What began as an early-stage venture investing company founded on faith has grown into a highly successful firm working across a number of different asset classes. Get the full story of Sovereign’s Capital in our latest Fundraiser Feature blog.
Q: How did you get your start in this industry?
John Coleman: When I graduated from college, I thought I was going to be a journalist or a think-tank person. But instead, I went to Washington, D.C., and decided to get into business. The first place that gave me a job was a quantitative energy hedge fund. I spent about a year as an energy trader and enjoyed that but eventually I became convinced that I wanted to spend time in the investment world. I loved the global nature of it–the way that the financial system touches almost everything. Private markets were always attractive to me because you get to be so hands-on with either the startups or the private equity-owned companies that you're working with. I worked at a large investment manager for the last decade, and then I came to Sovereign's Capital about a year ago.
Kenny Ewell: I started my career at JP Morgan in their healthcare investment bank in New York City. I did that for a couple of years and then I did a fellowship program out in the Philippines, called Princeton in Asia. I wanted to spend a year in the nonprofit space doing some kind of service. I thought I'd end up being a pastor or a missionary, but I ended up getting a job with a private equity firm in Indonesia and Singapore and was there for about two and a half years. Then I went to business school back in the U.S. and later got a job with a global med-tech company. In 2019, one of the co-founders of Sovereign’s Capital–whom I had met back in Indonesia and stayed in touch with over the years–reached out to see if I wanted to join his team.
Q: Tell us more about Sovereign’s Capital.
John: Sovereign's was founded about a decade ago by Henry Kaestner and Luke Roush–two entrepreneurs of strong Christian faith who recognized the need for more support for faith-driven businesses in the venture capital community. It began as an early-stage venture investing company, and then in 2018, they introduced the idea of lower-middle market private equity. They would buy $3 million to $25 million businesses, with minority or majority stakes. They found they were really successful because there were a lot of people in this market who sincerely wanted to partner with a private equity firm or a capital source that they felt shared their values.
Over the last 18 months or so, Henry and Luke began to think about how they could expand on this core thesis of being a faith- and values-driven firm into a broader array of different activities. Kenny and I came on board to help enable that. We've subsequently launched several new capabilities with the hope that we can be a values-aligned partner across a number of asset classes. We have a fund of funds now, supporting other managers like us. We have a public equities fund, investing in publicly traded companies. And we have private equity and direct venture. We're incubating an international impact investing capability, where we can invest overseas in places like Africa or Eastern Europe, in a way that prioritizes impact over financial return. All of our other strategies are high-return strategies. It's been a fascinating journey.
Q: What made 2021 such a successful capital raising year for Sovereign’s Capital?
John: For one thing, I do think we have a novel concept. We introduced something that was different than what existed in the industry before. I think particularly now, firms really have to know who they are and what they do differently in order to be successful in a very crowded marketplace. I think the differentiation of our thesis around faith and values alignment opens doors for us to have conversations that were meaningfully different than if we had launched what I'll call a prototypical fund of funds, for example.
Secondly, getting a great team in place–folks like Kenny, like Luke and Henry, who have great relationships in the industry. Coming into this with people who have expertise in what they're doing and whom our limited partners can trust has been a big part of our success. It's critically important to us to be of great service to our clients. We care about their success and we're trying to engineer an experience that's good for them–not just good on the investment side, but all around. We want them to know that there's someone who can take their call and that our technology systems will be great to work with, which is why we partnered with Juniper Square. We do as much as we can to engender trust with our LPs because they’re giving us their capital to steward for a very long time.
Q: Other than trust, what do you think makes for a good investor experience?
John: Everything–from when we first speak to a client, to them accessing a data room, to the subscription process, to reporting, to everything else. You want the experience to be simple, in that it's intuitive, but at the same time, you want to have the sophistication in your fund administration to deal with a variety of clients and to be able to meet whatever individualized needs they have. You want to be reliable, in that, you want to be able to promise something and then fulfill that promise immediately and at the standard of quality that you said you would.
These days you also want the experience to be as technologically enabled as possible. Individuals and institutions now prefer you have a unified and simple interface for what you're doing. That’s why it was important for us to find a good partner for this. We didn't want to build technology, we're certainly not capable of doing that. But we needed an interface that allows us to focus on tailoring the experience.
Kenny: For me, it comes down to engagement with the LPs and being quick to respond to them. I think that goes a long way.
Q: What are you looking to raise funds for this year?
John: We have four strategies right now. Three of those are traditional private market products: fund of funds, venture fund, and private equity fund. We also invest in public equities. On the private funds, we typically have about a year to fundraise. The public equities strategy is open-ended.
Q: Do you anticipate any challenges in raising capital this year?
John: It’s a choppier market right now, and I think in volatile markets people are more deliberate about the decisions they make. A lot of funds raised a lot of money last year and coming into this year, so it's quite a crowded marketplace. If you're an institution that has a portfolio, you know the allocation you're shooting for. You're now over your target for venture and private equity because the performance has been so good. You have to adjust that by investing a little less–not because you think the asset class is bad, but just to get your portfolio allocation. We’re optimistic about the markets in general, but we're also prepared that this could be a somewhat tighter fundraising market than it was last year.
Kenny: I think it may be especially more challenging for first-time funds. Institutions and individuals will be putting capital to work in the private markets this year, but I think it'll probably be mostly with more experienced firms with strong track records.
Q: How does Juniper Square help with your day-to-day job duties?
John: I think of it as three core things. One is more time with our team so that we can hire, retain, develop, and support the best talent in the industry. This is hugely important for investment firms. Two is more time with our investments–those firms and companies that we're partnering with. We can do better diligence on behalf of our clients there and invest ourselves more deeply in the strategy. Then the third is more time to build relationships with our LPs. The more time we have to do that, to give people the confidence that we’re real professionals and are making sure everything else is in place, the better.
Kenny: For me, it all goes back to our mission. Our vision at Sovereign's Capital is to help transform the marketplace with a different approach to investing. It's important to us that we be able to partner with people who need capital in a variety of ways, but also be able to offer clients a variety of different products for their portfolio that can reflect their values. Because we have that extra time, we can be more effective investors and communicators of the mission and the vision for what we're doing.
Our business is based on trust and so is our relationship with Juniper Square. I have a very high amount of confidence in the Juniper Square team because of the many small but meaningful interactions I've had with them. For example, somebody just emailed me a couple of days ago on the fund admin team and said, "Hey, I noticed these charges in your bank account. Can you confirm that these are all interest charges for your line of credit? Is there anything here that you don't recognize?" Just knowing that they're looking at that gives me a lot of confidence that they're paying close attention to all the other stuff as well.
Sovereign's Capital was listed as one of top fundraisers in 2021 using Juniper Square’s Digital Subscription feature. Check out more winners here.