Sovereign’s Capital

sovereign’s capital

Firm Headquarters: San Jose, CA; Offices in Durham, NC; Chattanooga, TN; Jakarta, Indonesia

Date Founded: 2012

www.sovereignscapital.com

This Page was Updated January 2020

Investment Approach

INVESTMENT THESIS

We believe that God uses his people to reflect the Kingdom on earth as it is in heaven. Entrepreneurship represents an important role that we can steward to this end, because business has an outsized influence on shaping culture, contributing to human flourishing, and cultivating trusted relationships that lead to personal transformation. While we don’t believe that all investing relationships can or should be faith-aligned, it’s truly redemptive when entrepreneurs and investors are linked through shared identities as Christ-followers seeking the Kingdom together. We believe that biblical business practices and financial outcomes can be synergistic rather than competitive in many business models, particularly over the long term. We exist to enable such spiritual and financial stewardship for entrepreneurs and investors, as we encourage the spiritual integration ideals of business excellence, leaders transformed, theology of work, ministry in deed, and ministry in word. We invest in early stage technologies through our venture funds (Series Seed and Series A), and we also invest in lower middle market businesses ($2M to $10M in EBITDA).

INVESTMENT OVERVIEW

We expect to raise funds every three to four. We gather commitments during fundraising, then call and deploy funds over a four-year investment period. We manage investments over the subsequent four to six years, and exit investments as opportunities arise. We invest in profitable, lower middle market companies with $2M to $10M in EBITDA. We also invest in early stage software and technology companies with strong economic moats at the late Seed and early Series A stages.

Investments to Date: 50-100

Focused Geographic Regions of Investment: 

  • Is all of your activity in the US? ~80% of past investments, ~95% of go-forward investments (will be US focused).

  • What countries outside of the US are you active in? Indonesia and Singapore

Focused Industries of Investment:

  • Data, Software and Technology

  • Healthcare

  • Consumer Services

  • Other: Business Services

Investment Example:

Lower Middle Market: In 2020, Sovereign’s invested in a lower middle market restoration services company in the Southeast U.S. The company had seen strong growth for several years, and the owners sought a values-aligned partner to help pursue regional acquisitions. Management believes in full spiritual integration across the business, exemplified in the company’s mission statement: “To make a positive impact in our community and our customers’ lives while also glorifying God by being faithful stewards of all He has entrusted to us.” The team lives out its mission through the restorative work they provide for customers in a time of great need, often when homes or places of work have been greatly damaged. They believe that each job is an opportunity to shine the light of Christ in their community, and they estimate that their work impacts tens of thousands of families and employees each year. They also run a non-profit that funds the restoration of homes for neighbors hit by tragedy who don’t have insurance for their homes. Like many lower middle market companies, we expect this investment to deliver dividends starting two to three years after investment, and expect a likely exit in ten to fourteen years, for a target IRR of ~16% to 18%.

Early Stage Venture: We invested in Bridestory in several transactions from 2014 to 2015. The company provides a platform for wedding planning in Indonesia, with a mission of making wedding planning as easy as possible so that couples-to-be can focus on their marriages. It also launched ParentStory, a platform that helps parents identify quality experiences to share with their young children to strengthen their families. The company managed the “A Blessing to Share” program, which collected and delivered surplus food from weddings to the Foodbank of Indonesia for disadvantaged families and the elderly. We actively partnered with the CEO as he grew Bridestory since investment. It was purchased by regional unicorn Tokopedia in 2019 for a ~2.6x return on our investment.

Company Differentiator:

Sovereign’s is run by a team of former operators with industry and regional expertise. We see our work as ministry to CEOs as we support and serve in business and spiritual capacities. Sovereign’s has a deep bench of advisors to support portfolio companies across various industries and focuses.

PREVIOUS OR ACTIVE PORTFOLIO COMPANIES INCLUDE:

Capital Raise Strategy

Total Assets Under Management: $105 million across 3 funds and 2 sidecar vehicles

% of Capital from Top 3 Investors: Less than 25%

Financial Reporting Frequency to Investors: Quarterly and Annual

Average Investment: $750,000

Minimum Amount: $500,000

Setup to accept charitable capital through the National Christian Foundation or other listing platforms? Yes—NCF ($25M minimum) and Impact Foundation ($100K minimum)

Luke Roush | Managing Principal

Mr. Roush has twenty-one years of experience in venture investing, global commercialization, and business development at venture-backed and Fortune 500 companies.  Over the last eight years, Luke has managed Funds I and II, as well as the special purpose vehicles under the Sovereign’s portfolio. Before co-founding Sovereign’s Capital he ran commercial operations at TransEnterix (NYSE:TRXC), a venture capital-backed medical device company.  He was responsible for creating the strategy and managing the execution of TransEnterix’s commercialization efforts.  Prior to joining TransEnterix, he served as Chief Operating Officer at Liquidia Technologies (NASDAQ:LQDA), a privately held nanotechnology company focused on targeted drug delivery and alternative energy applications.  Mr. Roush previously served as global group marketing manager for the neurovascular stroke business at Boston Scientific (NYSE:BSX), and held sales and marketing roles of increasing responsibility at Newell Rubbermaid (NYSE:NWL), a leading consumer products company.  

Mr. Roush graduated summa cum laude with Highest Distinction from Duke University, and was a scholarship member of the football team earning three varsity letters during his tenure. Mr. Roush later earned his MBA from Duke University’s Fuqua School of Business. He served as Vice-Chair of the board for Ten Thousand Villages over a nine-year period and was an active mentor with Endeavor Global and the Global Entrepreneurship Program for Indonesia. He is also a member of the Board of Advisors for the Christian Economic Forum.  Mr. Roush is a member of Echo.Church and currently resides in San Jose, California with his wife, Brooke, and their three children.

Henry Kaestner | Managing Principal

Mr. Kaestner brings an extensive background in entrepreneurial and operational experience to the Fund.  He has been an entrepreneur since his undergraduate days at the University of Delaware, where he earned a BA in International Relations and concurrently ran a series of collegiate apparel firms employing more than 200 employees and contractors with sales at more than 40 universities.  Upon graduation, Mr. Kaestner took senior staff positions at Arthur Andersen and then Merrill Lynch in New York City.  In 1996, he entered the institutional commodity trading industry, which was the genesis for his first entrepreneurial success as an adult. That endeavor, Chapel Hill Brokers (a predecessor to ICAP Energy), was an institutional energy derivatives broker that became the top ranked over-the-counter intermediary energy broker in the country.

Mr. Kaestner then moved into the telecom arena co-founding Bandwidth.com (NSDQ:BAND) which has grown to over $250 million in annual revenue and is a clear industry leader implementing Voice Over Internet Protocol (VOIP) with more than 6,000 business customers in the U.S., including Google, Vonage and Skype.  From the beginning, Mr. Kaestner and his business partner David Morken founded Bandwidth.com with the four pillars of Faith, Family, Work, and Fitness.  Mr. Kaestner and Mr. Morken’s intentionality about their faith may have been a challenge for investors, as Bandwidth.com went 0 for 40 in venture raises. During Mr. Kaestner’s tenure as CEO, Bandwidth.com rose to become the fourth fastest growing company in the country from 2003 through 2007, and is now the fifth largest telecom company in the country for originating voice traffic. The company spun-out Republic Wireless in 2016, and Bandwidth proceeded to go public on the NASDAQ in November 2017.  Their focus on core values proved to be a key part of their success and the financial returns they provided to early investors.  Mr. Kaestner moved from CEO to Executive Chairman in 2008 to focus on ministry and philanthropic activities, and he stepped down as Chairman in 2016. He previously served on the boards of HOPE International (Christ-centered economic development), Concentric Development (Christian strategy consultancy), and Praxis  Labs (a Christian mentorship and accelerator program). Mr. Kaestner currently sits on the Board of Directors of Valley Christian School in San Jose, and previously served on the Board of Visitors for the University of North Carolina at Chapel Hill, and on the Board of Visitors of the North Carolina Central University School of Business.  He is the co-founder of DurhamCares, and has made angel investments in Christian-led companies.  He lives in Los Gatos, California, with his wife Kimberley and their three sons.

Jake Thomsen | Partner

Mr. Thomsen has fifteen years of experience across finance, consulting, and tech product development. He began his career at Bank of Hawaii (NYSE:BOH), ranked then by Forbes as the top bank in the U.S. He became the bank’s youngest ever AVP, overseeing a region with 25 team members providing every aspect of commercial banking. Mr. Thomsen went on to serve as a strategy and finance consultant to tech startups and renewable energy companies in the U.S. and Sub-Saharan Africa. In this role he helped founders and executives develop product and go-to-market strategies, build analytics and financial planning capabilities, and structure acquisitions. In 2013 Mr. Thomsen joined the NextGen Analytics group of consulting firm Booz Allen Hamilton (NYSE:BAH). He structured multi-billion dollar energy projects, designed work in Jakarta to anchor a new Southeast Asia office, and conceived, oversaw development of, and sold an enterprise cybersecurity analytics SaaS product. Mr. Thomsen helped stand up Booz’s Internet of Things product group, which developed connected hardware and software solutions across healthcare, oil and gas, and government intelligence. 

Mr. Thomsen graduated magna cum laude from Pomona College. He earned his MBA in Corporate Finance from Duke University’s Fuqua School of Business, and a Masters in Public Policy in International Development from Duke’s Sanford School of Public Policy. He currently serves on the board of Little Lights Urban Ministries and Trinity Fellows Academy, and on the Ideas Council of American Enterprise Institute’s Values &Capitalism. Mr. Thomsen is a member of Church of the Resurrection in Washington, D.C., where he lives with wife Lauren and twin children Blaise and Vivian.

Michael Tremain | Partner

Mr. Tremain concentrates on investment sourcing and portfolio management with a focus on lower middle market opportunities. His career includes stints with TrinRock Capital, Andersen Consulting, the Walt Disney Company, Hard Rock Cafe International and he has led a number of privately held companies in the technology, wholesale distribution, oil & gas, healthcare, residential construction and commercial services sectors. Michael earned his BS in economics from the University of North Carolina at Chapel Hill and his MS in International Political Economy from the London School of Economics. He and his wife, Kristin, and four children live in Lookout Mountain, Georgia and attend Rock Creek Fellowship. Michael is a member of C-12 Group and the CEO Forum and also serves on the board of directors of the New Canaan Society.​

Kevin Sutantyo | Partner

Mr. Sutantyo is a natural problem solver, well balanced in analytical skills as well as relationship and consensus building. Raised in Jakarta till his late teen years, he then lived in the US for 15 years, developing an understanding of life in both countries. Mr. Sutantyo received a Bachelors of Science in Mechanical Engineering from UC San Diego in 2002 and immediately worked in a related field with the Northrop Grumman Corporation. He then ran a small biotech manufacturing and distribution enterprise in Phoenix, AZ and Milwaukee, WI for 5 years till he returned to Indonesia in 2010. Mr. Sutantyo has been active in Angel investments in both Indonesia and Silicon Valley since 2009, giving him experience in early stage companies and the different nuances of investing in the different regions. He is engaged in multiple mentoring programs, school development projects and other non-profit related activities.

Mr. Sutantyo is actively involved in various ministries in International English Service church in Jakarta, most recently finishing a term as a deacon. He and his wife, Nathalia, live in Jakarta with their son, Caleb, and daughter, Thalia.

Spiritual Integration and Impact:

Faith Driven Investing can span a wide range from high yield to concessionary returns that have a higher level of spiritual integration. Having clear expectations of this philosophy is key for the movement. Each investment is unique and you might want to select multiples but if you had to choose one quadrant that best fits your groups spiritual integration and financial performance targets … What would it be?

We believe that supporting faith-motivated entrepreneurs in business excellence and faithfulness equips them to shape culture, contribute to human flourishing, and share the hope that they have with gentleness and respect. We conduct annual spiritual integration reviews and regular prayer sessions with partner companies, as well as provide Faith-Driven Entrepreneur material and other spiritual resources. Internally, we apply a Spiritual Integration Matrix to ourselves, have internal prayer time, enjoy a corporate prayer and chaplain, and use a Slack devotional channel, among other activities.

Describe the Spiritual Integration Activities of the Fund:

  • We have a set for portfolio companies (spiritual integration reviews, prayer, spiritual resources, faith-driven entrepreneur material, etc.) and internally (apply the Spiritual Integration matrix to ourselves, internal prayer time and corporate liturgical prayer, Slack devotional channel, etc.

Is Impact and Spiritual Integration Tracked?

  • We indeed track spiritual inputs, as we seek to be an encouragement for entrepreneurs to devote themselves to habits and practices that shape us. These include, for instance, corporate worship, time in prayer and scripture, and belonging to an intimate group of peers. We find that it is difficult or even misleading to measure spiritual outputs, so we focus on spiritual inputs, and apply the same ones across all portfolio companies. We also track outputs related to human flourishing, which tend to be different for each company. One company’s redemptive intent may be to avoid learning disabilities and costly visual surgeries for kids by screening pre-verbal children; for them our output variable is the number of children whose visual screens caught a disorder and mitigated future suffering. Another company may exist solely to create jobs in a developing country; for them, our output variable is the number of jobs created. Since reflecting the way the world should be and one day will be (i.e., “restoration”) is so multifaceted, we find that measuring outputs on a case-by-case basis offers the right balance of accountability and appropriate customization.

Are you partnered with any other organizations?

A lot of Investing Conversations look at Social Impact related to the United Nations Sustainable Development Goals. Is there one of these that most resonates with your organization?

  • We have investments that address various SDGs, including the following: no poverty, quality education, clean energy, decent work and economic growth, industry/ innovation/infrastructure, climate action, responsible production, and others. These overlaps are unique manifestations of CEOs’ spiritual missions, rather than areas that we seek out specifically.

If you’re wildly successful how will the world be different?

>
“Followers of Christ pursuing redemption in the world through their companies, products, and services. Companies across the country providing meaningful work and caring for / ministering to their stakeholders. Entrepreneurs stewarding the top-down influence of the technology and startup space for human flourishing and God-honoring culture.”

WHY The FAITH DRIVEN INVESTOR?

  • Why are you compelled to be certified and a part of the Faith Driven Investor Group? Part of the community, benefit from ideas of others, etc.

  • Does the leadership align with the Unifying Principles on Faith Driven Investor and agree to the Code of Conduct? Yes

  • Who nominated you to be listed on the FDI site? Justin Forman, Faith Driven Investor

AFFILIATIONS- Are you a part of any third party groups, that you would like to list here?

  • N/A

Learn More