GoingVC Interview: A Conversation With Atin Batra, Founder & GP of 27V

fter the chaos that has ensued in the public and private markets this year, the venture capital and startup scene looks a little different than it did this time last year. There are reports that fundraising has started to slow as interest rates rise and that investors are losing their appetite for risk. 

But that doesn’t necessarily mean it’s a bad time to be an investor, says Atin Batra, the founder and solo partner at the venture capital firm 27V, which focuses on the edtech space.

Batra has been investing in startups for nearly a decade. Prior to his time at 27V he served as a principal at the fund Q Venture Partners, where he managed a portfolio of companies across North America and Israel. 

Batra also led the B2B startup accelerator at one of Hong Kong’s largest property groups, the Swire Group. GoingVC recently caught up with Batra to get an inside view of what is really going on in the private markets right now. 

Question: Tech valuations have taken a big hit this year in the public and private sectors. The drop came as a big surprise in the public sector. Were you and other VCs that you know also surprised?

A: The drop itself wasn’t much of a surprise, but the scale and speed of the drop were unexpected for sure. There’s always been a corner of the VC world that has been cautious and waiting for a correction – I was safely, albeit anxiously, ensconced there. The oft-quoted Warren Buffet advised investors both in the public and private markets to be “greedy while others are fearful.” This is exactly why you see a lot of investors looking at 2022-23 as a key opportunity to get in early on generational companies.

Question: With valuations down and everyone re-evaluating, what are you seeing out there in terms of VC investment? Are investors taking a breather? Waiting out the uncertainty? Or buying the dip, if you will?

A: After two outlier years for everything in fundraising, we're now returning to what 'normal' feels like. Granted, the total amounts invested are still record-highs, but they're in line with what you'd expect if trends from 2018-19 had continued along the curve. Instead, what we saw in 2020-21 was a suspension of reality.

Founders may be under the impression that VCs aren’t investing, but that’s just not true. With valuations having significantly decreased, venture capitalists are just bargain hunting! They’re leveraging relationships, perhaps going back to founders who they may have passed on before and securing more favorable terms. The truth is, it’s not a bad time to be an investor.

Frankly, having worked through holiday breaks including the sacrosanct summer migratory time and end-of-year Christmas break, investors are finally taking time off this summer to reset and recuperate. Hopefully, this will allow them some perspective on the space in general and they will come back to the investing arena with evolved expectations on round sizes and pricing.

Question: How do you approach startups in an environment like this? Are they frustrated by the drop in valuations or more open to deals given how difficult conditions have become? 

A: Both founders who didn’t raise in the last six months are probably kicking themselves right now but most founders I’ve spoken to are also open to ‘deals,’ as the primary goal right now is to lock in cash for at least 12 months of runway. Sadly, that also means that we’re seeing some unsavory behavior from investors, with 2x or 3x liquidation preferences and other predatory terms.

I’d recommend founders stay open to structured deals as long as they believe it’ll be valuable in the long run when it comes to cash for survival and other intangible benefits.

Question: Do you expect tech valuations to bounce back toward the pandemic highs seen in 2021 if there is not a severe recession?

A: No, I don’t think we’re going back to the heady days of 2021 - at least, I hope not. The way I see this playing out is another year of conservatism and gradual clawback to the deal activity levels of 2020-21 but without the stratospheric valuations.