Ramtin Naimi started trading stocks when he was 16, was managing portfolios by 18, and started a hedge fund a year later with the encouragement of several mentors. After some big success in hedge funds using his own directional strategy and a fresh approach, Naimi has easily made the transition to venture capital, with similarly successful results.
“Ramtin is a classic Angel,” says Gil Penchina, his syndicate partner. “He hustles, has a huge network and will run through walls to help others. He has an amazing network that has allowed him to become an important node in Silicon Valley at a young age.”
If Naimi’s success thus far is any indication of how far he can go, his is sure to make big waves, and soon. I was able to sit down with Naimi to ask him more about the path he’s taken, and where he is going next.
Tell me about the firms that you’re involved with right now.
I work full time at Core Innovation Capital, and I have my own venture fund on the side called Abstract Ventures with my partner Mike McCormick. I also have a syndicate on AngelList called Abstract By Flight with my partner Gil Penchina.
How did you get started in venture?
I started a hedge fund when I was 19. I had been trading since I was a kid, around 15 or 16 years old, and I made a trade shortly after high school that made me a decent chunk of change. I decided that I was going to stop going to school and raise a hedge fund. I started the hedge fund with about $600K in assets under management and grew that to about $12 million across the board between the ages of 19 and 22.
The fund was going well, and things were going fine, but one thing I didn’t know back then was I wasn’t very well networked. People in my network helped me raise money, so I didn’t have to take on that burden. It got to the point where I wasn’t able to scale the fund any further on my own.
What got you interested in venture capital?
At that point, I explored opportunities at larger funds, and met Stuart Peterson from Artis Ventures, who exposed me to venture capital. Stuart was working on AV2 at the time -- some really exciting deals -- and I got to shadow him and visit a few portfolio companies. I decided that I was still young enough to change career trajectories, embarked on a venture path, and haven’t looked back to hedge funds ever since.
Stuart, who ultimately became a good friend and an unbelievable mentor, let me shadow him for a few months while he worked on Juicero as they were doing their Series B. I just fell in love with the company; it gave me exposure to what a startup company should look like and what kind of founders I wanted to be backing. After I met Doug Evans, I knew there was no one better suited than him to build that company. It was an unbelievable team and product.
Being able to support a company like that from so early in the stage was so much more fulfilling than working in a public market career, where you do little else but look at chart patterns all day long and decide which way you’re going to make money. With venture capital, you actually have a little bit more say in the outcome of your investments, because you’re investing in the company early on. You get to work with them, introduce them to people that can help them, watch their trajectory, and take a little bit of ownership in the company’s success.
My path then led me on a journey into FinTech, with a startup I founded called Lender’s Exchange, which created a secondary exchange for marketplace lending, geared towards companies like Lending Club and Prosper. Many people who make an investment on those platforms get stuck in their investments, and this was going to help provide a liquidity solution for them. In hindsight, I’m glad I pulled the plug because that sector is completely crippled right now.
However, one of the VCs that I met during that time was Core, which is where I work now. They impressed me in that everyone at this firm has a very, very strong understanding of the financial services sector. Core is a 150mm firm that exclusively invests in financial services-oriented startups that provide upward mobility to everyday Americans; so our scope is very broad in terms of what we will look at in the space.
I stayed in touch with them and met Gil Penchina, a very prolific Silicon Valley angel investor who was an early investor in PayPal and a seed investor in LinkedIn. He has the largest suite of syndicates on AngelList and is, by far, the most active investor on AngelList. I worked with him for a six or seven-month period, and that was my crash course in high-volume VC investing -- how to see tons of deals and decide on which ones to do. I learned more from him in a short time frame than anyone else throughout my career.
You were exposed to a tornado of deals. What patterns did you start to recognize in good deals?
Gil once told me that when he gets a deck, he skips to the page that has the killer metrics on it. If that page doesn’t exist, then there are no killer metrics. He very quickly looks for certain things in decks that should be there to justify the quality of the deal. Metrics, growth, traction, KPIs -- if those things are present, then take a closer look.
Look at the team behind the business. Is this the right team to build this company? Have they had prior successes? If not -- and a lot of companies haven’t -- that’s fine, but do you think this is a team that’s capable of being successful this time around? Do they have good investors backing them? Many of the leading Silicon Valley VCs provide immense value to their portfolio companies and are instrumental in helping them get off the ground.
Those are things that we look at, plus the entrepreneur’s ability to attract talent; it’s a very competitive landscape to get people to work for you in this town. Smart people only want to work for very smart, charismatic, and confident people, so those kinds of leaders tend to attract the best talent.
How did you start Abstract Ventures?
Abstract Ventures came to life when Stu and Doug gave me direct access to invest in Juicero and I figured the best way to do this was to start my own fund.
The thesis behind Abstract was to only invest in four to six really big, borderline crazy ideas a year, nothing incremental. By borderline crazy ideas, I mean companies that embody the mentality, “Go big or don't go at all.” Juicero is one of these that’s going to turn the healthy foods and beverage industry on its head. In addition to Juicero, we’re currently closing an investment in Ripple, which takes big ideas to a whole new level. Ripple, simply defined, is the future of how money will move.
The reason I focus on only doing a few deals a year that I’ll write million-dollar-plus checks into is because I have a strong opposition to the way most other young VCs are constructing their portfolios. There are a ton of newly formed funds down in LA that average just three million dollars in AUM, and their strategy is to write $30K checks into 100 different deals, and hope that one of them hits it out of the park.
The problem is that they don’t often see good deal flow, so they’re investing in 100 lower quality deals, hoping one works. That will never scale into an institutional strategy. The checks they write are too small to generate much of a return, net of a unicorn outcome, and don’t move the needle in terms of what an institution looks for in an investment fund. They’re typically not co-investing with leading VCs. Because they’re not providing any value, they’re typically investing only in companies that can’t raise from anyone else, or they got lucky that one of their friends has a good startup and is letting them in on the round.
The purpose of Abstract Ventures was to create great opportunities with my access to good deal flow through relationships like the ones I have with Core, Stuart and Gil. Throughout my career, I’ve established a very strong network of investors; more recently, a big group of family offices on the East Coast that tend to have an appetite for venture that you don’t tend to see in West Coast family offices that are overexposed to venture. These are the groups I reach out to when I raise for a specific deal.
What do you think that you bring to those startups that others don’t?
I am very well-networked so I help with key hires, introducing potential customers, bringing in value added and strategic investors and I have a very expansive network of other VCs that can help them fill out their rounds. It’s not so much that Abstract Ventures brings the resources of that of a Google Ventures, Andreessen, or Sequoia, where they have teams of people helping the portfolio companies; what I bring to the table is network of people that can help them out and a time commitment that institutional VCs aren’t able accommodate. I like to think I can punch above my weight class in this respect.
How are you finding deals now?
Core only focuses on financial services, and since we’ve established strong credibility in the space for being the VCs you want in a FinTech investment, we pretty much see everything in the space. Everyone who is doing a FinTech deal sends it to us to get our input, or wants us in the deal for the value that we add.
We know all of the regulators in the financial services space, and since it’s a highly regulated sector, we like our portfolio companies to take those things seriously. We have the network to make sure that they are regulatory compliant, from day one. A lot of these companies involve lending, so we have the debt servicers and capital partners they need, in addition to knowing all the potential acquirers for the business.
In the Abstract Ventures side of the world, I don’t really go out to find deals. I have a network of five to seven people that do great deals and are very intelligent. If they send me a deal, I’ll take a very strong look at it. If the deal is coming from one of those people, that’s an 80 percent indication that I’m going to do it, especially if they’re already invested in it. I'll do just about any deal Stu puts in front of me and was lucky enough to be able to follow Core into Ripple.
Who else do you see doing great deals?
Artis Ventures is up-and-coming. They just had the second biggest private venture backed acquisition in history with Stemcentrx, which sold for $10.2 billion. Outside of WhatsApp, that’s the biggest venture-backed acquisition, ever, and it’s the largest private venture-backed biotech acquisition ever. The co-investors Artis brings in on deals are the biggest names in VC, and Artis is routinely leading a lot of those rounds. I’m fortunate to have a relationship with that firm, so I get to see some really great deal flow.
