Sean Jacobsohn, a partner at venture capital firm Norwest, believes the enterprise software market still offers opportunities for new startups, but not by repeating the same products or competing with major platforms in their most established functions. According to his interview with Crunchbase News, the most significant opportunities lie in modernizing legacy systems, targeting secondary products of human resources platforms, and building specialized financial applications for specific sectors.
Jacobsohn draws on operating experience before moving into investing; he held leadership positions at WageWorks, Cornerstone OnDemand, and Upwork during their growth from millions of dollars in revenue to tens of millions, and all three companies became publicly listed. He joined Norwest in 2014 after serving as a partner at Emergence Capital, and currently focuses on enterprise software, with particular interest in financial and human resources software, supply chains, and construction technology.
Legacy Systems Remain an Area for Competition
Jacobsohn says Norwest’s map of the “CFO office” market included more than 500 companies, with about three-quarters of them legacy-system providers. Although most financial workflows have become automated to some degree, part of the market still relies on on-premises solutions or platforms that are slowly moving from internal operating environments to the cloud. For that reason, he is not focused on automating a task that has never been performed before, but on replacing existing solutions that have become outdated compared with the new generation of products designed around artificial intelligence.
He sees enterprise resource planning systems as one area open to change, citing NetSuite and Sage, in addition to sales tax software and treasury management. He also invests in procurement solutions and sees room for horizontal applications serving multiple industries, as well as vertical applications aimed at construction and manufacturing, with interest in opportunities in transportation and logistics.
Artificial Intelligence Is Useful, but Precise Calculations Are an Important Exception
Jacobsohn does not reject bringing artificial intelligence into financial products, but he sets clear boundaries for what software agents should do. Users in the financial sector need consistent answers, and errors in calculations or data can affect accuracy and auditing. For that reason, he believes artificial intelligence can handle workflows that do not require precise numbers, while it should not be relied upon for calculations when accuracy and the numerical result are essential requirements.
This view is not a general rejection of artificial intelligence, but distinguishes between using it to understand, predict, and execute work and assigning it computational processes that cannot tolerate error. This is an important point for companies marketing financial products as “AI-native” without clarifying the boundaries of safe use.
Competing with Major Platforms Starts with Secondary Products
Jacobsohn believes competing with the core products of Workday, ADP, SAP, UKG, and Dayforce is difficult because these companies have broad distribution and deep ties to their customers’ operations. However, he believes secondary products, which do not represent the central business of suite platforms, may give specialized companies a greater opportunity.
He cites his investments in Legion Technologies in workforce management and Elevate in employee benefits. In his description, specialized companies benefit from focusing on a large market that does not receive the same level of attention from a suite provider, rather than trying to build a comprehensive alternative covering every platform function. He also notes that distribution can sometimes decide the competition even when the technically best product is not the winner.
What Does the Investor Look for in a Founder?
Jacobsohn believes artificial intelligence has made it easier to build companies, particularly in simple horizontal workflows aimed at small businesses, but it does not eliminate the difficulty of building complex solutions for the mid-market or enterprises. Solutions requiring deep domain expertise or tied to a specific industry remain harder to build and maintain, while competition from internal development teams is lower, according to his observations of his portfolio companies targeting the upper end of the market.
When evaluating founders, he places the ability to sell at the center of the process. He says most of the CEOs he supports come from product and engineering backgrounds, but that is not enough; they must sell to customers, partners, investors, and employees. For that reason, he attends sales calls he arranges with the CEO before investing, and may withdraw when customers repeatedly show no interest in scheduling a second meeting.
Norwest, which was founded in 1961, invests from its 17th fund of $3 billion, which it raised in 2024, and manages $15.5 billion in assets after backing more than 700 companies. Jacobsohn says his firm primarily focuses on seed and Series A rounds, with the ability to make selective Series B and Series C investments. He also does not believe the weak IPO market changes its interest in financing, because most companies are acquired before reaching a listing.
Why Does This Assessment Matter?
The interview provides a practical framework for understanding what an institutional investor sees as an opportunity in a crowded market: not every new product is a compelling replacement, and simply adding an artificial intelligence layer on top of an old workflow is not enough. According to the argument presented, value comes from understanding the system that will be replaced, choosing a function that does not receive sufficient attention from major platforms, and proving the founder’s ability to turn the product into sales. These conclusions remain an investment opinion attributed to Jacobsohn, not a general rule guaranteeing a startup’s success.