CapitalG’s Laela Sturdy on Investing, Partnerships, and the Power of AI

In an exclusive interview, Laela Sturdy, head of Alphabet’s growth stage venture arm CapitalG, discusses her management style, the firm’s investment strategy, and the role of AI in their portfolio companies.

Laela Sturdy, the head of CapitalG, Alphabet’s growth stage venture arm, has been making waves in the investment world since taking over the helm last year. With a background in marketing and a deep understanding of Google’s inner workings, Sturdy has brought a fresh perspective to the firm. In an exclusive interview, she shares insights into her management style, the firm’s investment strategy, and the transformative power of AI in their portfolio companies.

Building a Strong Team and Leveraging Google’s Expertise

Sturdy’s management style focuses on building a strong team and leveraging the expertise within Google and Alphabet to benefit their portfolio companies. With around 50 people on her team, Sturdy emphasizes the importance of collaboration and knowledge sharing. CapitalG has access to over 3,500 senior advisors within Alphabet who can provide valuable insights and support to their portfolio companies. Sturdy highlights the example of partnering with Google’s training team to provide AI and ML training to portfolio companies, enabling them to upskill their engineering talent.

Maintaining Data Privacy and Independence

Addressing concerns about data privacy and the flow of information between Alphabet and portfolio companies, Sturdy reassures that everything is opt-in from the portfolio companies’ standpoint. CapitalG operates as an intermediary, facilitating win-win partnerships without sharing any sensitive data. Sturdy emphasizes that they exist to support and empower their portfolio companies, not to exploit their data.

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Investment Decision-Making and Portfolio Size

CapitalG’s investment decisions are made by an investment committee, which includes Sturdy and three other general partners. The firm typically invests between $50 million and $200 million in each company and focuses on sectors where they can go deep and make a significant impact. Sturdy mentions that they invest in approximately seven to eight new companies per year, with additional follow-on rounds for existing portfolio companies.

Ownership Percentage and Long-Term Orientation

While CapitalG is flexible on ownership percentage, Sturdy emphasizes that their focus is on money-on-money returns. They aim to invest a significant amount of capital in companies with strong market potential and differentiated businesses. Sturdy cites their investment in Stripe as an example, highlighting the company’s incredible performance and the long-term compounding potential of their investments.

AI Strategy and Technical Differentiation

AI is a key focus for CapitalG, and Sturdy highlights the importance of technical differentiation in their investments. While many incumbents have a strong position in enterprise use cases due to their distribution and customer base, CapitalG is interested in areas where technical differentiation and existing distribution are less important. Sturdy mentions Magic, a company focused on building an AI software engineer, as an example of a portfolio company with strong technical differentiation.

AI’s Impact on Portfolio Companies

Sturdy notes that across their portfolio companies, AI is being used to enhance the customer experience and streamline internal processes. From rethinking marketing strategies to improving customer support, AI is transforming various aspects of their operations. Sturdy sees both enterprise customers and growth-stage companies excited to experiment with AI and leverage its potential to drive innovation and focus on high-value opportunities.

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Laela Sturdy’s leadership at CapitalG has brought a fresh perspective to the firm, emphasizing collaboration, knowledge sharing, and the transformative power of AI. With a focus on delivering returns and leveraging Google and Alphabet’s expertise, CapitalG continues to make strategic investments in growth-stage companies. As AI continues to reshape industries, Sturdy and her team are at the forefront of identifying companies with strong technical differentiation and helping them unlock their full potential.