Some VCs Still Believe In The Future: Meet Big Sky Capital

This is the next article in an occasional series about the investors who are actively supporting the freelance revolution despite short term economic uncertainties. It’s well-known that venture capital investments are way down from 2021 highs. As Crunchbase noted in a recent article, venture investments in early stage startups are way down. Not only is the total off, but individual investments also show an interest in lowering risk.

The facts are clear. Again, from Crunchbase: “Early-stage funding totaled $25.6 billion in Q1, down 54% year over year. The year-over-year pullback in early-stage quarterly funding in 2022 started in the third quarter and has continued to decline.”

But there still some committed early-stage investors out there who are interested in supporting the next generation of SaaS type companies. Big Sky Capital is one of them. Big Sky Capital is a venture capital firm that’s based in Astana, Kazakhstan, and operating both in the US and Kazakhstan. The firm invests in both early-stage and later-stage companies, but its current fund includes a strong interest in early-stage SaaS type startups.

Typical investments at Big Sky run from $500k - 1.5m. But in a recent conversation with one of the founders, Jahn Karsybaev, a Kazak native and Harvard Business School graduate, pointed out that Big Sky is sometimes willing to provide a smaller pre-seed investment as low as 50K to give a young entrepreneur initial funding to develop their thesis.

Big Sky is the product of a decade’s long friendship between Kazakhstan natives and entrepreneurs Adil Nurgozhin and Jahn Karsybaev. The two have been friends and partners for decades, though separately investing as well.

Nurgozhin remained in Kazakhstan and built a solid reputation for entrepreneurship through early investing. Karsybaev moved to the US for education and decided to remain. After graduating from the Harvard Business School, Karsybaev continued on his entrepreneurial journey and co-founded and launched Mybasepay.com, an EOR and AOR back-office. He followed this by reconnecting with childhood friend Nurgozhin and together they raised their first fund of $20m.

For readers that are unfamiliar with Kazakhstan, a brief digression. Unlike other former Soviet Union satellites, Kazakhstan has thrived in independence and has become a significant regional economic power. For example, apart from Covid-19 years, Kazakhstan has enjoyed impressive growth as shown below. The growth of Kazakhstan’s tech industry and a strong technical and entrepreneurial community have been major policy priorities for the government leaders. In turn, it has proven a significant contributor to Kazakhstan economic expansion, and led to a number of attractive portfolio investments for Big Sky in the SaaS space and other investment channels.

Moreover, in its 2050 Strategy, Kazakhstan has focused on becoming a leading nation in the knowledge economy, and emphasizing innovation and multi-year investment in transportation, medical equipment, and the ramping up of new industries in areas like mobile, multi-media, nano- and space technologies, robotics, genetic engineering and alternative energy.

This forward-thinking national agenda aligns perfectly with the investment thesis of Big Sky Capital. And, accordingly, Nurgozhin and Karsybaev have focused their investment priorities on two challenges:

• First, taking on big problems where the value of being an early investor could be significant.
• And second, exploiting chronic friction points in important service processes, bringing in new tech to disrupt and replace old and inefficient processes with digital solutions.

For example:

• Cerebra is solving a critical medical problem: earlier and more accurate identification of stroke potential. The startup has developed AI based software that enables early stroke detection for faster and more pinpointed treatment. It’s currently being tested in a number of stroke centers across Kazakhstan, and will soon come to the State.
• CrediLinq, developed in Singapore, disrupts the bureaucratic process that starves attractive young businesses of early investment. It provides credit-as-a-service to help young businesses scale, enabling a more inclusive, accessible, digital-first and frictionless experience for companies in accessing growth capital.
• Pippin Title, a US based company, is transforming title insurance through increased access to data bases. It is using digital technology and a nationwide network of searchers to re-invent title search, and producing a faster, more cost efficient, and more accurate real estate closing process.

But, in a universe of startups to invest in and support, and so many capable and accomplished entrepreneurs seeking funding, what drives the decision-making of Big Sky Capital’s partners? Nurgozhin and Karsybaev respond in almost identical ways:

1. “Giving the next kid a chance.” Big Sky sees the creation of entrepreneurial opportunity for the next generation of business builders as their first and most important personal goal. Both principals had a challenging early life, growing up in relative poverty in post-Soviet Kazakhstan, and feel a deep obligation to supporting the next generation. As Nurgozhin tells the story, “An older kid changed my life by helping me learn how to code, and then helping me get into the right school. I want to ‘pay it forward’ for the next future entrepreneur.”

2. Supporting people with real vision and determination. Big Sky is unafraid of very early-stage investments. They are looking for budding entrepreneurs and business builders with a very clear vision of what they are creating, and the discipline and determination to build it. As Karsybaev put it, “We want to partner with people who are driven to build their vision.”

3. “Been there, done that.” Although open to very early stage investments, Big Sky’s principals prefer a level of experience and maturity in their portfolio company founders. For example, several of current portfolio companies were created by founders with experience in large international corporations managing products, processes, and teams. This has been important for fund investors like Stephanie Quinones, a partner in top law firm Gunster.

Big Sky Capital is a new firm, and its first fund is unlikely to be its last. The entrepreneurs it is supporting are a good reflection of the fund’s principals: a mix of Harvard and Experience U. What’s likely to make Big Sky Capital attractive to startup founders is that very mix of insight and hustle. Add to that a shared philosophy that Nurgozhin calls his “Big Sky Obligation” to the companies they fund and support: “We’re partnering with brilliant people. Our job is to inspire these brilliant people, challenge them, befriend and support them, and also be completely honest with them. It’s the best job in the world.”

Viva la revolution!