2021 Impact report

Dec 30, 2021

It is with great pleasure that we introduce the second Sturgeon Capital Annual Impact Report. Having battled through an unprecedented year in 2020, 2021 proved to be more of the same for both our business and personal lives. Our work last year again reconfirmed the power and importance of technology start-ups for the sustainable economic and social development of frontier and emerging markets. Our focus is on those countries still at the early stage of their digital transformation, where inefficiencies are rife, and the opportunity for impact and financial returns is greatest.

This idea of digital transformation is by no means new, and we see it as a process with countries at various stages along that journey. Out in front you have China, which has progressed from a copycat economy to a global leader and innovator. Next you can find India, followed by Indonesia and several LATAM countries. At the beginning of the process are the countries on which we focus, such as Uzbekistan and Kazakhstan, as well as Pakistan, Egypt, and Bangladesh. The commonality between these countries is that they have reached an inflection point of smartphone and internet penetration which creates the foundation on which digital businesses can be built. To continue the analogy, venture capital is the cement necessary to build the market leading technology companies of the next 10-20 years, and this is where we come in.

Also common to all these markets is structurally high unemployment, especially among the youth, and low financial inclusion, which are our two impact areas of focus. In our target countries, it is typical for youth unemployment to average 2-3 times the general unemployment level. This is exacerbated by the median age being in the range of 20-25. Creating jobs for this many young people is one of the great challenges and opportunities for these countries, and we are proud that across our portfolio companies, 50% of employees are under the age of 30. In addition, women are underrepresented in the technology industry globally, and this is even more the case in markets such as Uzbekistan, where female workforce participation is less than 50%. We are proud that 31% of our portfolio company employees are women. This is a number we intend to increase over the lives of our investments by engaging with portfolio companies.

The second theme to our impact mission is an area we have invested heavily in during 2021. Financial penetration in each of these markets is very low, whether measured by the number of bank accounts or the percentage of the population that has borrowed from a financial institution. The reasons for this are manifold, including the size of the shadow economy, the lack of data on individuals and businesses, and the weak or non-existent digital payment infrastructure. We believe these are all solvable at scale by embedding finance in technology solutions.

A substantial number of our portfolio companies, such as Billz and Finmap, are providing B2B SaaS solutions to the SMEs that form the backbone of these frontier markets, in so doing helping to formalise the way they run their businesses and gathering real-time, in-depth data which can be used to provide financial services. Our largest portfolio company, Zoodpay, provides access to credit for the unbanked mass market across Central Asia and the Middle East. Two of our recent investments, Payze and Datacultr, are building the payments rails and collections operating system to enable the digital economy and access to credit. Together our portfolio companies handled over $210m of turnover for more than 22,000 businesses in 2021.

Away from our fund work, we welcomed our second intake of scholars in Uzbekistan. As part of our commitment to the 2X Challenge and empowering women in our target markets, we publicised this year’s scholarship for women only. Having received only one female application out of more than 20 last year, this time, we received more than 20 from women alone. It was clear that unless we emphasised that the scholarship was for women, in Uzbekistan they would assume it was only for men and not apply. Going forward, we will double down on our efforts to encourage more women into the IT and finance workforce as we expand our scholarship program into other countries.


Presentation of scholarship at Westminster International University Tashkent


Presentation of scholarship at INHA University Tashkent


Looking forward to 2022, as our portfolio companies grow and mature, we will continue to put impact at the heart of our engagement with management as well as our investment process. Employment and financial inclusion are key pillars for the sustainable development of the countries we invest in, and we believe our funds and portfolio companies can be a driving force for their development.

“Above all, job creation will be the key factor for developing countries to reduce poverty, improve people’s lives, and reach the Sustainable Development Goals by 2030… Creating more and better jobs requires economic transformation: …it is essential to harness the technological innovation and entrepreneurship that the digital age has unleashed.”

— Axel van Trotsenburg, Vice-President of Development Finance, World Bank (2018)

Our impact mission

The central premise of Sturgeon’s impact framework is that investing in innovative, technology-enabled companies that create private-sector jobs can generate long-term, sustainable social impact and superior financial returns for investors. This framework delivers meaningful social impact by providing capital to empower private entrepreneurs to grow their businesses, in turn creating employment opportunities which we believe are the most effective driver of social change in these markets.

Providing capital’ in this sense means two things. One aspect is the provision of true private capital in markets where there is limited capital available for early-stage technology companies. It also encapsulates the ability of technology companies to bridge the gap between archaic financial institutions and the businesses and individuals with limited or no access to financial services. Through innovative distribution, alternative data, and embedded relationships, these start-ups can be the drivers of financial inclusion across the markets that we invest.

The impact objective for our first fund is to support 500,000 jobs, encourage technological innovation and drive financial inclusion through the portfolio companies that are solving the key problems affecting businesses and consumers in their day-to-day lives. We have relied on the United Nation’s Sustainable Development Goals to shape our impact target; specifically, Goal 8 to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”.

We foster technology adoption and innovation across our portfolio, bringing in international expertise to train local employees and insisting upon the highest corporate governance standards. The efficient and profitable companies our approach nurtures are more resilient during periods of economic volatility, something that is crucial to the long-term success of frontier market businesses.

Fund II – Headline impact data 2021