Naphtali backed Rampersand once they agreed to a “portfolio approach”
Prior to his son Paul’s company, Rampersand, finding its footing, Naphtali describes the Australian venture capital market as non-existent. That’s what prompted Paul to start developing his own organisation.
When he looked to his father for help, Naphtali made it clear that he would only support the enterprise if it met his meticulous standards of operation and due diligence.
“I said I loved him dearly, and I was happy to back him, but I did know that running into this area... you’ve got to have a portfolio approach.”
This was part of his philosophy that by raising capital and investing other people’s money, you had to be significantly more careful.
“When you invest other people’s money, you’re much more rigorous than when you’re dealing only with your own.”
“My role was to bring some structure and governance.”
Whilst he admits that he didn’t have much of a mind for the technological side of the business, he knew that he could add processes to the company that would enhance it.
Part of that was limiting how much capital investors could contribute.
“I said to everybody, “You’re not allowed to put in more than $250,000.” They were all people who, god forbid they lost it, it wouldn’t have hurt them, but they’ve got their money back a couple of times over.”
His sometimes-conservative approach to investment is part of his success; Naphtali understands when a risk is necessary, and when it can prove detrimental. In the case of Rampersand, who are in their fourth funding stage, its proven extremely profitable.
What to look for when investing
At its core, finding projects to invest in requires seeing potential in the bigger picture, according to Naphtali.
“It [must be] a platform, an idea, a concept that we think will work. That we think is scalable.”
But what's more important than the idea itself, is the team behind it. No one can go it alone, and Naphtali is only interested in projects that espouse that thinking.
“Anyone that thinks they can do it by themselves is uninvestable. Anyone who doesn’t have the capacity to build a team [and] maintain a team... that’s one of the fundamentals.”
Obviously, conducting due diligence still requires assessing the viability of the business in terms of its competition and its place in the market, but the group pushing the idea are more important than the idea itself.
“Building [a business] means bringing in people and building a great team. That’s always the key to success.”
Watch the full interview, conducted by Ready Media Group's Managing Director, Rob Langton, here.