 6 spread across Europe & APAC.
How is 27V set up structurally and how did you become such a global ambassador?
27V is a Cayman Islands offshore fund, which makes it really easy for investing internationally. The bigger concern from a legal standpoint when investing internationally is the local jurisdictions of each of these companies and how to purchase shareholder documents in those jurisdictions. The best way to resolve this is to use Delaware C Corps for all investments, even in international companies. As a startup, always issue shares in a Delaware C Corp entity to make it easy for investors. Founders should certainly have an operating company of their own for their local jurisdiction but the holding company should always be a Delaware C Corp.
Atin was able to become very globally connected early in his career. When he started working as an investor at the accelerator, the mandate was to bring international companies to Hong Kong so that they could actually help the conglomerate that he was working on for that accelerator. Afterward, he worked at another VC firm that was focused on investing globally, with an eye on bringing those companies to actually do manufacturing in Asia.
How does 27V think about structuring investments?
Equity investments are preferred, but there is nothing stopping 27V from investing in any other type of instrument (convertible debt, post/pre-money SAFE notes, etc.). Something that 27V is working on is developing a standard equity transaction document set so that founders can close rounds more efficiently. The benefit to not doing an equity round from the outset is to save on legal fees, which isn't a solution as much as it is kicking the can down the road. It is better to do it properly from day one, as it will only get more expensive and complicated in the future. 27V covers the legal fees for leading the investment. This practice is uncommon, as most VCs recoup fees like these from the total check they are investing.
The only reason 27V would consider Special Purpose Vehicles (SPVs) is when they have a high conviction company that hits series A in order to increase the number of total dollars they can invest in the company. From a founder perspective, SPVs have little drawback and enable larger check sizes from a single entity on the capitalization table.
How do you conduct diligence on founders and companies at such an early stage?
These three things are what Atin looks to get answers to in the first call:
- Would I want to work with and for this person for the next 20 years?
- Is this person actually a builder? (products, services, communities, etc.)
- Has this person actually failed and what did this person learn from that?
All of these questions relate to the idea of trying to understand a founder's origin story and what led them to start their company. Additional questions from a business standpoint include the team's industry experience, their customer understanding, and the founder's ability to grasp unit economics.
What portfolio companies would you like to shout out?
- Go to https://www.27v.vc/portfolio to see all the great companies!
- Fluent
Fluent is a chrome extension that helps you practice new languages while you browse the web. It translates select English words on the websites you’re already reading to a new language of your choice. It’s completely embedded and immersive learning, there is no need to start a new routine or spend any extra time studying, but you will be practicing your skills throughout the day. - Edgi Learning
Edgi Learning is building educational quests for high school and college students so that they can actually learn about important content pieces that are outside of their curriculum. For example, if you want to learn about what caused the baby formula shortage right now, Edgi has a quest going on, which is encouraging students to research and then create content that proves they understood the concept. The platform gives students control over what they’re learning — and how they’re learning it.
Final words?
“Be curious.” As an investor, the only thing keeping Atin alive in this industry is the fact that he is just curious about every new business that crosses his desk. In his mind, that’s the single most important quality that any individual can have; just be curious and want to learn.
Thank you for reading this article! Please leave a comment, clap, and follow.
Authored by Arteen Zahiri, Rumeer Keshwani, Elham Chowdhury, & Julian Ramcharan
