Gupta, an alum of MIT, founded Romulus Capital in 2008.
AB Wire
Romulus Capital, founded by Krishna K. Gupta in 2008 with a modest $850,000 fund, and later joined by another Indian American, Neil Chheda, has raised its third—and largest—fund, at $75 million, to back early-stage startups, many sourced in labs at MIT. The company has raised altogether $150 million.
The duo intend to lead seed or series A deals in 15 to 20 companies from it, they said, reported TechCrunch.
Forbes reported that when Gupta started Romulus out of his MIT dorm room in 2008, he was a 20-year-old geek who didn’t drink or party much and had spent summers competing in math Olympiads while growing up in Illinois.
“My peers and I had all these ideas, but no way to build on that foundation,” Gupta says. “So I tried to solve the problem and a lawyer told me, there’s a name for this: venture capital.”
Making the rounds of Boston’s larger venture firms, Gupta says he was dismissed out of hand for being too green. “The feedback was, ‘who are you?’” Undaunted, he launched Romulus like a startup while working at McKinsey, where he learned the hard way that side projects are tolerated so long as they don’t lead to awkward calls on the job.
Returning to Cambridge, Gupta rented out a town house and then sublet all the rooms, sleeping in the basement and liquidating his bank accounts to keep going with his $850,000 first fund. At the time he closed the firm’s second fund for about $75 million, Gupta was down to $200 left on a $10,000 personal credit line he’d coaxed out of a friendly staffer at Bank of America, Forbes reported.
Gupta would meet Chheda through the McKinsey alumni network, which liked to tell the story of the precocious analyst who’d quit after just eight months (before he could be let go) to play at VC. A former three-year analyst who’d sold a startup and was working at Zynga, Chheda added his own Yale and Harvard Business School networks to Gupta’s MIT connections. Cold emails to MIT alumni had made up much of the initial $850,000 fund, with investors like Jack Belz writing checks for $10,000 at a time. MIT Corporation board chairman Robert Millard is now involved with Romulus, as well as investor Art Samberg and Joel Ornstein, an MIT board member who was an early investor and adviser to investment firms including Apollo Global Management, Carlyle Group and WL Ross.
One thing that may not change: Romulus’ nerd rep. Jokes Gupta: “Of course, half the people we meet think we named it after the Romulans in Star Trek.”
TechCrunch reported originally, Romulus Capital wanted to support great technical entrepreneurs Gupta met on campus who would likely, after graduation, abandon their very early-stage startups for day jobs in finance or consulting, Gupta said.
As Indian Americans in their late-20s today, the investors feel they are “more relatable” to many founders than top-ranking partners within large Silicon Valley firms, which haven’t had a good track record on diversity within or beyond their ranks, reported TechCrunch.
That said, Romulus companies have gone on to raise follow-on funding from some of the biggest funds and corporations around, including NEA, General Catalyst, Intel Capital and Salesforce.
The young firm has seen two exits (by way of mergers and acquisitions) in its portfolio to-date, with the sales of Crocodoc to Box, and Gyft to FirstData Corp. in 2014.
It has also seen one company deadpool, however– Beacon, the all-you-can-fly travel startup, which closed shop in spring this year after raising a tranched Series A round from Romulus and others.
Most recently, Romulus led a $5.5 million investment in EquipmentShare, a peer-to-peer marketplace used by contractors to rent heavy equipment. EquipmentShare was part of Y Combinator, but its founders are not MIT alumni.
The Romulus portfolio also includes: ClassPass, which lets customers book and take classes at any listed gym or fitness studio for a flat monthly rate; Placester which provides site creation and other tools to help real estate agents do business online; E la Carte, a maker of tablets for restaurant tables that allow patrons to pay without waiting on a check; and Ginger.io an app that tracks a user’s mental health then alerts and helps them when they need counseling.