5-Minute Interview with Robin Butler, Sturgeon Capital
Dr. Dorothy Kelso
Managing Director, SuperReturn | Board Chair | Emerging Manager Champion
In this series of 5-minute interviews, I shine the spotlight on up-and-coming fund managers in private markets across the globe. All geographies. All strategies. All sectors.
Here's my conversation with Robin Butler, Partner at Sturgeon Capital.
Quick facts about Sturgeon Capital:
Q: What is Sturgeon Capital’s investment strategy?
A: We invest in nascent digital ecosystems which are primed for rapid technology adoption and growth over the next 10-20 years.
Q: What is the size of the opportunity in the Asian markets you invest in?
A: We focus on Central Asia, the Caucasus and South Asia (excluding India) which has a population of about half a billion people and $1tn of GDP. These markets have high smartphone and internet penetration, yet digital penetration is currently under 5% and both consumers and businesses are plagued by inefficiencies in their day-to-day lives. The ongoing rapid shift from offline to online represents more than $200bn in potential revenue for startups over the next 20 years. Comparable markets that have been through this same shift are India, Indonesia, and Brazil.
Q: How do you source deals across a vast geographic area?
A: We have both an on-the-ground presence in each core market, as well as regular travel by the international team, meaning we see every deal from an early stage. To bolster deal flow further, we look to set up accelerators and/or dedicated pre-seed funds (in collaboration with local pools of capital) that allow us to develop the local talent pool and provide visibility on deal flow from company inception.
Our local presence means we can carry out in-depth due diligence, particularly qualitative DD, that other international investors are unable to do. We find that in such nascent ecosystems, the signals that investors look for and recognise from more developed markets are, at best, irrelevant and, at worst, misleading and damaging. We saw many “tourist VCs” get burned during the hype of 2020-22 because of this.
Q: What hands-on expertise do you have?
A: My background is somewhat esoteric. I’ve spent the last 10 years living, studying, travelling and working in emerging markets. Home has at different times been Jordan, Iran and (as of three weeks ago) Georgia. I studied Arabic and Middle Eastern History at university then studied Farsi in Iran for close to a year. I get paid to travel to the countries I want to go to on holiday, the most recent of which was 10 days travelling around Bangladesh. Aside from a short period selling internet packages at university, every job I’ve had has been focused on emerging markets. I think this gives a differentiated perspective on the challenges and opportunities in these markets, and an open mind to how these are evolving in the context of macro, political, religious, social and other factors.
Q: How are you building your team?
A: Our team is a mixture of founders and investment professionals with extensive experience operating and investing in emerging markets. The core ventures team is made up of five full-time individuals, with a roster of venture partners that have deep domain expertise and support Sturgeon with both due diligence and post-investment company support. We do not look for MBAs or big-name former employees when hiring; instead, we look for people who can bring a different perspective and a passion for the markets we invest in. Sturgeon has recently started hiring talented local junior analysts we hope to develop into the next generation of investment leaders in our markets.
Recommended by LinkedIn
Q: How do you see your business scaling?
A: We are in a unique position that the combined AUM across both Private Equity and Venture means we can optimise VC fund size for performance, not AUM. Therefore we will scale these funds in line with the investment opportunity that we see in our markets. The current fundraise of $35m is sized according to that opportunity today and our confidence in being able to deliver +5x fund returns for investors. In the future, we see a gap in funding at Series A to C in our markets, for which we may explore growth stage funds and build a team to manage this.
Q: What are the key ingredients of your success?
A: Five come to mind. First, we have visibility over 100% of dealflow through our reputation and permanent on-the-ground presence. Second, we are able to conduct in depth due diligence, especially qualitative, through the same on the ground presence. Third, multimarket experience gives us greater perspective and reduces error rates for us as investors and our portfolio founders. Fourth, the hands-on portfolio support we provide, in tandem with our experienced venture partners, is crucial for the success of the companies. Fifth, we mobilise follow-on funding from international investors which helps compound company growth.
Q: What’s the biggest challenge you have had to overcome?
A: Educating investors about the size and potential of the markets we operate in. Most have never heard of Uzbekistan or think that Georgia is just a state in the US and have only seen Bangladesh in the news when things go wrong. We try to bridge this gap by bringing investors to spend time in our markets because we’ve always found that 5 minutes with our founders is better than 5 hours of us pitching the opportunity set. We recently brought 100 investors, VCs and founders to Georgia for two days of presentations, panels and 1-to-1 meetings, for example.
Q: How else do you support the development of the markets you invest in?
A: We are proud to have set up the Sturgeon Foundation, funded by Sturgeon Capital’s management fees, to provide scholarships to women and underprivileged students in the markets where we invest. We have also set up Swift Launch, a novel incubator/accelerator in Uzbekistan that fosters the supply of talent and entrepreneurial mindset in the region.
Q: What valuable lesson have you learnt that helps drive your approach?
A: I have learned that very few people are truly exceptional, and that hard work, empathy and taking the time to see things from someone else’s perspective goes a lot further than most expect or believe.
Q: What advice would you like to share with our readers?
A: Be the one who comes with solutions not problems and be ready to implement them independently.
#privatequity #venturecapital #innovation #investing #entrepreneurship #b2bsoftware #fintech #marketplaces #CentralAsia #Caucasus, #Southasia
Well done!
Partner at Sturgeon Capital
10moThank you Dr. Dorothy Kelso, it was a pleasure working with you for this!