How can venture capitalists achieve transformative impact across borders and sectors? What’s the “X factor” that turns early-stage tech investments into billion-dollar companies?
With over 16 years of experience, Dror Nahumi, General Partner at Norwest Venture Partners, has a clear strategy for identifying and nurturing high-potential startups on a global scale.
In this conversation, Dror shares Norwest’s unique approach to building an internationally diverse portfolio across the U.S., Israel, and India. He reveals his investment philosophy, focusing on high-impact sectors like enterprise tech, cloud, and AI, and emphasizes the importance of spotting early-stage companies with competitive advantages that can drive them to unicorn status. Dror’s insights into scaling companies like Gong and VastData show why operational experience and a strong go-to-market strategy are essential for tech startups aiming for exponential growth.
Dror also explores why generative AI could be a new user interface for business, enabling entirely new applications that disrupt traditional markets. He highlights the role of venture capitalists not just as investors but as strategic partners who help founders navigate key decisions and overcome challenges.
With advice for aspiring VCs and entrepreneurs, Dror demonstrates how a purpose-driven approach and a commitment to deep due diligence can create lasting impact in today’s fast-evolving tech landscape.
Transcription:
Steve Brotman: Great, welcome to today’s episode of Driving Alpha. Driving Alpha was inspired by an exotic car tour where we rented six cars—Lambos, Ferraris, Aston Martins, and others—and drove around for the day with our VC friends and investors. There were 12 of us, and we traded cars every 30 minutes or so. What we found was the best part of that day was our conversations with other VCs like yourself, Dror.
Today, we’re excited to welcome Dror Nahumi, a distinguished figure in the venture capital world. As a General Partner at Norwest Venture Partners, Dror has been instrumental in shaping the landscape of technology investments, particularly in enterprise, cloud, and semiconductor sectors. With a career spanning operational, go-to-market, and experiential roles in both the U.S. and Israel, Dror brings a wealth of experience to the table, with recent investments in companies like Gong and Wiliot that position him at the forefront of emerging technologies. We’re looking forward to an insightful conversation with him as we delve into Dror’s investment strategies, the lessons he’s learned, the future of tech, and some key takeaways from his career. So welcome, Dror.
Dror Nahumi: Thank you so much, Steve, for having me. I’m looking forward to this podcast.
Steve Brotman: Excellent. So, Dror, tell me, how did you end up in Menlo Park, California? You’re a long way from home.
Dror Nahumi: I am. It’s a long story that we’ll make short. I was in operations all my life—first as an engineer, in multiple places and so on. One of my latest roles was as a board member in a company where Norwest Venture Partners was also on the board as an investor, a company called Veraz Networks. The managing partner at the time, Pramod Haque, sat on the board with me for six years. One day, he called me and said, “Let’s talk about Veraz, but let’s also talk about potentially joining Norwest as a VC.” I thought, “VC? I’ve never thought about it,” but I did have relevant experience. It took some time from both sides to make sense of whether this was the next chapter.
For that purpose, I was in New Jersey at the time. My wife and I moved back to Israel, and we thought a lot about it. We decided that it made sense, and here I am 16 years later, still doing venture capital.
Steve Brotman: That’s awesome. They say that operational entrepreneurs often make the best VCs. Would you agree with that sentiment?
Dror Nahumi: Not necessarily. Venture capital is a complex business—we have to know so many things, and we come from different backgrounds. There’s only one way to measure if you’re a good partner or not, and that’s the results. Here I am, 16 years later, and still doing it. So the results speak for themselves.
I think it depends on the type of investments people make, their personality, and the strategy each person chooses. Operational background does help a lot when mentoring early-stage companies as they grow and become larger. That’s what I bring to the table.
Steve Brotman: Certainly, it helps if you’ve been there and done that, but it could also be frustrating too, right?
Dror Nahumi: For some people, yes. You’ve got to know that you’re no longer running these companies. You’re not the operator anymore; someone else is the CEO, and the management team is the management team. Your job as a board member is not to run these companies; it’s to provide the right advice to the founding team and the board to help make the best decisions that bring shareholder value. Not everyone makes that transition well.
Steve Brotman: That’s great. Tell us more about Norwest. I know the firm has been around for as long as I can remember. Why don’t you bring us up to speed?
Dror Nahumi: Norwest is a very experienced firm. We’re now investing from our 17th fund, a $3 billion fund, managing $15.5 billion in total. That makes us a large venture and growth equity fund with a global presence.
Our strategy is to invest in multiple stages, from seed to growth equity, and in companies that are profitable. We invest in three major geographies: the U.S., India, and Israel. And we focus on technology-oriented domains. We’ve built a diverse portfolio with no pre-allocation between groups—we invest in what makes sense at any given time where we can create the biggest impact.
Steve Brotman: And you head up the venture capital unit.
Dror Nahumi: I do. I’m what you might call the sector head of the venture group. My personal investments are with Israeli companies, whether they’re based in Israel or in the U.S.
Steve Brotman: That’s excellent. I’ll be visiting Israel in a couple of weeks and am super excited about that. You’ve worked extensively with both U.S. and Israeli companies, and you’re familiar with the different startup ecosystems. How do you see those two countries differing? What can they learn from each other?
Dror Nahumi: Fantastic question. When I started 16 years ago, I set out to build a strategy for Israeli investments at Norwest. At that time, we couldn’t find many Israeli companies that went public. I used to say, “Prepare for exits in the $100–$300 million range,” because Israel was great at building technology but struggled with go-to-market skills and international management teams. Now, 16 years later, Israel has bridged that gap. Look at companies like Monday and Gong, which is one of our portfolio companies, and others like Vast Data and Wiliot.
The Israeli entrepreneurs have developed strong go-to-market skillsets, so now they’re on the same playing field as U.S. companies. You still have to build great products and take them to market with the same efficiency, regardless of where you’re from.
Steve Brotman: Has that made your job harder now that Israeli companies are better at going to market, or has it actually made it easier?
Dror Nahumi: No, it hasn’t made my job harder. In fact, it’s made it easier by allowing me to build true unicorn companies—real companies with hundreds of millions in revenue and multi-billion-dollar valuations. We invested at the seed stage, and they figured out how to scale and become significant businesses. It’s actually made my life easier, enabling big outcomes that really move the needle for a firm of Norwest’s size.
Steve Brotman: Excellent. Dror, your personal focus as an investor—is it primarily in early-stage seed investments? What stage are you most comfortable with? You probably have experience in all of them, but what’s your favorite?
Dror Nahumi: I’ve been mostly successful with seed-stage investments, often at the PowerPoint or Series A stage. That’s where I find I can create the most impact, both for the company and for Norwest, as early-stage involvement allows me to influence key decisions. Plus, joining early can yield significant equity in those companies. That’s where I’ve chosen to focus my time, and it’s led to my best investments so far.
My strategy is straightforward—I’m not keeping it a secret. In a seed stage, I look for two things: I need to be convinced the company has the potential for a big outcome and that the team has an “unfair advantage.” If those two conditions are met, I’m excited to join the journey.
Steve Brotman: How do you balance evaluating great companies versus great founders? How do you determine that big outcome—is it based on the founder’s vision, the company’s goals, or both?
Dror Nahumi: I’ve seen great founders pursue a product that ends up as more of a “feature” rather than a full solution, and that typically doesn’t lead to a big outcome. Since we’re a $3 billion firm, we aim for high-impact outcomes. I need to be convinced the business opportunity is very large and can truly become a multi-billion-dollar company. At the seed stage, the team is often incomplete, but I do need to see they have some form of unfair advantage compared to others who may want to build the same thing.
Steve Brotman: Can you give me some examples?
Dror Nahumi: Absolutely. When we started Gong, one of our biggest recent successes, the two founders came to me with a strong understanding of the product and user needs. The CEO had previously run multiple companies from the inside sales perspective, so he knew the need that Gong would address better than anyone else. He wasn’t just building an app; he was building a tool for a role he had lived. That gave him and his co-founder an edge, which really played out.
Another example is our investments in two storage companies: Vast Data and Weka.io. The founders of both companies had built storage products before, so they knew the space thoroughly. Renan from Vast Data, for example, had previously built ExtremeIO, which became a billion-dollar business after being acquired by EMC. So, when he started a new company in storage, he clearly had an unfair advantage. Now, it’s a $9 billion valuation company we’re very proud of.
Steve Brotman: That’s awesome. So you’re essentially leveraging founders’ past experience and hard-to-replicate insights. What advice might you give an aspiring entrepreneur without prior experience?
Dror Nahumi: They need to identify their uniqueness in the market. I’m not saying that inexperienced founders can’t build big companies—they certainly can. But if you want to win big, you need partners who know what it takes. Sometimes you can’t add those partners early, but you should aim to bring on people with experience in areas you lack as you grow. The right investors can also guide you on what areas need strengthening.
Steve Brotman: Switching gears a bit, since many of our listeners are fellow VCs, how long have you been in the industry again?
Dror Nahumi: Sixteen years.
Steve Brotman: Sixteen years! So you’ve probably made some mistakes—as have I. Any advice you’d give to an up-and-coming VC?
Dror Nahumi: Absolutely. I talk with a lot of VCs, including our partners at Norwest, as well as colleagues in the industry. People often think we compete, but we partner more than we compete. Not everyone is successful in this business—it’s very statistics-oriented, and we make mistakes. That’s part of the job.
My advice is to find your X factor or unfair advantage. We are products, too, and our customers are entrepreneurs. What makes you unique? If you don’t provide a significant value proposition to your companies, why would they choose you? And if you’re like everyone else, it’s hard to compete for the most lucrative investments. The most successful VCs often have some unique strength that sets them apart.
Steve Brotman: At the risk of making you sound arrogant, what would you say your superpower is?
Dror Nahumi: No superpowers here, Steve. But I’ve been in operations all my life. I’ve seen companies at all stages—from initial sales to scaling up, to hundreds of millions of dollars in sales, and even going public. My “superpower,” if you can call it that, is experience. I’ve repeatedly helped companies go from a PowerPoint to multimillion-dollar, or even unicorn, status.
I tell entrepreneurs, “I can’t be your CEO, but I can be your partner on this journey.” I stay involved in major decision-making points, and I bring a lot of experience that can help build a large outcome.
Steve Brotman: Absolutely. Being able to repeatedly reach those outcomes is invaluable. Looking to the future, there’s a lot happening in tech. You’ve been observing trends over the last 15 years—what emerging technologies are you most excited about for the next 5 to 10 years?
Dror Nahumi: Right now, AI is capturing everyone’s attention, so I can’t ignore it. I see AI as a new type of user interface. Every time there’s a shift in how people interact with applications, we see major changes in the market. Look at CRM—Salesforce didn’t invent CRM, but by changing it to a SaaS and web-based model, they transformed the space. Mobile did the same when applications shifted to mobile-first.
With generative AI, we’ll see a similar wave of applications and services that use AI as the primary user interface. Many applications will benefit from this shift, as it’s often easier for users to say what they want to accomplish rather than navigating fields in a SaaS app. This shift will require a lot more infrastructure and bring about new technologies to enable these changes.
Steve Brotman: You mentioned two companies, so is your preference for infrastructure or applications within the AI space?
Dror Nahumi: Personally, I invest in both, especially given my focus on Israeli companies. Gong, for example, is an application company, while others like Vast Data are more infrastructure-focused.
Steve Brotman: Got it. Any more examples you’d like to add?
Dror Nahumi: Sure, I have a few more. In cybersecurity, I invested in a company called Signage Security that serves small enterprises, and in ActiveFence, which focuses on trust and safety, even for LLMs. Then there’s Williot, which uses innovative technology to help enterprises with supply chain monitoring at scale.
Steve Brotman: Recently, I saw a company innovating in the beehive space—that’s pretty wild. Do you like “crazy” ideas, or are you more reserved? I was talking to Tim Draper, and he loves the crazy ones.
Dror Nahumi: I’m not quite on that level, but I can tell you that many of Norwest’s best outcomes were companies we debated a lot about early on. If everyone sees the opportunity, then it’s probably too late. As a VC, if you’re only chasing what everyone else sees, you’ll just end up competing. But if you see an opportunity that others don’t and you’ve done serious diligence, sometimes you have to go against the consensus.
Take SolarEdge, for example. It was a late-stage investment, and at the time, all VCs had lost money in new energy investments. But SolarEdge became a major success—it went public and kept growing. That wasn’t easy to see at first, but it’s those non-obvious investments that often lead to the best outcomes.
Steve Brotman: The less obvious to others, the bigger the potential outcome if you’re right.
Dror Nahumi: Exactly. Some people need more time to see an opportunity. Even with Gong, when we started, most investors didn’t believe in it. By the time we became a significant company, it was too late for others to jump in.
Steve Brotman: What insight did you have with Gong that others missed?
Dror Nahumi: Great question. The CEO had deep experience in inside sales and knew there was a need to record and analyze sales conversations, not just rely on CRM summaries. I called 15 potential customers, and 13 said they’d use it across their teams and pay about half of what they pay for Salesforce. That gave me the conviction that we had something here. Many people who passed on it simply didn’t do that work.
Steve Brotman: Do you think you’ve been lucky?
Dror Nahumi: You need luck in everything, Steve.
Steve Brotman: Well, it sounds like you work hard to make your own luck. With SolarEdge, what was the key insight?
Dror Nahumi: My partner Matt Howard and I had looked at many companies in the space, so we had a lot of knowledge. SolarEdge had very high barriers to entry, an incredible team, and promising technology. It took time to build momentum, but once we did, it was beautiful to watch.
The ups and downs are part of this job, but when you see your companies hit amazing milestones, it’s rewarding. That’s why I do this.
Steve Brotman: One of the reasons I do this podcast is to learn from people like you. I appreciate you joining today. Before we wrap up, I have one last question: Sometimes the best investments are when your team is split. What’s your take on that?
Dror Nahumi: Absolutely. At Norwest, we don’t vote or force consensus. If a partner does the work, is diligent, and is convinced, we allow them to make the investment. We hold them accountable for the outcome, of course, but this flexibility is part of our culture. Some of my most successful investments wouldn’t have happened if we required unanimous agreement. Each partner can have high conviction and make their case, and if they’re passionate and thorough, we support them.
Steve Brotman: That’s remarkable. We have a similar culture at our firm. Do you ever try to encourage a partner to dig a little deeper, or do they sometimes step back after more research?
Dror Nahumi: Yes, we do encourage partners to consider areas of hesitation and complete thorough diligence. But ultimately, we want them to have high conviction and be passionate about the companies they want to join.
Steve Brotman: Awesome. Dror Nahumi, thank you so much.
Dror Nahumi: Thank you very much, Steve.
Steve Brotman: I enjoyed it. Maybe we’ll see you in Israel sometime.
Dror Nahumi: Looking forward to it. Thank you.
Steve Brotman: Thanks.