Atman Capital, a year-old early-stage venture firm backed in part by about 20 founders, is softening the deal for these individual limited partners.
It promises to give credit to one of those who forward a successful deal to the venture firm in the form of a certain stake in the company’s own profits.
It’s an interesting twist for the company, founded last year by Brazilian-born Pedro Sorrentino and Pedro Dias, which invests in startups in the US and Latin America. In a tightening capital market in which Atman has closed $9 million to a fund targeting $30 million, the added temptation — on top of the 80% in profit LPs typically receive from successful results — is also smart.
“We spoke to over 100 founders and asked them what they wanted and what was important to them. The most common response was the desire to tap into their personal network, as all of these founders – through partial secondaries – are very active angels,” Sorrentino told australiabusinessblog.com. “Then we came up with the model of paying them with interest in the fund while making deals together as a community.”
Dias spent seven years at JP Morgan and a few more at Riskified before co-founding Atman with Sorrentino. In February 2021, Sorrentino left OneVC – another cross-border company he founded – to focus on building Atman Capital.
“Investing in both regions makes us better investors, and it makes us a much more interesting value proposition as a company because we have a presence in both regions,” Sorrentino said.
The fund plans to invest in the pre-seed and seed stages with checks averaging $750,000 to $1.5 million. It looks at B2B, software, commerce, consumer and fintech startups. LPs are a mix of high net worth individuals, family offices and institutions in addition to founders.
So far, Atman also has more than 20 founding LPs that are part of his “Egregore”, meaning a collective of individuals who share values and principles with skin in play. Currently 70% is from LatAm and 30% from the US. The founders include: John Sung King — founder and CEO of publicly traded Five9; Alexandre Liuzzi, Co-Founder and CSO at Remessa Online, which was acquired by EBANX; Adhemar Milani Neto – founder & CEO at KOVI, and Doug Storf – founder & CEO at Swap, among others.
The advantage of becoming an Atman LP as opposed to continuing to invest in angels, the couple say, is that these founders have a “safe” place to bounce ideas off their peers.
“There’s a limit to the honesty we can bring to the table with your board or even your executive team, so we’ll try to make sure we’re one of the most comfortable places for real intellectual debate while we’re earning.” also money together,” said Sorrentino. “It’s a fund that’s driven by the community.”
It’s also a matter of convenience, the couple says.
“Many of the founders are still running companies and don’t want to be VCs,” Dias noted. “There are many K1s, their fiscal situation is getting messy. This is how we ensure operational efficiency.”
The company’s investment thesis, according to Sorrentino, is to focus on companies run by second or third time founders who seek to minimize their waste of money with a profitability plan.
Atman, the pair say, wants to support pre-seed and seed-stage startups that “operate like they are Series A.”
“They shouldn’t be afraid to have difficult conversations and worry about investor updates while handling cash in a much more conscious way,” Sorrentino told australiabusinessblog.com. “We believe that the [fundraising] environment will become much more difficult in the next one to three years. We don’t think we’ve seen all the pain that’s about to come.”
Despite the company’s slowdown, venture capital firms in Latin America continue to raise funds. Brazilian impact investor Positive companies also targets a $30 million fund, of which it has raised $20 million to date. Its latest fund, Positive Ventures DIF II, is designed to invest in the earliest stages of tech companies that are “defying the enormous challenges of the world’s south,” according to cofounder and co-CEO Fabio Kestenbaum.
In August, positive companies announced the first investment through the new fund. Together with the Collaborative Fund, it led the pre-seed round of Ruuf, a Chilean marketplace connecting homeowners, solar installers and lenders. They were followed by Juan Jobet, Chile’s former energy minister, who also joined the board, and Harvard Innovation Lab in that investment.