Many years ago, I invested in a fantastic team normalizing and democratizing insurance online. It showed amazing growth, but the regulators didn’t like the business and continually put up barriers to prevent it from succeeding. It was a harsh lesson in the perils of navigating a complex environment, and it’s why we are wary of investing in industries where we don’t fully understand the regulatory landscape.
Aspart of our series called “5 Things I Need To See Before Making A VC Investment” we had the pleasure of interviewing Ivan Nikkhoo.
Ivan Nikkhoo is a seasoned investor, entrepreneur, advisor, board member and educator focused on helping tech teams achieve their growth potential. With four decades of C-level tech sector experience, Ivan founded Navigate Ventures to extend much-needed support to promising B2B SaaS companies outside Silicon Valley, helping them navigate the tricky and often protracted journey from Series A to Series B (Growth) rounds.
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you please share with us the “backstory” behind what brought you to this specific career path?
Myentire career has been focused on enterprise software. I started as a software engineer, moved into management and eventually founded my own software/consulting firms.
When I exited the last company in the early 2000s, I joined Wells Fargo’s tech investment banking practice and began examining the strategic and capital needs of tech companies throughout their lifecycle. This is where I started to notice the disconnect between capital in Silicon Valley and capital everywhere else — something that would ultimately compel me to found Navigate Ventures as a way to solve the problem with capital gap in underserved ecosystems.
What are your “5 things I need to see before making a VC investment” and why?
At Navigate, we have a clear investment thesis that underpins everything we do. We invest only in B2B enterprise SaaS companies outside of Silicon Valley. Furthermore, we have clear benchmarks around proven product market fit, quality of team, the level of traction, ARR, unit economics and capital efficiency that we look for in every prospective portfolio company.
Once these criteria are met, there are five clear areas we look at prior to investing.
Firstly, we look at the quality and agility of the team. Fast-growth tech companies often have to be agile to achieve product/market fit quickly and continuously, and as such we want to feel confident that the team knows how to pivot and move with the markets.
Secondly, we look for proven product/market fit. Ideally, we would like to see several enterprise class brand name clients using the product live, in production, in a mission-critical application, who have paid for the product and are referenceable. Enterprise deployments provide enormous validation, not just in product quality but in demonstrating that the startup can sell at the highest level and provide the appropriate level of customer success.
Thirdly, we want to make sure the company has a repeatable sales model. This is a big challenge, particularly with companies founded by younger, less experienced entrepreneurs. The CEO is typically the main salesperson in the early stages of growth — and they’re often brilliant at it. But they also need to be able to find, hire and upskill the right salespeople to perform in the same manner in order to scale.
Fourthly, we look for founders who are solving problems in industries that they already live, breathe, and understand. A great example of this is one of our portfolio companies, Barn2Door, the leading end-to-end enterprise platform for farming. We loved the fact that Janelle Maiocco had a background in farming. Another is OnSiteIQ, an AI-enabled construction intelligence platform founded by Dr. Ardalan Khosrowpour, who has spent time in the construction industry and has a PhD in Civil Engineering.
Finally, like all VCs, we want to see a very large and growing addressable target market.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
Several years ago, I invested in a team solving the problem of securing residential WiFi from cyber attacks. It was an outstanding team, but trying to sell direct to consumers is expensive and difficult, and they were missing a larger B2B opportunity. The company ultimately made a successful pivot to a B2B enterprise model, which in turn, resulted in a highly successful exit.
Selling to large enterprises is very hard and sales cycles are much longer. This is why SaaS companies that are good at this are highly valued. Enterprise class customers generally have low churn, high organic growth, long contact lives, and predictable recurring revenues. Having such clients also acts as validation, as their diligence is usually very comprehensive.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
Many years ago, I invested in a fantastic team normalizing and democratizing insurance online. It showed amazing growth, but the regulators didn’t like the business and continually put up barriers to prevent it from succeeding. It was a harsh lesson in the perils of navigating a complex environment, and it’s why we are wary of investing in industries where we don’t fully understand the regulatory landscape.
More generally, I believe in the ‘shampoo, rinse, repeat’ mantra when it comes to investing. I believe that “Disciplined Investing Results in Superior Returns in the Long Run.” The key is identifying a unique thesis where you have a competitive advantage, implement the strategy, and then continuously improve and adapt. I was once persuaded to invest with a friend of mine — a serial entrepreneur with a consumer business backed by leading investors — and I didn’t go through my usual disciplined investment process. The company did not survive, and since then, I’ve doubled down on my enterprise SaaS focus and tightly defined thesis and investment process.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
I had the opportunity, pre-Navigate, to invest in a leading shopping and rewards platform. It was a consumer business, so I turned it down. Eventually it had a massive exit.
Another company I came across more recently had a thesis about providing transportation assistance to elderly people who needed to show up for healthcare appointments. They’ve created an Uber-type business which has done extremely well.
Sometimes, in an effort to be conservative, disciplined and diligent, we miss opportunities. This is normal, particularly given that we try and spend several months getting to know companies before we invest.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
One of my portfolio companies in the HR-tech space was facing the challenge of competing with an active competitor. When you have a competitor that you go up against frequently, it has the impact of lengthening your sales cycle, reducing margins, and potentially losing opportunities.
In this instance, we agreed this could be an acquisition opportunity. The company acquired the rival, and we did an insider round to replenish the balance sheet. In B2B enterprise SaaS, sector leaders usually have more favourable valuations, so when it comes to displacing the competition, it is worth considering every option.
The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is, of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
Investors should never decline anyone along diversity lines. We have to look beyond these parameters and recognise fantastic CEOs wherever and whenever we encounter them.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
Guns, Germs and Steel by Jared Diamond is my favourite book. It offers a great explanation of why the world is the way it is.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
Two quotes spring to mind. Firstly, “The harder I work, the luckier I get” continues to ring true.
Secondly, and there are many different variants of this, but I think “Focus on significance over success” is an important life lesson for anyone involved in company building. Making a positive change in the world should be our ultimate purpose — unfortunately, in too many instances, it’s just hot air, and people don’t walk the walk.
How do you define “Leadership”? Can you explain what you mean or give an example?
Leadership is the ability to help people reach their full potential.
I’ve found that, in practice, this is as much about reassuring people that it’s okay to make mistakes and helping them move on from them.
For example, many of our portfolio founders are first- or second-time entrepreneurs. When you have startups in these early growth stages, it really is a question of when, not if, things will go wrong. The ability to calmly explain, “This is normal — let’s find a path through it”, is probably the biggest difference I’ve made as a leader.
How have you used your success to bring goodness to the world?
I’ve been able to give back to my community over the years both through teaching and mentoring young entrepreneurs. I loved teaching, and it showed me that most people don’t know what they’re capable of — we all need a bit of help to unlock and realise our potential.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be?
I am always looking for companies that are making the world a better place and cleaner. Cleaning the oceans is a massive priority for me. I’ve been scuba diving most of my life, and I’m increasingly worried that we’re approaching a tipping point as more coral are dying. If I could create an aircraft-carrier-sized ocean cleaner, I would!
Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why?
Elon Musk, for the simple reason that I want to know why he does what he does.
This was really meaningful! Thank you so much for your time.
About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.
Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.
While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.
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