Episode 026 - Alex Branton, Partner Sturgeon Capital, London

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger;Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  This is your podcast for Fintech, Decentralized Finance, Blockchain and Smart Contracts, Digital Banking and all the frontier technologies that are changing the financial landscape globally. Episode Introduction: Welcome back everyone.  We have a fantastic program for you today.  Today, I have the privilege welcoming back to the podcast Sturgeon Capital, when we did an interview early part of 2021Sturgeon Capital is a London-based investment firm with a very interesting, and successful, I might add, geographic strategy;Sturgeon was established in 2016 to specifically to tap into vast opportunities its team has identified in Central Asia;  So, think of Kazakhstan, Uzbekistan, and in adjacent regions such as Bangladesh, Egypt, Turkey; We´re going to get into all of that and a lot more.  To help me do that I have the pleasure of welcoming Alex Branton, a Partner at Sturgeon.  Alex, thank you very much for making the time to be on the program today.Before we get into the meat of what Sturgeon Capital is doing, I find it useful for listeners if you could provide your background, and your journey, more broadly, that led to the founding of Sturgeon;  Alex Branton Bio:  Over a decade of investment industry experience with a blend of direct investment experience and fundraising expertise. Studied, lived and worked in emerging markets (most significantly China and Central Asia) on and off for 15 years. Whilst maintaining a vital role on the investment team, spends significant time working with companies on their fundraising and strategic partnerships. Before Sturgeon, part of a 4-person team, that helped build a tech-focused asset manager called Columbus Point with the co-founder of Cantillon in the capacity of head of business development, raising approximately $200m, building the operational infrastructure and working with the investment team. Prior to this, was an Associate Investment Director at Cambridge Associates working in the emerging markets team, advising on direct co-investment deals, economic consulting, financial modelling, and portfolio advisory and discretionary management.  Alex holds a BA in Industrial Economics from the University of Nottingham (during which time he also spent time studying finance at Hong Kong University) and an MSc in Development (specialism in Development Economics) from the London School of Economics. He is also a chartered alternative investment analyst (CAIA) and is fluent in Mandarin Chinese having studied in a post-graduate in Shanghai and has taken R programming courses at UCL. History of Sturgeon, why founded with this vision for frontier markets in Central Asia? What is a “frontier market” according to Sturgeon?  Your website indicates “we reject traditional definitions of ‘frontier markets’ – expand on this… Sturgeon invests at an early stage (Seed and A round) in technology across huge untapped geographies ~$275m AuM across our venture fund and inaugural growth equity mandate Raising our second early-stage VC Fund Sturgeon Opportunities II ($50m)The TAMs in our addressable markets are so big you don´t need an Excel spreadsheet.Our companies target massive addressable markets that are highly fragmented or otherwise dominated by bad (or often non-existent) incumbents that are not capable of technological innovation.  We don’t speculate on “frontier technologies”, rather we focus on tried and tested business models in ``frontier`` markets.You are now raising capital for the Sturgeon Emerging Oppor. Fund II.  Target of $50MM80% of the portfolio will be comprised of companies from emerging tech capitals in Pakistan, Bangladesh, Egypt & Central Asia representing well over 500 million people. When including adjacent countries, our geographies of interest represent over 1 billion people.We will keep our funds small and are not afraid to double-down on winners.  We want to keep our “low denominator” advantage and optimize for returns by matching fund size to the opportunity set.  Although we see ourselves as a smart index, we also believe in concentration and follow-on heavily in our winners.We are filling the ``funding gap.``  We focus on entering at Seed and then leading Series A and Series B.  Beyond Series B we support our companies to raise growth capital from strategic co-investors.The funding gap:  Our target countries represent some of the last truly enormous digitally unaddressed markets.How do you source deals, what you are looking in an investment in a co. in this geographic mkt (game-changing tech, solving major pain points, etc.)   Network Effect:  Genuine local and global networks that inform us as investors and create value for portfolio companies. A huge % of our value add to Founders...