Sean Jacobsohn, a partner at Norwest, reveals why testing a founder’s sales skills is crucial before investment and discusses emerging opportunities in finance and HR software markets amid ongoing legacy disruptions.
- Finance software markets remain ripe for disruption despite heavy incumbent presence
- AI-native solutions are preferred over legacy SaaS 1.0 platforms
- HR startups advised to target secondary products of major platforms for better traction
What happened
Sean Jacobsohn, a longtime veteran of HR software companies and now a partner at venture firm Norwest, discussed his investment approach and current market opportunities in a recent interview. Drawing on his background in senior roles at companies that went public, he focuses on enterprise software startups that challenge legacy finance and HR platforms. He currently manages a diverse portfolio spanning pre-revenue to over $300 million in revenue.
Jacobsohn described how Norwest, a firm managing $15.5 billion and investing through a $3 billion fund raised in 2024, is seeking next-generation business applications that address entrenched providers struggling to innovate. He emphasized that even in a crowded market like finance software, many workflows remain tied to legacy or on-premise solutions ripe for AI-driven disruption.
Why it matters
Jacobsohn points out that the office of the CFO is one of the last remaining strongholds of legacy software, with over 500 players identified and around 75% still categorized as incumbents. Because CFOs directly approve and purchase finance software, startups have a unique opportunity to replace outdated systems more easily. This dynamic creates fertile ground for both horizontal and vertical solutions in industries such as construction, manufacturing, and logistics.
He also emphasized the growing demand for AI-native applications that surpass older SaaS 1.0 products in automation and user experience. For HR startups, Jacobsohn advises focusing efforts on peripheral or secondary products where large platforms are less entrenched, thus increasing chances for successful market entry. His approach highlights the strategic importance of targeting overlooked segments in large enterprise markets.
What to watch next
Investors and founders should monitor how AI integration continues to reshape finance workflows that remain automated via legacy or dated cloud platforms. New companies that combine domain expertise with AI capabilities have a chance to disrupt large ERPs, including NetSuite and Workday, especially in upmarket segments where existing solutions have limited flexibility.
Additionally, Jacobsohn’s emphasis on testing a CEO’s sales capability signals a key decision metric for venture firms evaluating enterprise software founders. Startups with leadership demonstrating direct customer engagement and sales effectiveness may have an advantage in securing investment. The broader market should watch how Norwest and similar firms balance innovation and founder execution in their portfolio strategies.