Emerging Manager Navigate Ventures aims to ‘bridge the growth capital gap’
Ivan Nikkhoo has worn many hats. He co-founded a technology consulting firm, served as a software executive, worked in Wells Fargo’s technology investment banking division, and was a managing director at boutique merchant bank Siemer & Associates.
“We’re not looking for people that have a solution looking for a problem. We’re looking for people that understand a problem really well and understand how to solve it efficiently.”
Background and Strategy
Navigate Ventures was founded in 2018 and is based in Beverly Hills. The firm closed its debut fund at $30 million in late 2022 and built a portfolio of 26 investments across B2B and enterprise SaaS companies.
Representative Portfolio Companies
- Fama Technologies: Develops software for screening social media to turn identity data into actionable insights.
- Barn2Door: Provides enterprise software designed for agricultural business management.
- Operative Intelligence: Creates customer analytics software for call centers, exemplifying the type of company Navigate seeks.
Significant Jump
Nikkhoo says the main reason so many SaaS companies fail between Series A and growth-stage rounds is that the average time between rounds has jumped significantly.
“The average time for pre-seed to seed, or seed to Series A rounds, is about 20 months, while Series A to growth is 33 months, so they just run out of cash.”
Investment Strategy and Fundraising
Navigate Ventures is currently raising its second fund, targeting around $75 million. The firm primarily raises from high-net-worth individuals and family offices. Navigate declined to share Fund I performance metrics but stated that its typical holding period is 2 to 4 years.
Series A Extension Strategy
Navigate focuses on **enterprise SaaS companies outside Silicon Valley** with $2M–$3M ARR. The firm extends the runway for these companies from 9 months to 18 months before seeking growth-stage investors.
Navigate builds a small extension round alongside the Series A investors using their pro-rata rights, giving the company extra time to hit the performance metrics that growth investors are looking for.
Winning Ways
Nikkhoo’s strategy allows companies to grow past Series A, growth-stage investors get solid deals, and Navigate helps to generate DPI quickly for its LPs.
Why Aren’t Other Firms Pursuing This Approach?
- Deep domain expertise – “I’ve been doing this for 42 years.”
- Both seed-stage and growth-stage relationships are needed.
- Small check sizes, meaning the funds will never be large. Most fund managers prefer being asset aggregators.
“We have a pretty accelerated path to DPI and our return profile is pretty consistent.”
The Role of Secondaries in Venture Capital
One of the unique aspects of Navigate Ventures’ approach is its use of the **secondary market** to exit investments.
“Secondaries are going to become a lot more important. Most people think secondaries are just auctions, but liquidity is a major issue. Secondaries provide optionality for both LPs and GPs.”
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