It’s 27V’s birthday today! 🎂🎉🥂When I started raising my first fund in 2019, I couldn’t have predicted everything that has happened in these past two years (except for the continued success of Fiveable, Toggle & 101Edu — my first 3 investments — which seemed inevitable 🚀 even then). What I can say for sure is that my experience has taught me many lessons to apply to the next chapter of 27V — and confirmed a few I already knew, but needed to be reminded of 😜.
First, the lessons:
- Working as a solo GP does not mean working alone.
I’m often asked why I’m a solo GP, especially given that everyone who knows me would characterize me as a people person. Day-to-day, though, I’m not alone: I’m collaborating with founders, investors, limited partners, and industry professionals. A special part of my job is to be constantly synthesizing insights from forty-five (45!) portfolio founders. Any GP can have ex-C-suite advisors with operational experience, but I get to build close relationships with entrepreneurs who are doing the work today and know what it means to build a company in this highly unique moment in time. Their feedback is invaluable, and I think they should have a say in the curation of the community we’re building together, which is why I ask the founders for feedback before making every investment — the #27Vfam rolls deep! - Errors of commission > errors of omission.
Part of being a GP is embracing the inevitability of missed deals. My responsibility is not to jump at every flashy new idea, but to make sure the ones I do invest in are financially sound and viable businesses in the long term. It’s cliche now but really, half the deals that get signed these days are based more on FOMO than actual potential. What I don’t want to do is invest in something where the math doesn’t make sense or that’s a reputational risk. - Invest with conviction, at the right stage.
Counter-intuitively, first-time fund managers (<$25M funds) are advised to invest a portion of their Fund Is in later stage companies to prove they have access to marketable names. That never sat right with me because I sincerely believe that I owe it to Fund I investors to generate meaningful returns for them rather than optimizing for the longevity of my business (the firm). Over time, I recognized that this advice (Seed funds investing at A or B) is even worse from a math perspective. A $25M fund investing $500K checks at $50M (or even $25M) valuations will never generate the net multiple return needed to justify LPs risking their capital. Which led me to the thesis of investing with conviction, because ownership numbers matter. - Community is NOT a commodity, when built with intentionality.
When I started 27V, I knew we were building something special with our portfolio companies, but I didn’t know how to explain it. What I did know is that I had a group of people — not just founders but their employees, too — connecting and helping each other with everything from investor lists to TikTok strategy (the Slack channel’s called #TikTank and I’m a regular lurker 👀). Most startup employees are moving into roles they’ve never held before. By opening up our Slack to all employees, we have the experienced engineering manager formerly from Twitch or Niantic giving advice to this young new manager in the midwest who has never worked at a big tech company. And, the knowledge flows both ways. I have four DTC companies using TikTok as their primary channel of growth. The #TikTank’s median age is under 25. They know how the target audience is using social media and are working together to figure out solutions for problems they all face. Teams can learn best practice from the people actually practicing, not investors who are out of the game. Building a community where the companies can help each other and are invested in each others’ success is collaboration at its best, where rising tides can lift all boats. - Being a specialist investor with general knowledge IS value-add.
Despite having a lot of relevant experience in investing, I had a bit of imposter syndrome during my first year as an investor. I didn’t know how to explain what I was bringing to the table. But, I learned that you can either be a general investor with a specialized value add (e.g., you invest in any sector and help them with deep product expertise), or you can do what I do and invest in a specific sector about which you are knowledgeable and passionate. In my case, that’s education and the future of work. As long as I can help in this specific space, whether I have a functional specialization or not doesn’t matter.
On to what I already knew.
- Relationships matter.
This is not novel wisdom, but it’s true. My first LP came through because of a 6 year relationship. My first investments, Fiveable and Toggle, were from building relationships with the founders over months. I was a risk for these companies, but they chose to make space for me because we’d gotten to know each other. Of the 21 portfolio companies, more than half have come through referrals. Again, this is well-known in the investing space, and the tactical advice is just as enduring: be yourself and connect authentically. Investments are transactions, relationships are not. - Location doesn’t matter.
I’ve always been a remote investor. I live in Asia and deploy most of my capital to North America. While recruiting portfolio companies, many VCs limit themselves to their local regions or recognized tech hubs. They’re missing out! Game-changing innovation can come from anywhere. This location-agnostic approach was also a huge benefit in adapting to the pandemic. While most firms were spinning up new processes and getting comfortable on Zoom, 27V was already there. As innovation diffuses away from San Francisco and New York, I’m ready. - Education and the Future of Work are the next horizon in investing.
Investing in education and the future of work is why I wanted to start a fund in the first place. I’ve always been convinced that this space would have the most impact, and I wanted to build a firm to invest in those technologies. The pandemic threw into sharp relief just how imperative these sectors are, catalyzing rapid growth in invested $$$. It’s great for the ecosystem, and I’m not afraid of a little competition (just try to keep up 🏃♂️).
If the past two years have taught me anything, it’s that you can’t predict the future. The next year’s going to be even more special as it will bring on my biggest adventure yet with the birth of my first child. I’m sure becoming a father will change how I think about education, work, and everything else! But whether I’m supporting the Batra family or the #27Vfam, I’ll keep abiding by the same principles: showing up authentically, doing the math, rolling with the punches, and supporting the team as best as I can. Cheers to another two years 🍻, and more 🤞