Meet Chris Shonk, Managing Partner at ATX Seed Ventures

ATX Seed Ventures is an Austin, Texas-based firm that just raised a $32 million fund

Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.

But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?

We're highlighting key members of the community to find out.

Chris Shonk is a founder and Managing Partner at ATX Seed Ventures.

Shonk started his first business at fourteen, was named the Special Operations Soldier of the Year. He has had numerous exits as a founder/operator, angel investor and venture capital investor in the software and consumer tech and services industries over the past 15 years. He has been interviewed by Business Week, Inc. Magazine, Entrepreneur Magazine, The Wall Street Journal, Fast Company, and Forbes.

Shonk is a graduate of the Acton School of Business and was the first alumnus to start an endowment to offer other deserving entrepreneurs the opportunity to change the world.

VatorNews: What is your investment philosophy or methodology?

Chris Shonk: We’re raising our third fund. We are based in Austin, and Austin is the top technology hub for our region; Inc Magazine covers the surge cities every year, and Austin was number one, along with Salt Lake City and Raleigh. So, the word’s been out for a while that there’s just a ton of momentum here and that Austin is the technology and venture capital watering hole for the larger region of the south central U.S., which is all of Texas, Oklahoma, Louisiana, New Mexico. I was talking to a founder today up in Kansas that’s in the logistics and transportation business, so we really do pull from a very large geographic footprint.

There’s not a lot of institutional, early stage capital in this area; there’s a ton of angel investors, there’s crowdfunding platforms, there’s all kinds of ways to get friends and family capital, build your first MVP of the product, but, once you’re ready to build a business, you need to somebody to write the big check, price the round, bring in some board governance, and help you build a company. There’s not a lot of funds doing that, per se, and that’s the zone we’re in.

The reason for that is that if you’re going to raise a venture capital fund, if you’re going to be an institutional early stage investor, especially at the seed stage, there’s just some math and some operational constraints that are very hard to address. Mainly, it costs the same to administrate and run a $25 million fund as it does to run a $250 million fund, so most fund manages don’t want to raise a small fund because they can’t access institutional capital and there’s no profit left over to pay and attract talented people to run the fund. It’s just a constrained model. When you have the same fixed costs, the funds that are small get disproportionately burdened compared to larger funds. You don’t have leftover capital, and you can’t hire investment professionals, you can’t run a process, it’s really hard to build companies and run an institutional fund on a small AMU, or assets under management. What happens is most people try and find a workaround, so you have a bunch of funds out there who are happy to throw in alongside somebody else who’s leading the round and doing the work. Very few funds have the inclination or the operational ability to actually lead early stage rounds at the seed stage and run a Series A/B process on them. It’s just math and operational constraints. So, the world’s awash with early stage micro and seed funds who are just throwing in capital, placing bets on 100 companies per portfolio, or waiting for some other institutional VC to step up and lead the round and then they’ll throwing alongside them. That’s the reality of the landscape.

We are different because lead and we run a Series A/B process at Seed and Series A stage. It’s that simple. We do exactly what top institutionally anchored and managed funds do at Series A and B, we just do it one phase earlier. A lot of the seed rounds we’re investing in are what I would call late seed, where they already have a product built, they have customers, they’ve raised some friends and family, potentially some angel money, and we’re their first institutional check, and that’s a fun place to be. It’s a great time for the founders, it’s a great time for us. Your first big check prices your round, it establishes a valuation on your company, establishes a board process, helps you with governance, helps you hire executives, navigate first customers, nail product, nail pricing, identify who’s going to lead that next round for you. Oftentimes it’s ATX leading that next round or co-leading it. We’re business building venture capitalists, and the fun part about it is there’s a world of people who got out the gate but they can’t finish the race, so we like to find really talented entrepreneurs with big market opportunities after they’ve gotten out the gate, and help them around the racetrack.

VN: What are your categories of interest?

CS: From a technology thesis, we really like the intersection of a couple different things. We like IoT, so equipment that was once dumb that is now connected or smart. We love artificial intelligence and machine learning, particularly for software to identify and chew through information, turn that information into actionable insights and value at scale, and then leverage those two things together. We like the cloud and the ability to navigate big data and combing cloud with AI and IoT.

Moore’s Law is over; things can only get so small and so fast in cadence, there is a new chapter of technology innovation that’s happening at the edge, which some people call "edge technologies." What’s happening in these small, smart pieces of equipment, these devices, that allow them to leverage imbedded AI and make decisions at the edge. That’s really some next level stuff.

From an industry perspective, you take all that stuff I just told you, and you apply that to big stalwart industries. I’m talking capital intensive, massive businesses that were built on legacy technology and innovation stacks. You have real estate, transportation and freight, manufacturing and logistics, energy, these are all big, giant industries with huge companies that have massive balance sheets that were never technology innovators. They unlocked value through financial engineering, management process and operating model innovation, so most of those businesses were built on these tenets. These are classic business industries have never had, internally, the DNA to be frontier innovators with new technology applications and really lean into the new paradigm that’s being opened up by AI, IoT, the cloud and edge. That’s the area we like to play in.

Insurance tech, or the intersection of insurance, benefits and payroll, is a space we love. Talk about exciting; you get these massive insurance companies, which are some of the most large and profitable business in the world, and they just never had to be innovative. They’re living on the same actuarial tables and the same technology stack from 10, 15, or 20 years ago. Every time they buy a company they have to digest that company, get things marching in the same direction, usually integrating that legacy tech stack, and they haven’t had to make that leapfrog jump to the next technology stack that’s going to take them from where they are to where they need to be to maintain their competitive edge. And that’s super exciting.

VN: What's the big macro trend you're betting on?

CS: The macro trend that we’re betting on is everything is getting more and more connected. Big businesses with big resources are having to evolve, the barrier to entry for new and dynamic, technology-led businesses are challenging legacy business models, and it’s creating a very acquisitive dynamic between large businesses and new technology entrants. This is an exciting time for founders, and it’s an exciting time for investors.

VN: What is the size of your current fund and how many investments do you typically make in a year?

CS: We currently manage $60 million and typically make four to six investments, where we’re averaging around one and a half per quarter. We have enough data now to say that’s the magic number. Sometimes we’ll do two in a quarter, another quarter we might do one or none, it just depends. We see so much deal flow that we have to be very, very selective. We’re on fund III and we’re very well known in our market as the go to early stage fund for Seed to Series A, so we’re flooded with decks because there’s nobody providing that leadership roll at seed. So, as you can imagine, we see a ton of stuff. The difference with us is that we’re running a constructed and concentrated portfolio, so we’re only going to make a dozen to 15 investments per fund. That’s not a lot of investments so we say, "no" so much.

We try to leave the campground better than we found it. It’s our credo. We’re entrepreneurs ourselves; our founding team combined entrepreneurs and institutional fund managers that came together, so we have a really experienced general partnership, a really unique team composition. Most early stage funds are either ex-entrepreneurs trying to help other entrepreneurs build companies or they’re thematic financial investors that never built a company but understand that early stage is where the alpha is and they raise a fund around that theme. Very seldom do those two world intersect where you have someone who has actually built companies, who understands how to do that, combined with somebody that’s run institutionally backed private equity and venture capital funds before. We have those two things together, it’s a beautiful model because all of your sophisticated and institutional investors have the comfort and knowledge that there’s a real progress to what’s being done and you’re a legitimate asset class that looks and smells like a lot of their larger private equity and later stage venture investments.

You can outsource and out-deliver on the value side by being an ex-entrepreneur; identifying entrepreneurs, sourcing deals and winning deals, because the best founders choose to work with ex-entrepreneurs early stage. There’s tons of data on that, and, if you think about it. If you’re an amazing entrepreneur and you can take money from anyone, do you take money from the gal or the guy in a suit who have never built a business, never made payrolls, that are coming at you with buzzwords and hypotheticals and grad school playbooks? Or do you want to partner with somebody who had stood in your shoes, who has made similar decisions and can help you navigate through that with legitimate experience and authentic empathy as part of that core relationship? That’s just the reality of how the best founders choose their first lead investors.

VN: How much is that in dollar amount for you?

CS: Because we’re running a concentrated portfolio, you can imagine we have a pretty decent amount of reserve for that second check. Our typical first check really varies, because every company comes to us from a different place as far as what they’ve done. Some already have a product, some companies come to us with $100,000 a month in revenue, some come to us with an idea on the back on a napkin, and everywhere in between. Our average first check is typically north of $700,000, and our average second check north of $2.5 million, but the real answer is whatever is takes to lead the round. Again, we’re not tourists, we’re not jumping on cap tables and riding shotgun alongside some other fund that’s doing the heavy lifting, so if it’s a $1 million round, we’re at going to be at least $500,000 of it. If it’s a $5 million round, it will be at least $2.5 million. That’s just how it goes. We want to economically lead and structurally lead, whatever you want to call it, we lead Seed rounds.

VN: What kind of traction does a startup need for you to invest? Do you have any specific numbers?

CS: We like to invest post-product with initial revenue. We’ll stray from that for an industry we love, that we have an edge in, or lean-in for a successful founder we’ve worked with before. We’ll make rare exceptions but, as a general rule, we like to be at least post-product. It’s really the velocity of the revenue and the key performance indicators around the revenue that we assess. So, I would rather talk to a company that’s doing $70,000 monthly recurring revenue, and they did $40,000 the month before and $20,000 before that and $5,000 in the first month.

We want to see that they have a management team that works well together, in an industry they know, and that those entrepreneurs are perfectly fit for the business model that they’re leveraging. We call that "entrepreneur fit" or "founder fit." It’s really important that the founders you’re working with actually make sense for the business they’re trying to run, that they’re not just smart people who’ve identified a trend and they’re trying to jump into the market. That hasn’t really been so successful in the early stage, from our experience.

VN: What other signals do you look for? Team, product, macro market?

CS: We like a founding team that ideally has worked together before and compliment each other. It’s like a marriage, where you want it to be accretive; everything in life that you do you do should be accretive. You’re always looking for one plus one equals three, in all things. So we want to have accretive teams, where the sum of the parts is greater than the whole. The same thing with their business model and the way that they’re doing things. Why is it moving faster, more efficient at acquiring customers for less money or throwing off more contribution margin per activity than the status quo? The last and biggest question for us, and this is where I think a lot of investors don’t really have an answer, is how are you, as an investor, going to add value to that opportunity? Why, when you send the wire and sign the documents, is that company going to be 2x or 3x more valuable immediately because of your contacts, your experience, and your ability to assist that specific team at that specific stage with that specific business opportunity in that specific market? If we cannot add value, then we have to walk, because then we’re just money. And, if we’re just money, who cares? There’s plenty of money out there.

VN: What do you think about valuations these days? How does that affect how you invest?

CS: There are certain industries that naturally command higher valuations, like pharmaceuticals, hardware, big industrial type stuff, where you’re going to have Series A rounds that are north of $50 million. More generally, I would say that if you had to look at Texas, the seed round is around a 25 to 50 percent discount from the coast. A lot of that is the price of the round, or valuation, relative to the traction the company has, that’s what gets lost in a lot of these reports. “There’s a company in Texas that raised a this pre-money, the same company in California raised at this pre-money, versus Salt Lake, New York, etc.,” but what it doesn’t take into account is what accomplishments the company’s has made and how derisked the investment is, and, ultimately, how the big market opportunity is. If you’re setting out to build a $50 billion category-leading, high growth business, if you’re a bit above the cohort mean on pre-money then it’s not as big a deal because you’re swinging big. But if you’re building a company that’s probably not going to be more than a $250 million company, the structural dynamics of the industry wont allow for that pricing lattitude. You need to be valuation conscious there for sure because your upside isn’t exponential and uncapped. What’s lost in the numbers that everybody’s clamoring about is relativity: relative to what? Relative to geography or this round versus that round? Seed is Seed and A is A but that’s becoming blurred; today’s seed used to be what we would call a Series A five years ago, so everything’s evolving, meaning it really depends on how much traction the company has, where that company is located, how big the market opportunity is, and how much risk has been mitigated and, frankly, how much capital is being put to work in the round. Part of the math is bigger checks; if you’re writing a big check and the founder doesn’t want to sell that much equity, the only the way to get there is to raise less money or increase your pre-money valuation. That’s just formulaic.

Really what it comes down to is how capital inventive your journey is going to be. So, if you know coming out the gate that you’re going to have to raise $250 million to have a shot at being successful, that’s important to know and that’s absolutely going to affect your valuation along that journey. But if you think you can come out the gate and you’re going to need $5 to $10 million take your company north of $50 million in recurring revenue, that’s a different situation. Also, you have to contemplate how the line between growth venture and small buyout has really blurred. There’s a lot of money at that crossover zone to where companies are talking to both venture capital growth funds and private equity buyout funds because everyone’s trying to come upstream and get into interesting opportunities. The market’s just awash with capital, all asset prices are historically high so the line between venture and private equity is getting blurred too. At least as the first check we get to set price and term. That’s reassuring for us.

VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?

CS: That’s been pretty easy for us. Because there are so many seed funds and the barrier to entry to launch a seed fund is so low, limited partners consider seed funds to be kind of amateur hour asset class. It’s the wild west, it’s cute and interesting, but LPs can’t put big money to work and they expect a trade off from the process, professionalism and institutional rigor that seed funds can provide relative to later stage and buyout funds. Some just outsource it all to a fund of funds to get index-exposure to seed and in the process risk mitigate manager concentration but they pay double fees and often are removed from nuance and information that is key for understanding how early-stage alpha is captured. This keeps big LPs out of the conversation and information flow of direct managers and that’s unfortunate as we’d like to see all sizes of investors better understand early-stage and further legitimize the asset class.

For us, it hasn’t been a problem because we’ve already raised funds and managed assets in the multi-billions. Our team of Danielle Allen, Brad Bentz already know what that looks like, we know how to report to LPs, we know how to construct portfolios, sit on boards, orchestrate follow-on rounds, navigate exits, etc. There’s a whole process that comes with being a fund manager; you’re not just investing in companies and hanging out with entrepreneurs on bean bags hacking away at frontier tech ideas. Unfortunately, most of the seed fund category is just glamorized angel investing, and that’s just not what we’re doing at all. LPs know us, they know that they’re getting a fund that’s going to be run like a Series A and B fund, but is going to have a better valuation on their initial check. If they can expect 3 to 4x from their Series A and B fund, they can expect 5 to 7x from us, because it’s the same process but we’re getting more for less. Our mortality rate has been at parity with Series A and B so going to outperform, economically, the larger funds. The catch is you can put big money to work in our stage without degradation at some point.

VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?

CS: It’s a bit less competitive in Texas because there’s not as many funds around. We’re at the place where you’re pricing and leading a round as well, so there’s not that many funds at the seed stage actually stepping up and leading a rounds. We’re in a unique position, just from that perspective. If you’re an entrepreneur and you want to somebody to actually step up, write the big check, take a board seat and help you put together that Series A and B, and build your company there’s not a lot of funds doing that.

First, we’re writing checks that are larger than most seed funds, so that differentiates us right out of the gate; founders can find syndicated capital very easily, as long as you have a lead and somebody’s managing the asset. There is no lack of money willing to come join the party but few want to prep the meal, set the table and clean up after if things go south… and they will go south; this is venture capital not muni bonds. We differentiate by our ability to lead, write meaningful checks and help entrepreneurs take things to the next level. Second, we have founder DNA. We’ve built companies in the industries we’re operating in and know very well, we can help with customers, we can help round out management teams and acquire talent necessary to scale these companies immediately. It’s what we do, we’re business builders so that resonates with entrepreneurs as well. The third thing, which has become prevalent and exciting, is we’re on Fund III. We’re not the new kids in town trying to put together a fund and surf the wave of momentum. People know us and some of our portfolio companies are some of the best known companies in our region. Every top market has cast of founders that everyone admires, that have had multiple exits, that can snap their fingers and hire junior talent and we’ve been very fortunate to have a lot of those types of founders and executives in our portfolio. That has created its own buzz and brand around ATX, to we’ve become this shining city on a hill for founders, in a land where there’s no one at our stage in a leadership position for seed rounds. I guess that comes along with being an incumbent, and on our third fund instead of a new entrant or coastal fund sending in an analyst or venture partner.

VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?

CS: GoCo is one. They’re three founders that have already worked together, they’ve already exited two companies. That’s the exact example of what I was talking about; in this case, because it's three founders, it’s one plus one plus one equals 10 scenario. We have multiple public insurance and benefits companies that invested alongside of us, and are strategic partners to the company and actively adding value. Doing the dance with corp venture/industry capital is nuanced but we brought in really smart money alongside of us that’s helping as a sales and distribution partner We led and priced both rounds, and we have a board seat. The founders moved from Austin to Houston and are scaling up aggressively there. This will be a great win for Houston and that’s nice to see.

Another company is Pensa Systems. They are serial entrepreneurs, both founders have had significant exits very relevant to what their current venture is doing. These guys have been doing AI and next level robotics since the beginning of the industry. Both founders came from frontier industries that have had massive exits and raised from Tier 1 West Coast venture capital firms. They could have raised money from anybody but they took our money; we led the seed round, helped them raise the follow-on round by bringing in a larger VC we really like with AI/Robotics experience to fly co-pilot and lead the round with ATX. The team also brought in industry capital as well, one of their largest customers, as an investor in the round. So, you have a big, giant public company co-investing with a Tier 1 VC fund that’s larger than us, so they can then lead the next round. We were quarterbacking all of this with the exec team and that’s how we like to work as an active partner amplifying incredible execs to move faster and have better access to information and networks

Then you have AlertMedia, another serial founder with exceptional process and direct sales skills. His last seed investors received 300x and not many founders can say that. This rockstar exec team could raise money from anyone, but we led the seed round, introduced the Series A fund, then they raised a Series B from another fund we like and then they just finished closing their Series C. So that’s just beautiful how that came together. There is lot of local capital across this company and it will be a nice win for Austin and multiple funds here. What is great about seed done right is a 50X return on initial check for a series A/B fund should be a 100X return for us.

There’s also QuotaPath. This is basically a C & VP-Suite team that rolled out of a company in Austin called TrendKite, which was recently acquired for $225 million. The founders and execs are well known mentors and advisors in both the Austin and Philadelphia and that rare servant-leader DNA we strive to work with at ATX. They’ve raised venture capital money, they raised up a Series D and over $47 million. They could have raised money from any of their prior VCs but didn’t and we are thrilled to be partners at day zero. We sat down and had dinner, hammered out a term sheet and we were off to the races. They’ve staffed up, they’ve got customers already, and we couldn’t wait to write the next check. That’s the kind of stuff we live for. All these guys can raise money from anyone, everybody’s trying to throw money at them, including the big West Coast VCss. T We love talented founders going after big swings where we know we can be value add and lean in early to prove that and build at relationship.

The last company I’ll mention is called Slingshot Aerospace. What’s interesting about this company is it’s my third time investing in the same founder. So, I’ve backed him three times, and he’s always taken me to the promise land. The CEO is a true unicorn. There are many brilliant technical savants who are great individual contributors, and there are great leaders who can rally talent and build engineering teams, but few people are both an exceptional builder and leader of builders. As a VC backing founders you have already worked with is a true privilege. We know each other’s strengths and weaknesses, we’ve worked in the board room, we’ve popped champagne, we’ve cried. His co-founder is the absolute subject matter expert in her industry and has tremendous leadership skills and strategic acumen as a retired high-ranking military officer. They combined their skills to focus on embedded artificial intelligence and edge technologies for aerospace. This is frontier technology, truly next level stuff. To frame it Palantir would be the closest market comp. Thematically, all of the West Coast and East Coast VCs were on this guy like a fat kid on a cookie. He hadn’t even announced the initial customer set and and he had 17 term sheets in discussion. So imagine trying to navigate that. We sat down on a Saturday, which turned into a Sunday, and we had to work through a deal where we could lead that round and get the ownership we need while enabling the founders to be pumped up and have a ton of space to raise future rounds as things take off. We led four other VCs who tagged along and now he’s getting to announce another round as well. This is a blow out year; the revenue is tracking to put them at Series B KPIs and they haven’t even raised a Series A yet.

VN: What are some lessons you’ve learned?

CS: One is that you have to add value to both have a sticky and long-term relationship with your entrepreneurs and the founders you’re trying to back. Then you have to communicate and be transparent with your limited partners. Limited partners want information, alpha, access and professionalism, while founders want transparency, helpful assistance (attention investors..not all assistance is helpful) and, again, professionalism. So a lot of those are congruent.

You have two masters as a VC, and you’re in a servant-leader role. What I’ve learned is the market has forgotten that, and venture capital has become broken, in my opinion. If you think about venture capital as a product, our customers are the limited partner and the entrepreneur. Entrepreneurs are way over promised on what and how venture capital money is different and how it’s helpful going to be. If you actually talk to founders, very few VCs deliver on that promise of being different and being value add, so that doesn’t serve them and that’s broken from the entrepreneur’s side. From the limited partners side, they have been coached that the Bay Area is the center of gravity and that if you want to invest in funds that are going to give you outsized returns, you have to focus exclusively on brand name California or New England brand names that, frankly, may not be relevant to the stage and the alpha that you’re looking for. The alpha has drifted early stage and to direct & co-invest windows. So, Seed is the new A, and the alpha is outside of the traditional regions and the alpha is coming from people that institutional investors don’t look at, traditionally. Smart investors talk about diversity and edge that comes from perspective, exponential ways of thinking, complimentary teams, etc. When you’re only making investments in one region, with a whole bunch of people that went to the same grad school, that all tend to have the same chromosomes and look and act very similarly, you’re probably not going to get exceptional returns because it’s homogeneous. Homogeneity is the end of exceptionalism.

We should return to the roots, and actually treat venture capital like a product. Pretend you’re an entrepreneur. What’s your industry? Who’s your customer? What concessions are being made by that customer? Where has it become inefficient and sloppy? What edge do you have to beat competitors, differentiate and better serve your customers. That’s venture capital. Our masters are founders and limited partners and we live every day to serve them. We build our business model to serve them and their specific needs. When you do that, you can build a sustainable business, and our business is the business of a fund. That’s how we’ve been able to get to Fund III, and that’s how we’ll be able to get to Fund 10 and build a brand that everyone knows globally for our region and stage.

The second thing I would say is that venture capitalists don’t think of themselves as organizational builders, they think of themselves as asset managers. So, most venture capitalists are fund managers, not organization builders. What that means is they focus on doing deals, fundraising, marketing to LPs and they don’t focus on building a world-class organization with a team of other people? How am I scaling my organization? How do I make room to grow talent within my own fund so that I can take my team of three to a team of seven? That’s not how fund managers think, fund managers don’t think about building and scaling their organizations and that’s what I’ve learned about venture capital, for sure. Especially at seed stage.

VN: What excites you the most about your position as VC?

CS: I feel like I’ve won the lottery. I’ve had multiple exits as a founder, exits as an angel and now exits as a VC so all different positions and perspectives in the board room and on the cap table. Innovation is everywhere, no one’s short on innovation. Texas is on fire and Austin is the emerging market for big things across founders, VCs and Limited Partners.

Secondly, going from player to coach is a blast. When you’re an entrepreneur, you’re running your company and your job is to know your backyard, and you need to answer every question about your backyard. "This is your market, this is your team, these are your competitors, here’s what you’re doing." And you pay attention myopically to your backyard. As a venture capitalist, I get to see the whole subdivision. I sit on multiple boards, I have data feeds from a larger market, a bigger perspective, and I’m able to help every single entrepreneur with their own backyard because I can see the whole subdivision. That’s what so fun; it’s the intellectual stimulation, the pattern recognition, the network effect of talent, co-investors and customers far exceeds any single operator’s ability to have that same perspective. That allows me to be very value added in my relationships and that’s what it’s all about.

VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?

CS: I’m one of three partners and it’s a team sport. We are so fortunate for a an early stage fund of our size, to have the caliber of partners we do. With Danielle, we joke that we hired Picasso to paint our garage. She is so overqualified for venture capital; she came from the multi-billion dollar hedge fund world and now she’s working for a firm that has $60 million under management. Brad and I have worked together and he’s one of the most intelligent and empathetic people I’ve ever met. He’s five steps ahead of everyone at all times and he genuinely cares about what he does. He’s a savant and an altruist. I get to wake up every day and work with them.

Then, just the portfolio we have built and the LPs we have. Our first fund was not institutional, it was all value-add LPs. What’s fun about a value-add fund is that everyone who was an LP in that fund was invite only. We hand selected every single LP in Fund I and we were optimizing for industry and stage value-add, not a checkbook. When you do that you build this foundational group of limited partners who are so much more than money, and that creates a tribe of collaboration and value add that scales far beyond the headcount of our general partnership. That network effect of partners who are really value-add, that can then spills over to assist our portfolio companies, allowing us to punch above our weight. ATX Ventures is more than a fund but less than a religion. It all started with people and process and our market hast been screaming; Austin is the Kauffman #1 City and the Inc. #1 Surge City as we are stepping into our 3rd fund with nearly two decades of value-add and reputational infrastructure laid. There is going to be a wave of tourists and opportunists with any hot region, and that’s great, but early-stage venture is a get rich slow, game. Relationships matter, reputation matters, value-add matters and there are some companies and funds in Texas that will be global pillars for the next decade and beyond.