Education Investor Atin Batra, Being Bullish On Education

In May I wrote about the education market was going through a brutal time.

But education investor Atin Batra has a different view of the market. He is the founder of 27V, an early-stage investment firm focused on edtech and the future of work. Batra is bullish on the future of education investing and the market and thinks we all may be reading the dynamics wrong.

Batra’s portfolio has a combined $300 million enterprise evaluation and he’s scored big wins with companies such as the in-class engagement and homework platform built specifically for chemistry courses, Aktiv Learning. Aktiv, Batra says, is producing revenue in the millions and used in more than 600 colleges and universities. His investment basket also includes Fiveable (raised $16 milli0on, products growing at 80%), New Campus (on track for 7-figure revenue in 2022), Fluent (16,000+ users, a 40% 30-day retention rate), Edlyft (projecting 7-figure revenue for 2022) and DayOne (more than 300 fellows have created 150 companies).

Of the charted downward trend for education outlined in May, Batra said it was a misleading view.

“For one, March 2021 was undoubtedly close to the peak for the public markets, and especially for education companies. At the end of the same time period, Facebook was 64% and Netflix a mere 40%, of their respective market caps – and both those companies have market caps that are orders of magnitude larger than any of the EdTech companies,” he said. He added that, “Most pandemic-darling industries are reverting to the mean.”

On the education companies I outlined in particular, Batra said, “Frankly, I don’t really consider any of the listed education companies as innovative. LMSs are a dime-a-dozen, and there is only so much technology in a marketplace for homework solutions.”

And, he says, the long-term impact of the pandemic in education is likely to be different than it will be for other sectors. “Very few students and teachers had ever participated in online learning activities before being forced to do so due to stay-at-home policies. Some of them, not all, have realized that they quite prefer this method of instruction,” he said.

I asked Batra if there were specific types of education companies he thought had near, high-end potential. “There are two commonalities I’ve noticed in successful EdTech businesses,” he said – “nailed the business model” and “built by teachers.”

Batra also said he’s “keeping a close eye on” two trends in the education market. One, he said, is that, “especially post-pandemic, and the Great Resignation, employers now recognize the immense need to retain top talent. The best way to do so is to provide them opportunities to learn and grow, hence the increased focus on upskilling. Where corporates invest their time and resources, so too will VC investors.”

The other trend is “the predicted demise of traditional higher ed – which I believe is a thought experiment completely blown out of proportion,” he said. “But what I hope will change is that proof-of-work may become a more valuable credential than the piece of paper you hold. That will be a better marker for whether the person can be a productive contributor to society, in my opinion.”

I asked Batra what things he looks for when he’s investing.

He said, “a compelling origin story” and added that “having genuine customer feedback is a gift never to be scorned” and that he looks for “unit economics that make sense.”

“This sounds more prescient today but, I’ve always maintained that we’re in the business of business. If a founding team doesn’t have well-thought plans to monetize then I begin to wonder where their priorities lie,” he said. Batra added, “essentially that’s what investors are looking to understand – who you are, what you’re building, and how’re you going to make money from it.”

For education companies in particular, Batra said it’s also “crucial to gauge whether the founders understand, and appreciate, the challenges of selling to institutions and whether the team measures true learning outcomes, or mere vanity metrics.”

Batra is not the only education investor and is not the only voice speaking up for education opportunities. At the same time, his voice on why to invest in education is worth hearing.

“It always gets my goat,” he said, “when I see crypto or NFT companies or even funds raise billions of dollars, money that could be so much more productively invested in education, giving people the opportunity to raise their station in life and achieve their fullest potential.

“When did financial and social engineering become more important than teaching the concepts of engineering and world-building to the next generation? How can anyone believe that buying a single picture of a cap-toting monkey merely for one’s personal amusement is a better use of resources than buying an entire year’s worth of school resources and supplies for an entire classful of children?” he asked.

It’s an investment question worth asking. And, when those are the returns being calculated, in that context, the education market is always a smart investment.