Investing at Atland Ventures with Ava Najafi
Background
Ava Najafi is a University of Minnesota senior studying Finance and Entrepreneurial Management. She is a Managing Partner at Atland Ventures and an Associate at Groove Capital. Atland Ventures is a $1 million fund that invests $25,000 checks in startups solving problems faced by digitally native generations. I talked with Ava about how they make investment decisions, how they support founders, and how to join the internal team.
Highlights
- Atland Ventures is open to investing in all startups that fit their thesis around solving problems faced by digitally native generations. You don't need to be affiliated with the University of Minnesota.
- Atland Ventures has 20% of its initial $1 million fund left to deploy first checks and invest in follow-on opportunities. They are in the process of raising Fund II.
- Atland Ventures recruits new internal team members each semester, looking for people passionate about entrepreneurship with good critical thinking skills. They value diverse perspectives and involve students with various majors and skill sets in the fund.
Interview Transcription
Kieran: Thanks, Ava, for joining me today. Do you want to introduce yourself?
Ava: My name is Ava. I'm a current University of Minnesota senior studying Finance and Entrepreneurial Management. I'm interested in the entrepreneurial and startup space, especially on the investing side. So, I've worked at Atland Ventures and at a few other funds, including one locally and an impact fund. I also have some startup experience and am excited to be here.
Kieran: How did you first learn about Atland Ventures?
Ava: Yes, it was the fall semester of my sophomore year. I was sitting in a finance class, and one of our previous Managing Partners came in to introduce Atland and what the fund was. I knew little about venture capital, but I didn't think it was a space I could break into until I was much older and wealthier. I was pleasantly surprised by the fund itself. I went to an info session that night, applied, got in, and it's been an amazing experience.
Kieran: Atland Ventures is a fund run by University of Minnesota students. It's a $1 million fund that deploys $25,000 checks at a time. The fund invests in startups solving problems faced by digitally native generations. Is there any other important background information that people should know about the org?
Ava: So, one interesting thing about Atland that I would like to share is that even though our fund is run by students who attend the University of Minnesota, the fund itself is not directly affiliated with the university. We are our own LLC, which allows us to be student-run and student-owned, which means students have complete autonomy over the investments we make. We run very similarly to a normal venture capital firm. We have limited partners from which we raise capital, and students can get carried interest from investments. That's one thing that makes us unique from other student funds.
– – let's start with questions directed to help founders considering Atland Ventures – –
Kieran: What do you look for in startups before investing?
Ava: Regarding our thesis, although we are industry agnostic, we're interested in rising industries such as sustainability, clean tech, and AI. We're also excited about spaces that have been stagnant for a while and are being disrupted by technological innovation. We look at the team, specifically individuals who are excited and passionate about what they're building and have previous experience building in the space in which they're creating a solution. We also look at the market and product. Is there a large enough market, and is the product filling a need in that market? Those are some basic things we look at when evaluating a startup.
Kieran: You invest in startups solving problems faced by digitally native generations. What's an example of one of these problems and a startup that's solving it?
Ava: Many of our portfolio companies show a great picture of this and the diversity of angles you can take when looking at the specific thesis. One that comes to mind is Cohart. The problem they're solving is in the art space. Traditionally, artists would have to work with a gallery to get their art seen. Galleries only provide access to a small percentage of artists to display their work and charge a high commission. When it comes to social media, think of Instagram or Pinterest; popularity wins rather than individual taste. So, Cohart is a social network that uses a vertical marketplace to help individuals discover and interact with artists and their communities in a collaborative setting. They aim to increase representation, transparency, and community engagement. As a result, they are helping with monetizing and sharing art and making it a lot more accessible compared to galleries or selling on Instagram or Pinterest. I think it's a great example of a company taking a space and creating innovation within it to make the technology more accessible and individualized.
Kieran: What does the Atland Ventures investment process look like? How do investments get done?
Ava: There are four or five diligence teams per semester. On each team, there are three to four analysts. That is where we source and diligence deals. Once one of those teams finds a company they're excited to invest in potentially, they'll create a memo and send it to the fund. The fund will give a preliminary opinion, ask some questions, and then that team will respond to the questions. Then, the team will present the company at our group investment discussion meeting on Fridays. If it gets an 80% approval rating from the votes, we'll proceed with an investment. It's quite a few steps, but it has worked well.
Kieran: How are you interfacing with founders during this process?
Ava: A lot of our sourcing methods come from personal networks or creative abilities. One unique tool within the fund is access to Pitchbook, which the university provides us. We source companies off of there. We look at local accelerator programs. I and a few other individuals work at local venture funds and can see some deal flow. Otherwise, we get creative in how we reach out and ask and have found success sourcing deals through different methods.
Kieran: What would you say is Atland Ventures value add to startups in its portfolio? How do you convince founders to take your check over others?
Ava: Our value add is very diverse and can be seen in a lot of different ways. One way it can be seen is through the validation of the market. Many of the problems these startups are solving are relevant to us. So, the act of Atland investing in them demonstrates to other investors validation of the market in some respects. The memos we write are in-depth and elaborate. We put a lot of work into the diligence and the memos so the founders can share those memos with other potential investors to decrease the barrier to entry on an investment. Many fund members have been interns at some of our portfolio companies. We're always happy to hop on calls to give product or market feedback to the companies we invested in and any company we've reviewed. The University of Minnesota student body is another huge asset to Atland. We've filled out a lot of surveys and market research through the student body's opinions and have received great responses. So, it's pretty diverse, and we're happy to get creative with those methods.
Kieran: How many investments are you making per semester, and how much money from the initial $1 million fund do you have left to deploy?
Ava: The number of investments we make per semester varies. On average, we make 1-3 investments per semester. We have 20% of our fund left for initial checks and follow-on opportunities, but we're excited about the second fund in the works to be able to continue our mission and allow other students to have this experience moving forward.
Kieran: What percentage of your investments are in people affiliated with the University of Minnesota (student founders, alums, faculty)?
Ava: While we've looked at companies created by people affiliated with the University of Minnesota, we don't have any investments in our current portfolio. However, it's something that we would consider and look at. I will say that many of our mentors and advisors are associated with or faculty from the University of Minnesota and are helpful in our diligence strategies. We utilize the network very well in that way.
Kieran: What do you see as the biggest opportunities to improve Atland Ventures in terms of how you support founders?
Ava: Anything within our fund, we try to get creative in how we learn and improve our strategies. We're always looking for ways to get better. This includes the portfolio side as well. I don't want to give a solid answer, but we've done random things, too. For example, last summer, we had a group of students meet one of our portfolio students at the Minnesota State Fair and exchange app downloads for corn, which might sound funny, right? That's an interesting strategy, but they actually ended up getting a ton of downloads that way, and we were able to get in the field and help them out. We've been able to leverage our student access with the university and be creative in whatever ways we can to help founders. We want to be an asset to them and are happy to try new things.
– now, let's transition to questions to help students who want to join the Atland Ventures internal team –
Kieran: Can you give an overview of the application process for internal team members?
Ava: The application process traditionally happens over a three-step process that includes written and interview steps. We dwindle the applicant pool at each stage and ultimately choose our final class. The recruitment process happens each semester. We take in a new class in the Fall and Spring.
Kieran: What are you looking for during the application process?
Ava: We are looking for people who are super passionate about the entrepreneurial space. Their interests and ability to think critically are two of the most important factors. It's really not relevant what they're studying. We have students in the fund studying traditionally associated majors with entrepreneurship, like Finance or Entrepreneurship, and others studying Computer Science, Data Analytics, etc. We just had somebody join from the College of Food & Agriculture. So, we're experimental and love having a diversity of perspectives within the fund. I'll add that we don't expect you to know everything coming in. It's an unfamiliar space. We value your passion and ability to think the most.
Kieran: As you onboard new team members to your org, how do you train them to give good advice and be helpful?
Ava: Atland is unique because we offer a for-credit course through the University of Minnesota. An upperclassman teaches it. That happens to me right now, but it changes each semester. We teach you about investment theses, due diligence, writing memos, how to talk with founders, how to source deals, how to do follow-on, and more in a lecture setting. Then, we have a group of directors with whom we pair with analysts. The director can mentor them by doing due diligence and conducting founder calls with them. Those two strategies, mixed with the overall support of the fund, which is very welcoming, allow us to create a positive environment to help people learn how to be good investors.
Kieran: Is there anything I didn't ask about that is important to know if you're considering Atland Ventures as a founder or someone who wants to join the internal team?
Ava: For the students, we value your passion and authenticity for the space over your knowledge. It's not a space that's super tapped when you're young. So, please don't let that be a factor that would stop you from applying. We see that as an asset that people have diverse perspectives and want to learn. From the founder's side, our thesis is broad regarding the industries and locations we invest in. We're not limited to Minnesota or the Midwest. We're always open to having conversations and providing product feedback, so please reach out if you're interested.
