If you have an undervalued tech-based start-up, the kind that venture capitalists don’t have the time for, it may be a good idea to tap Romulus Capital, a seed- stage venture capitalist fund focused on technology businesses. For, last month it announced its third
round of funds — $75 million in commitments — making for
a pretty respectable total of $150 million.
That founder Krishna K Gupta and his managing partner
and co-founder Neil Chaddha have done well with their
company, conceived in an MIT dorm room in 2008 and up
and running in two years, is evident in that they made it to
the Forbes 30 under 30 in 2015.
And, as a release pointed out, Romulus is the largest independent VC firm in the world managed solely by partners
under the age of 30.
Gupta, who spoke with India Abroad recently, has a strong
academic record, with a background that could have taken
him into math or academics. After all, the Chicago-born venture capitalist went to boarding school at the science- and
math-oriented Phillips Academy in Andover, Massachusetts.
In addition, he was a finalist at multiple math Olympiads
and at the Siemens Westinghouse Competition (for work
done in physical chemistry at the University of Chicago).
But Gupta always wanted to be an entrepreneur, having his
first go at it when he was but six, making and selling enough
artifacts from his garage that he could buy a pack of M&Ms
for his whole team.
Speaking of his Indian upbringing, he says his mother “was
unlike many Indian mothers.”
“She said, as long as you get your grades you can do what-
ever you want… I had a lot of freedom — as long as I kept my
grades fine. That’s very much an entrepreneurial kind of
thing: As long as you cover your bottom line, do whatever
you want.” That included playing chess and the piano, and
acting in a few local musicals.
And when it came to college, he picked MIT over Stanford
because it allowed him to learn both engineering and busi-
ness and because he “preferred the purity of the East Coast.”
According to Gupta, the strong foundation in math and science helps him better assess the companies Romulus
considers funding today. “It’s really hard for someone who
doesn’t have that,” he says. “The engineering mindset is all
about problem-solving and getting s*** done. That’s the MIT
mentality: ‘Get it done.’ That is very much in our DNA, too —
as a firm. That’s why entrepreneurs like working with us.”
Gupta was a junior at MIT when he decided to take the
plunge into business.
“I didn’t have any money,” he says. “My family didn’t come
from much wealth. We grew up middle-class.”
But the duo did raise $850,000 in funding in two years.
Gupta describes why they named the firm after a founder
“The Roman empire was one of the greatest and lasting
civilizations, right? And they focused a lot on engineering,”
Gupta says. “The Greeks were very much into basic science,
which is what I actually loved growing up, but over time I
grew to respect the Romans — because they were very prac-
tical folks, right? How do we build, how do we create, how do
we rule?! That’s what I love about the Romans. So, I named
my firm Romulus, the father of Rome.”
So what about Remus, the co-founder and Romulus’s
“Remus did not have a good end, right?,” Gupta points out,
rather pertinently, given that one way or the other Remus
wound up dead after an argument with Romulus.
Romulus is careful about the kind of firms it funds. The
focus, Gupta says, is technology- and science-based companies — essentially software firms in different areas, and
three companies — Humanyze, Ginger.io and Cogito — at
the MIT Media Lab focused on machine learning and artificial intelligence.
“We like B2B — business-to-business — rather than B2C
(business to consumer),” he elaborates. “That’s because B2C,
at the early stage… it’s a lottery. One can become Snapchat,
one can become nothing. One hundred will become nothing.
Whereas B2B you can engineer the growth in the business a
little bit more.”
Gupta gives the example of working with a real estate busi-
ness, helping build the firm: “We’re very hands-on. So, our
reputation is very much (about) helping to build the busi-
ness. We don’t do a lot of (funding of) companies, but the
ones we do we concentrate our capital and our time.”
It adds up to 16-18 hour work days, he says, adding that
when he isn’t working he prefers hanging around with
friends, having dinners with them.
While he won’t discuss figures, Gupta says the first rou- nd of funding has generated five times what went into
the start-ups Romulus picked. But over the years, Romulus
has gone beyond funding university campus start-ups.
According to Gupta, “Most VCs are pretty dumb. Often
times it is like their second career. The VC has previously sold
a company or something else. So it’s a pretty cushy job. It’s
like a retirement job. So, then they don’t do much for the co-
mpany. They say they do a lot, but actually do nothing. That’s
what I realized when I started my firm. It shocked me at first.
That’s why I realized there was a big opportunity for us.”
“In that case,” he explains, “the real value for the entrepre-
neur is just simply capital. That works for some entrepre-
neurs who need or want to grow quickly.” But not for all.
According to him, “More money is not always better than
less money. So, sometimes the big VCs will come to you
because they have so much money they have to deploy (so that
they can raise more money). They’ll say, ‘Hey, you’re raising $5
million; why don’t you take 15 and we’ll give you a much high-
er valuation so your total dilution will be the same.’”
Gupta says this kills the company culture when it raises too
“If you don’t grow fast enough, if you don’t hit the milestones to justify that extra money valuation, you’re screwed,”
he says, arguing for more constrained growth.
Gupta says that Romulus is not interested in quick returns,
and 100-million-dollar exits: “Once you get involved with
Romulus, you need to be able to have a 300 (million)-400
million dollar exit. With a big VC you need to have a billion-
dollar exit for them to see any meaningful cash back.”
He says there were many firms that would do well to sell at
less than $100 million, but is not a good outcome for a VC, a
fact he often points out to entrepreneurs.
Gupta says he is very passionate about India, having spent two or three months a year there in his child- hood. He also visited conflict zones, going to Assam
and meeting people from the United Liberation Front of
Asom who are in jail; to Kashmir, where he met Omar
Abdullah, the state’s chief minister till last year, and members of the separatist movement there.
“I believe India as a nation is very young, and my genera-
tion has the duty to form the Indian identity, and the only
way to do that is to understand what’s happening on the
Romulus has got going with first investment in India, put-
ting $2 million into a firm called Vyome, founded, among
others, by Shiladitya Sengupta, a professor at the Harvard
Medical School, that aims to do research on acne.
Romulus has a single bottom line, that is, it considers only
economic gain. A double or triple bottom line would call for
social and/or environmental gain, too.
“Right now, in technology, things are overvalued,” Gupta
says. “So we are waiting for things to shake themselves out a
bit. But we’re very active… Even in this time we’ve invested
20 percent of (the current round of funds) already… Four
years ago, we were at $750,000 under management; today
we’re at $150 million. So, in four years we’ve had 200x
growth of the firm, right? I think we have a lot of growth
ahead of us.”
‘We have a lot of
growth ahead of us’
Romulus Capital has announced its third round of funds — $75 million in
commitments — making for a pretty respectable total of $150 million.
Co-founder Krishna K Gupta tells P Rajendran more about the seed-stage
venture capitalist fund that was born in an MIT dorm room.
Most VCs are pretty dumb. Often times it is like their second career. The VC has previously sold a company or something else. So it’s a pretty cushy job. It’s like a retirement job. So, then they don’t do much for the company. They say they do a lot, but actually do nothing. That’s what I realized when I started my firm. It shocked me at first. That’s why I realized there was a big opportunity for us.
Krishna K Gupta