Uncovering hidden gems: The challenge of discovery in regional investing

One of NFC’s core values is “love of place”: The firm seeks out founders who deliberately choose to build their businesses in the Rocky Mountain region. “I believe that’s an advantage we have over other firms,” says Les. “A core part of our pitch to LPs is our geographic footprint and the strong personal relationships we’ve nurtured in the region. Being purposeful about where you start a company is so important. When we find founders in the region and build connections with them, those relationships carry weight. We’re deeply familiar with the local ecosystem, from the specific challenges founders encounter to the opportunities they can seize. Our commitment to supporting local innovation and understanding regional dynamics runs deep.”

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Yet the firm’s strong geographical presence doesn’t diminish the need for a data-driven strategy. Operating as a regional investor with a small team across such a large area makes identifying promising companies and founders—particularly at the stealth stage—a persistent challenge. “We can’t physically be everywhere,” Les explains. “Of course, we attend events, meet founders, and network. But the most exceptional founders—the ones you want to connect with—aren’t at networking events; they’re heads-down building their companies or embedded in really specific, unique networks. Those are the diamonds we want to uncover.” Existing tools for discovery often lacked the depth of data needed to spotlight stealth-stage companies or experienced founders embarking on fresh ventures. “Finding companies and founders before the big announcement was the biggest hurdle,” Les adds. “By the time a pre-seed or seed has been raised, it’s too late. We needed to be ahead of the curve.”

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Next Frontier was an early adopter of Harmonic, but Les is the first to admit his skepticism toward any company claiming to have the data he needs. “I’m a data guy at heart,” he says. “I used to run a data science services company, where I led a team of PhD-level data scientists. So my radar goes up when a platform claims to have superior data. My internal skeptic’s first instinct is to figure out why their data isn’t better than my status quo.”

“I stress-tested Harmonic by running searches in regions I knew well. Harmonic displayed a remarkable depth of knowledge about Montana companies—and the data was not only accurate but also incredibly comprehensive. It surpassed anything else we’d seen.”

So Les did what he always does when introduced to a new platform: He came armed with questions he already had answers to and put the platform through rigorous testing. “I stress-tested Harmonic by running searches in regions I knew well,” Les recalls. “To my surprise, Harmonic displayed a remarkable depth of knowledge about Montana companies—and the data was not only accurate but also incredibly comprehensive. It surpassed anything else we’d seen.” Les adds that founders are constantly launching new companies in the Rocky Mountain region—especially post-COVID. “Cities like Durango, Bozeman, and Boise have become viable places to launch companies; this simply wasn’t the case before. For me, as a regional investor managing a large area with a small team, Harmonic’s greatest value lies in discovery. Without it, many of these emerging companies might remain off our radar.” 

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Unlocking hidden connections with Harmonic’s dual-data approach

At least one of the investments in the firm’s most recent fund was discovered through Harmonic. “We never would’ve seen it otherwise,” Les maintains. That’s because, though one of its co-founders is based in Montana, the company is headquartered in the Bay Area. “So LinkedIn and other discovery platforms categorized it as a Bay Area company, overlooking its roots in the Rocky Mountain region,” Les explains. But Harmonic enables firms to filter and analyze both company and founder data—the operational base or headquarters of the business as well as the geographical locations of its founders and other senior officers. This two-pronged approach is critical for firms’ discovery process. Harmonic’s uncovering of the Montana-based co-founder is a key example of the insights that other tools often fail to reveal.

“LinkedIn and other discovery platforms categorized the company as a Bay Area company, overlooking its roots in the Rocky Mountain region. But Harmonic alerted us that one of its co-founders had a presence in Montana.”

Les describes that particular discovery as “such a special find. That’s the secret sauce, the sweet spot of Harmonic: merging data about individuals and businesses, uncovering key players and figuring out the right connections, and mastering entity resolution.”

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Democratizing access to data: “Now new and emerging funds can compete meaningfully with mega funds”

Les rejects the idea that widespread access to the startup universe diminishes competitive advantages. “Next Frontier’s response to the democratization of data is: That’s awesome. We know the alpha isn’t in the base-level sourcing. The true value lies in the work we do post-discovery: analyzing the data, building predictive models, making strategic investment choices, and thoughtfully managing our investments.” Les adds that NFC “isn’t in the business of assembling teams of analysts to manually parse PitchBook or Morningstar data and cold-call prospects—that’s simply not the best use of our time or resources.” Investors want to be spending their time on the activities that require “intellectual rigor, discipline, and diligence.” By unearthing valuable opportunities, Harmonic frees up time for those activities that genuinely create alpha. 

“Next Frontier’s response to the democratization of data is: That’s awesome. We know the alpha isn’t in the sourcing. The true value lies in the work we do post-discovery.”

Les acknowledges that some firms had achieved success with homegrown or custom sourcing systems before Harmonic came into play, “but the effort and resources required to build those systems are substantial. Having created a product and platform myself, I understand the challenges—especially when it comes to data platforms. Harmonic levels the playing field, allowing new and emerging funds to compete meaningfully with mega funds.” 

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Maximizing sourcing capacity with advanced search and lists

The search functionality and list-building features in Harmonic have fundamentally transformed how Next Frontier Capital operates, enabling the firm’s three-person sourcing team to punch well above its weight. Les underscores the power of Harmonic’s advanced search filters, which allow for complex, nested queries on everything from headcount, to geo, to founder backgrounds, to funding history, to social traction data, to hundreds of positive or negative keywords that align with their investment theses. “The amount of logic you can nest is incredibly powerful,” Les says. “Sometimes I overcomplicate queries to the point of diminishing returns, but that just shows you how robust the functionality is. We’ve developed a growing list of go-to searches, improved existing ones, and even sunsetted older queries as our theses and practices evolve.” This evolution has not only established a scalable, repeatable sourcing process but has also enabled the team to sharpen its focus on the most promising opportunities.

“Our sourcing team of three now operates with the efficiency and capacity of a team three to five times its size.”

Les adds that Harmonic’s list functionality has been equally transformative, enabling Next Frontier to manage its pipeline with precision and efficiency. Company Lists allow firms to group companies they want to monitor, exclude, or refine their searches around. These lists provide static, customized collections that help investors track their portfolios (e.g. headcount traction, social traction), target potential investments, or filter from view. “We have dedicated lists for companies we previously overlooked or that have advanced beyond the investment stage we’re targeting,” Les explains. “We also have lists of companies we’ve passed on, which helps eliminate noise. It’s a one-time triage and Harmonic never serves up those companies again, making our work more efficient.” Combined with Harmonic’s search capabilities, lists significantly enhance the team’s ability to identify and assess opportunities across an expansive region. Les does the math: “Our sourcing team of three now operates with the efficiency and capacity of a team three to five times its size.” 

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Redefining alpha through Harmonic’s evolution

The close collaboration between Next Frontier and Harmonic’s product team underscored Les’ confidence in the platform. “As a small VC in Montana, I had direct access to decision-makers shaping the roadmap,” he shares. Les’ contributions during feedback sessions had a tangible impact, as the Harmonic team balanced his input with that of the broader customer base. “I felt heard,” he reflects. “Seeing features I suggested implemented so thoughtfully reaffirmed that Harmonic wasn’t just evolving—it was internalizing what customers needed to become exponentially more powerful.”

“The product today is ten times more efficient and a hundred times more powerful than what I was piecing together manually.”

Rather than diminishing NFC’s competitive advantage, Harmonic’s evolution enhanced it. “The product today is ten times more efficient and a hundred times more powerful than what I was piecing together manually,” Les maintains. “I’ve regained the time I used to spend on manual processes and cobbling together resolutions. We’re now able to spend more time on algorithms and advanced data processing; I can now ask more creative and complex questions than ever before. We have a leg up; our sourcing team has true alpha.”