Transcript from a stream recorded for Devsmap.com youtube channel on Tuesday August 26 year 2025 for developer and startup community in Central Asia and Mongolia.
Speakers:
- Askar Aituov (Host)
- Nazerke Kalidolda (Sturgeon Capital)
- Robin Butler (Sturgeon Capital)
Video Transcript
Askar Aituov: We are live. Hi all. Uh, today we have Sturgeon Capital, uh, VCs. And actually, last week I, I watched, uh, another guy was doing his podcast, and with Nazerke, and there was a comment that the podcast host is so narcissistic and speaks about himself and doesn’t allow Nazerke to talk about. So, yes, uh, learning from that guy, I will mostly, uh, let you guys speak.
And, uh, we have, uh, Robin who recently authored a, in my opinion, like quite sophisticated article about the region, not only Central Asia, uh, but a broader, like, for us it’s kind of far Asia and Middle East. And Sturgeon Capital, uh, was quite early in this region. I think you guys like, like three, five years here.
Uh, having to like, uh, now region is becoming sexy, but these guys were here earlier and many people who live here, they don’t have such a perspective which you outlined in this report. So, thank you for this. And we’ll go straight to the questions. And I will let you guys talk. So, uh, as I actually, this question I sent to community as well. A lot of my friends went for good to the West for higher salaries for tech career, uh, in the US, UK. Uh, and they don’t return mostly. However, who does return to Central Asia are some startups founders, old friends of mine on fresh startups as well. They, uh, go to Mexico or US, UK, and some went to Indonesia and, uh, Middle East, UE, and then they return to Central Asia for kind of, they call it for various reasons, but I, I know it’s about customer acquisition cost, it’s more expensive in the West and than here. So, uh, there are other types of ideas that we could be here, uh, code shop, IT outsourcing hubs. And this was supported by government, uh, few years ago. In 2025, 24, I don’t see much of this. I see, um, like large, large players like EPAM who has strong sales force in America. They employ people, but they are not homegrown IT outsourcing companies. With this, what would be your single advice for, uh, 30, 35-year-old mature, uh, entrepreneurs, developers who live in this region, how they could, uh, develop their projects? Thank you.
Robin Butler: Thanks very much, Askar, and, uh, thanks for having us both, both on here. I know you’ve had a conversation with, uh, Nazerke already, um, but, uh, it’s really a pleasure to be here. I guess as I say, we’ve, we’ve, I think we, we made our first investment in Central Asia back in 2019, uh, which was was also interestingly our first exit. So, as I’m making up to six years, uh, coming up to six years now since we made our first investment. And like you say, back then it wasn’t maybe so sexy, uh, kind of, uh, domestically, regionally, or internationally to kind of be looking at opportunities, um, in the region. Uh, but glad, very glad to see that that it has changed, that there are now more founders founding businesses, uh, more entrepreneurs founding technology and technology-enabled companies coming from the kind of what used to be the sort of, let’s say stable careers, the ones that your parents would be happy if you went into. Uh, and taking, taking a higher degree of risk and trying to build something, uh, that’s in theory can be of a larger scale.
Um, I think as we, we kind of spoke about beforehand is is that kind of, if you, if you want to go down that path, um, you sort of have the sort of kind of idea of the sort of being able to deliver venture scale returns. Um, and that was really the the genesis of the article that we published, um, a few, a few, a few weeks ago was saying, well, uh, let’s say in order to generate venture scale returns, you’ve got to have a path to say 50 to 100 million in net revenue, not, not gross transaction value or gross, uh, merchandise value, but sort of true net revenue, uh, with sort of strong software and technology margins, um, say sort of 40 to, ideally a sort of 40 to 30 to 50% net, net margin. Now, in order to do that, you need a large enough addressable market. Um, and I think as we mentioned in the article is we’ve, we’ve met some great founders over the years building very interesting businesses, but in markets which fundamentally were too, are too small to ever be able to generate 50 million in revenue. And they might get to say 10 million in revenue and, don’t get me wrong, that that’s a would be a fantastic result. You’re going to have to work incredibly hard, you need some things to go right, whether it’s through luck or judgment or otherwise, um, to get to that, to get to that size, to get to that scale. But for, for an international investor and for international capital, that is, that is not large enough. Um, and you kind of mentioned that for a lot of people’s answer to that is, well, I’ll go to the US then, because the US is the biggest market and it’s sort of where people go to build big companies and it’s where all kind of brands and names that I recognize have, have, have been founded. But as you mentioned, is your, your cost of doing business there, I mean, I’ve seen people say, I’m going to raise half a million to go to the US. It’s like, all right, well, go on a nice holiday and you’ll be back in six months. Okay, I’m going to raise a couple of million or three million, but you see just the kind of cost of hiring the talent that you need locally, even if you can leverage a kind of cost arbitrage of having your technical team and some back office in, in Central Asia, you still need boots on the ground in, in the US, particularly for, as you mentioned, the kind of, um, EPAM being a good example where their sales team are all in the US. Now, they’re paying those people very well, um, and that they’ve kind of got to that stage over, over, over time. Um, so yeah, you can, you can look to go and found something in the US, you can go and look to build something there, you’re in a much more competitive and much more expensive market. But if you are going to stay and try and build something in Kazakhstan, Uzbekistan, the broader kind of region, what we were trying to get at with that article is that there, the market size needs to be large enough, um, and that’s kind of a function of, of two things. One is both the absolute size of the market, and two is the market share that you can build in that market. Like, if it’s a billion dollar revenue opportunity but you’re pretty confident you can get 10% market share because you have some kind of unique advantage, then that’s better than the sort of, well 1% market share of the 10 billion industry. Um, uh, or sorry, whatever it may be. So, uh, my math is wrong there, but you know what I mean. Uh, is, um, you need to make sure you have a large enough market. And that’s what we’re trying to get out with the article, things like logistics, financial services, agriculture, uh, SMEs, um, I think there are other opportunities potentially in the auto and real estate, uh, education verticals. Um, not all of them are the right fit necessarily for technology. Um, but if you are going to go and dedicate the next five to 10 years to building a venture scale company of sort of 50 to 100 million in revenue, then make sure you, it’s sort of a fundamental premise, you need to make sure that that market is large enough to go and do so. Um, and, I’ll stop there, I’ve been speaking for too long, but uh, Nazerke, interested to hear if you have any kind of further, further thoughts on it as someone who left Kazakhstan and has sort of now come back to be back working in the region as well.
Nazerke Kalidolda: No, I, I agree with this, uh, advice. Um, yeah, I, I, uh, yeah, thank you, Askar, for, uh, inviting. And, um, as, uh, I don’t know if your audience maybe doesn’t know us much, but I’m, uh, I joined Sturgeon, I think, the latest in the team. And before I was a, uh, founder. And I was the person who was also went to the West working at Google as a software engineer, then decided to, um, quit my job and do the startups. Um, and, um, I think at the time when I was doing it, it was much harder than now in terms of support, not from like, not talking about family and friends, etc., the whole like culture in Central Asia, but like the startup ecosystem from the programs, the the whole like thing which is developed now by the regional players like Astana Hub or IT Park in Uzbekistan or like in other Central Asian countries. I think it, uh, helps a lot. And at that time, it was, I think, there were not a lot of founders because we didn’t have this kind of support. Um, but for those people also who wants to stay in the cities where they are now working, let’s say they went to work outside Google in London, there are some hubs like Eurasian Startup Hub or Silk Road Hub. Um, so I think it also opens a lot of doors for our Central Asian founders to start their businesses anywhere they can, they are now. If they want to come back to Central Asia or they want to stay where they are and launch it, I think we have so many, uh, more opportunities than we had before. And, um, yeah, uh, this, um, I think this also, um, is, you can see that we have more founders by, uh, the more programs we have, more founders we have. So, um, but another thing which, uh, Robin mentioned is like, oh, uh, your parents might want some stable job, etc. I think we’re, uh, not there yet where like culturally we support taking more risks, more like, okay, um, I think it also comes from, um, from the time when, okay, we’re, uh, you said like 30 plus years old founder, we were born and raised in the moment when the Soviet fell and we were in the time, or we were growing when, uh, everything was so uncertain. So, whenever we were growing up, we were like, okay, I need some certainty in my life, I need stability. So I think it totally makes sense for us to prioritize the jobs at stable, stable jobs at companies rather than doing startups. Um, and my advice would be just, uh, of course, first of all, try, and the second is, I agree with the, with Robin’s, um, advice about, uh, looking at your market, because sometimes, uh, it, especially if you’re having a really good job, probably you wouldn’t quit it because you will go for the idea which has like no potential to become something big. Um, and I think the third thing which I would say, um, is, uh, to fall in love with more the problem rather than your solution because that’s what I see as a, yeah, yeah, you can see it often when the founders they, um, they have a hard time to recognize that this is not working but there is still a problem, but maybe you can solve it in a different way. And I was exactly the same person so I know it’s really hard to admit it but yeah, that’s what I would, uh, focus more.
Askar Aituov: Thank you. So…
Robin Butler: Maybe, maybe one, one thing to add if, if I can, Askar, is, um, is to, to, to really be successful at whatever it is you’re, you’re trying to do, and I really mean anything, is you, you, you ideally want to have some kind of unfair advantage, some sort of competitive or comparative advantage that puts you in the sort of top 1% of whatever you’re trying to do. Now, let’s say if you go from, let’s say one end of the spectrum is you might be running a corner store in an area. Now you’re, you’re only competing against other people within, let’s say, walking distance of that particular point, i.e., the other kind of corner stores in that area. And that’s a pretty small sample size and to be in the top kind of 1% there, you’d say is relatively limited. Now, let’s say you want to run a chain across the whole, the whole of one city, that then put you up against significantly more competition, you need to be better to be in that top 1%. You want to run it across the whole country, again, it kind of going up. The same analogy with building a technology company like if you are building something just in Kazakhstan or just in Uzbekistan, now inherently if you’re from, from the country, you have a comparative, a competitive advantage of just a cultural understanding and nuances that someone from outside doesn’t have. Let’s say you’ve worked in that industry for 10-15 years, so you have a very deep network, you have a clear understanding of kind of what the problem set is, how to get to the right people you need to get to. You’re almost certainly going to, your ability to put yourself in the top 1% there, I think, is, is, is relatively easy if, if you’re kind of coming from that. Um, you obviously need to be very smart and and and able to execute well. Now, even if you say you want to expand from Kazakhstan to Uzbekistan or Uzbekistan to Kazakhstan, you’re, you’re then just broadening that pool of people you, you, you need to be the best of. Um, and we’ve seen people be kind of successful doing it in the region, but it’s still sort of difficult. And then if you want to say, well, actually my market is global, then that pool of people you, you need to be in the top 1% of has expanded a thousand times, 10,000, a million times from where it was if you were just operating in, in, in one country. And then kind of then bring it back and say, well, what, what areas should you be targeting? Now, maybe you are, maybe you are in the top 1% of whatever it is on a global scale. But actually, if you can find something, let’s say an industry, a sector, a problem, even if it’s maybe just in Kazakhstan, just in Kazakhstan and Uzbekistan, that’s a 5-10 billion dollar problem, you are the one who has 10 to 15 years experience and network in that industry that puts you in that top 1% and you really truly believe you can go and acquire even a kind of 5-10% market share. There, you’ve found a way of building a sort of venture scale outcome, almost certainly with fewer resources because you’re operating in lower cost markets which you know better and you have the kind of networks in and when it comes to hiring, these other things will be easier. And I also your probability of success is probably higher as well. So it’s, it’s kind of just understanding where you sit relative to that problem. And I think the way Nazerke put it is almost poetic that yeah, you do need to really fall in love with that problem, not just the solution. And how can you put yourself in a place where you have that competitive advantage over whoever else is playing, playing the same game as you, and recognizing where you stand in that pecking order relative to, uh, to everyone else.
Askar Aituov: Thank you. Uh, just off-topic, Nazerke, by the way, you are the role model for girls. At least, I know from Instagram, you, you were a popular, almost like a tech celebrity before joining Sturgeon. So, you’re too shy. And, uh, to, to all people viewing, you can type questions in chat and we will put it like, like this. And I see like there’s around 40 people watching, nobody’s asking questions. And, uh, we will just finish if you don’t ask a question after 20 minutes because I booked Robin and Nazerke for like 40 minutes. So, please, uh, feel free to type and folks will see it and they can answer if they wish to.
And, uh, my question, uh, I didn’t send this question and, uh, I, I sent you a couple of questions, but I just, this one evolved because when Robin was, uh, saying about 1% and… Is that noise from me? No? You’re fine? I hear a siren. So, group-wise source because I had too much thought, thoughts. Uh, so top 1% ceiling of the ceiling. And I, I kind of tried to understand Sturgeon Capital’s formula which Robin had, uh, a lot of thoughts when he was, uh, saying. As I, I was looking, uh, in a shallow manner, just slightly on your portfolio. And I saw kind of tracking companies, transportation companies who work with trucks from Uzbekistan. I know a huge diaspora of truck owners, like, they buy trucks and they drive it in US from Uzbeks. And some other startups. And, uh, and your formula seems to be, you take a guy or a team who has, as you mentioned, like 18, 15 years industry experience and you invest to them. Uh, those people, those teams who has some aspiration to go on not just Uzbekistan or Kazakhstan or Pakistan, uh, to a broader market. Uh, we have overall in our part of hemisphere, the today’s old formula: take R&D in Almaty or Tashkent or whatever in the Central Asia and try to sell to the West. Uh, now it’s kind of obviously with, uh, this geopolitics is changing. Uh, so how would you, uh, assess the blockers, blockers for startup founders to become, not to become top 1% uh, in context of China? Because in Almaty, as, uh, people around I go to coffee shops, they, they say, “How, how on earth could we, the Kazakhs, we, we kind of missed the China. Nobody speaks Chinese in Kazakhstan, in Almaty. People were always like buying cheap products, or, well, as it is, we, we saw China is just cheap, cheap stuff. That’s it. And now people, Kazakhs with money, they go to Shanghai and they see like Westerners, white people all over the world, Russians, they all there, investing. Russians speak fluent Chinese. And other the Southeast Asians, they all like… And we are kind of, this is a blocker. I can, I personally cannot be 1% doing some product for China. I tried, I pitched and the Chinese folks they said, you are like, you are very underdeveloped country, you cannot sell. But you can sell on our behalf like to your country. So that’s the attitude in my opinion, in my case. Uh, yeah. So, uh, so we have Shanghai, we have Saudi. Although some people go Saudi and they return, they say disappointed. We have London. Is, in my small bubble, that’s where people try to go. So, uh, from your portfolio or maybe research, do we have chances to actually selling something, some projects to China, or it’s too early to see?
Robin Butler: I think it’s, it’s going to be very difficult to, to sort of build and, and sell a product into the Chinese market because, I mean, most of the sort of information I have is anecdotal and and from reading, but that the market there is a sort of, has a, has a such a ruthless level of copying and competition that whatever you say design in, in Kazakhstan, and it may be a very good product, within five minutes will have been copied and replicated by let’s say 100, um, 100 local manufacturers, suppliers, software houses, whatever it may be. And I think you see it with the, with EVs at the moment, the number of, it’s over 100 or however many EV manufacturers in China. We know the kind of BYDs that are succeeding and scaling successfully outside, but competition domestically, city by city is incredibly intense. I think my point being that if you’re going into that market as an outsider, almost certainly with less capital, less kind of depth of manufacturing capacity and and sort of, uh, talent, and again I’d speak about sort of manufacturing, but again it could be kind of technical and software talent as well, it’s going to be incredibly difficult for you to compete there. Um, now potentially there is something on an IP side, maybe it’s through a partnership. I think the opportunity more and more as I look across kind of portfolio is, is actually that sort of enablement for sort of cross-border trade in that I think what you’ve seen is a lot of these Chinese businesses understand that if they want to do business in another country, they need a strong local partner that can enable, let’s say with cross-border movement, local distribution, uh, financing, and the sort of local tech, technology side. And yes, maybe that’s not the sort of, uh, strong independent company you wanted to build on your own, but that can be a very large opportunity in and of itself. And I think similarly, as I kind of, you look at, as you mentioned, a lot of people looking at Saudi Arabia at the moment. The cynic in me would say most people are doing that because they think it’s an easier place to raise money and maybe it is, but I can tell you there’s a lot of other people who’ve had the same idea and who, who speak Arabic as a first language and, uh, have kind of networks and connections there and the market itself, let’s say, has opportunities but it’s still a challenging one to operate. I think it’s a sort of, a general comment is that it, it always, it’s always more difficult and it costs more and it takes longer to expand into any market, let alone sort of one that’s culturally very different. I can give an example, we have a Ukrainian portfolio company in the first fund, uh, an HR tech platform called People Force. Now, Ukraine and Poland, they’re right next door to each other. Quite a lot of shared history and all this sort of thing. I mean, after the Russian invasion, uh, People Force has expanded in Poland. It’s also expanded in Argentina. Now, you would say Ukraine and Argentina don’t seem to have a huge amount in common, but when you actually drill down into say, what is it you’re selling, who is it that’s buying it, why are they buying it, what are their alternative options? It’s actually Ukraine and Argentina are much, much more similar than Ukraine and Poland. So expansion in Argentina and Latin America has been more successful than, uh, expansion in Poland so far, and Poland’s picking up but it’s been a much slower kind of and a much harder process to, to work through. And there it kind of comes into saying, okay, really, do you have a clear understanding of who your ideal customer profile is and also your ideal market profile? What is it about particular markets that makes them the right place for you to go and to sell your product because of whatever the problem it is you’re solving and why it’s the right one there? And it’s going to be very difficult to do in China, I think Saudi in many cases doesn’t necessarily have the same problems that Uzbekistan or Kazakhstan does. Again, different industries, it’ll be different. And again, London will be very different. So it’s, it’s really understanding that both the market, what your ideal market profile is and what your ideal customer profile is for anyone that’s actually looking to expand into other countries with a keen awareness that it’s going to be, it’s going to be more difficult than you think it is.
Askar Aituov: Thank you. So…
Nazerke Kalidolda: I agree with this advice. Um, yeah, I, I, uh, yeah, thank you Askar for, uh, inviting. And, um, as, I don’t know if your audience maybe doesn’t know us much, but I’m, uh, I joined Sturgeon, I think, the latest in the team. And before I was a, uh, founder. And I was the person who was also went to the West working at Google as a software engineer, then decided to quit my job and do the startups. Um, and, um, I think at the time when I was doing it, it was much harder than now in terms of support, not from like, not talking about family and friends, etc., the whole like culture in Central Asia, but like the startup ecosystem from the programs, the the whole like thing which is developed now by the regional players like Astana Hub or IT Park in Uzbekistan or like in other Central Asian countries. I think it, uh, helps a lot. And at that time, it was, I think, there were not a lot of founders because we didn’t have this kind of support. Um, but for those people also who wants to stay in the cities where they are now working, let’s say they went to work outside Google in London, there are some hubs like Eurasian Startup Hub or Silk Road Hub. Um, so I think it also opens a lot of doors for our Central Asian founders to start their businesses anywhere they can, they are now. If they want to come back to Central Asia or they want to stay where they are and launch it, I think we have so many, uh, more opportunities than we had before. And, um, yeah, uh, this, um, I think this also, um, is, you can see that we have more founders by, uh, the more programs we have, more founders we have. So, um, but another thing which, uh, Robin mentioned is like, oh, uh, your parents might want some stable job, etc. I think we’re, uh, not there yet where like culturally we support taking more risks, more like, okay, um, I think it also comes from, um, from the time when, okay, we were born and raised in the moment when the Soviet fell and we were in the time, or we were growing when, uh, everything was so uncertain. So, whenever we were growing up, we were like, okay, I need some certainty in my life, I need stability. So I think it totally makes sense for us to prioritize the jobs at stable, stable jobs at companies rather than doing startups. Um, and my advice would be just, uh, of course, first of all, try, and the second is, I agree with Robin’s, uh, with Robin’s, um, advice about, uh, looking at your market because sometimes, uh, it, especially if you’re having a really good job, probably you wouldn’t quit it because you want to have a an idea which has like no potential to become something big. Um, and I think the third thing which I would say, um, is, uh, to fall in love with more the problem rather than your solution because that’s what I see as a, yeah, yeah, you can see it often when the founders they, um, they have a hard time to recognize that this is not working but there is still a problem, but maybe you can solve it in a different way. And I was exactly the same person so I know it’s really hard to admit it but yeah, that’s what I would focus on more.
Askar Aituov: Thank you. I see a question. Oh, one more question. Thank you guys so much. Thank you so much for your time. Uh, it’s there might be some more questions people will throw to the comments. I will send them over to you. Uh, overall your perspective is kind of not, not the one typically written in media. And I, I learned a lot from you guys and I will do the notes, put it to the recording. Thank you so much. We should repeat this someday, maybe after a year. I wish you good luck in the region. You are doing uh, like in a way, a pioneer’s job and you bring a lot of value to the community. At least by your presence uh, here. And I wish you a good luck and more press coverage. You deserve it. And thank you so much.
Robin Butler & Nazerke Kalidolda: Thank you. It was a pleasure to be here as well. Thank you so much for having us on. Great to speak. Cheers. Bye.
Askar Aituov: Thank you all for viewing this and put a like. Bye bye.
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