Building a successful venture fund and staying true to your DNA
This article was first published on the McKinsey Alumni Center website as part of the firm’s “Focus on Founders” series. It is reposted here with permission.
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Krishna K. Gupta (CHI 10–10) started out on the road to success at an early age.
He founded Romulus Capital in 2008 while still an engineering student at MIT. The venture capital firm invests in seed- and early-stage technology companies and has so far backed around 35 ventures, some of which have achieved conspicuous success. The company’s strong international investor base includes industry leaders, major conglomerates, and even members of royal families — to a large extent thanks to Krishna’s powers of persuasion.
In the years since its foundation, Romulus Capital has gone from strength to strength. The second fund it raised was for USD 50 million. The third, announced last year, is for USD 75 million. “This will give us the ability to lead the Series A round in the companies that we seed,” explains Krishna. “We’ll get further involved in the foundation building. We’ll help build the companies up. And now we’ll actually be able to put down a large check to help them grow to the next level.”
“It really allows to continue doing what we set out to do: company building rather than company betting,” he adds.
The road to success
Krishna puts the success of Romulus Capital down to its clarity of vision. “I think we’ve been able to get off the ground and build a real business because of many factors,” he explains. “Probably the biggest is that we saw an opportunity, just like any entrepreneur. We saw it early. And we had a vision to solve a particular problem that we saw.”
Vision — and tenacity. The fund faced a number of challenges in its first four or five years. “We were very perseverant, and that perseverance has stayed with us for almost a decade,” says Krishna. “That’s what enabled us. It allowed us to really scale.”
In the early days the Romulus model was all about universities and on-campus. Even today, the fund looks very closely at universities such as MIT, Harvard, and Stanford, for example, as well as further afield, including in the United Kingdom at Cambridge and in India such as at IIT or AIIMS: institutions that have top-tier engineering or science-driven programs.
What is the company looking for? A particular culture of entrepreneurship that’s been developed over years — but that’s not all.
“In addition, we look for ecosystems that have a contrarian and differentiated DNA,” says Krishna. “There are some incubators that focus on particular verticals, others that focus on particular business models such as B2B, and yet others that focus on particular geographies.”
Romulus Capital is based in Boston and around half of its investments are likely to remain in the Boston area. But with an investor base that covers more than 15 different countries, the company has a broader than usual perspective.
“We recently made our first investment in India and we expect to make more over time,” says Krishna. “The way I describe it is that we very much remain a Cambridge venture capital group. That is in our DNA. We continue to engage with the Cambridge ecosystem and are looking to export that in some ways to other places.”
“Hungry entrepreneurs always stay young”
One of the most surprising things about Krishna is his youth. He is still in his late twenties, and his partner at Romulus Capital, fellow alum Neil Chheda (MIN, DCO 07–10), just turned 30 this year. In 2015 they were jointly included in the prestigious Forbes ’30 Under 30' list in the Venture Capital category.
Krishna sees their relatively young age as an advantage. “The genesis of our group is a dorm room. That identity and that DNA is never going to change. We are hungry entrepreneurs. We’re not just former entrepreneurs, we’re not partners at a large venture capital firm in a cushy job — we’re hungry entrepreneurs.”
Of course, time does not stay still. “By the time I’m 40 I will have had 20 years of experience,” says Krishna. “And really, if you look at it, hungry entrepreneurs always stay young. They always have that mentality of ‘what’s the next big thing?’. They always get excited about opportunity.”
Krishna was on a steep learning curve in the early years of his fund. “In my first year I learned that people around you can talk a lot and they’re happy to discuss big dreams with you,” he recalls. “But ultimately, all that really matters is execution and delivery.”
“I had to ensure, single-handedly, the survival of the business. That’s probably something you hear commonly amongst entrepreneurs.”
Now Krishna has the support of a strong team. When hiring, he looks for people who can add something differentiated to the business — people who can do something important, better than anyone else on the team.
“I’m always looking to fill holes, to make the engine go faster,” he says. “So I look for enthusiasm and commitment — actually really important traits when you’re at a growing young company, because things never go as planned.”
Here, he learned a valuable lesson during his time at McKinsey. “I don’t like ‘yes people.’ The McKinsey maxim of ‘the obligation to dissent’ is very important to us.”
Romulus Capital — the name comes from the mythical founder of Rome — also looks for people who want to build something that is going to last.
“That’s very much who we are. And it’s something that you can tell about people. You can very quickly sense who wants to build something enduring and wants to stay there for many, many years.”
Advice for new entrepreneurs
Krishna is in contact with many alumni who have launched or are in the process of launching their own ventures. The biggest piece of advice he gives them? Do it for the right reasons.
“There are a lot of people out there today who start companies for the sake of starting companies,” he says. “What you really need to think about is, are you solving a problem? You need to understand your motivation and the conviction that lies behind that motivation.”
“‘Know thyself’ is also really, really important,” he adds. “Sometimes when you’re coming out of a particular career path you simply don’t have enough time to reflect on who you are.”
The early years
Krishna grew up in a culture of entrepreneurship. On his mother’s side, the family ran a small sugar-trading company in India, and his father founded a small consulting company around the year that Krishna was born.
“I’m sure that played a role,” he says. “I couldn’t really envision doing anything else. Even growing up as a young child, I was never a fan of quick flips or quick successes for the sake of it. I’ve always been more interested in building enduring institutions.”
Krishna has remained true to his DNA. “I think my younger self would be very happy that I have found something that I am passionate about. And built a company. And also that it is something rooted in building things for the long term.”
Sources of inspiration
Krishna looks to historical figures for inspiration. “I’m generally inspired by those who think and thought very big. And then were exceptional at execution.”
“One such figure who I’ve spent a lot of time looking into is Napoleon. Despite all that’s said about him he was able to achieve a lot at a very early age, primarily because of his vision and execution.”
Another more contemporary example is Warren Buffet. “Buffet has built an empire by staying true to his DNA and spending a lot of time with people,” explains Krishna. “I admire an ability to interact with people at a very high level and convince them to do what you want them to do.”
How would Krishna describe himself? “Very people-oriented: I’m someone who enjoys meeting people, building relationships and enabling others. But I like to break boundaries a lot,” he admits. “I don’t like strict rules or confines.”
Outside the office Krishna loves watching sports and enjoying the arts. “Achieving excellence in any field is inspirational to me,” he says.
There is no such thing as a typical day at Romulus Capital for Krishna. “We’re always doing a handful of things at once,” he says.
“First, we’re constantly engaging with new companies and new technologies. Second, we firefighting or helping build our existing companies. And third, we’re thinking about our firm when we get the time: What’s the state of the company? How do we fill holes? How do we grow over time?”
Five years from now Krishna sees himself continuing to expand the business. “We’re about a USD 150 million business today. I’d love to see how we can grow that five or ten times over.”
“I’d also love to diversify our business into more lines,” he adds. “One thing that’s very important to me is that I’d love to have a thriving nonprofit arm of our group. I committed that to myself when I started — to weave giving back into the fabric of our group.”
The McKinsey factor
With his father working in the consulting business, it was inevitable that Krishna heard about McKinsey from an early age. Moreover, growing up in the Indian community in Chicago, he had family members and friends who knew all about McKinsey. “I had always heard that McKinsey would be an ideal training ground for leaders and CEOs. Once I interacted with the Firm, that became clearer and clearer. And at that point it became a no-brainer,” he laughs.
By the time he joined the Firm, he had already founded Romulus. But McKinsey changed the way he thought about business.
“I was always a math guy, so I had a problem-solving mentality,” he says. “But I never really applied that to business problems. The biggest thing that McKinsey helped me learn and prepare for was critical problem-solving in a business context.”
“I am very much a big-picture guy who acts on gut and intuition. So forcing me to think in a more structured manner was really, really helpful. And it helps me on a day-to-day basis even today.”
“Secondly — and this is by no means trivial — McKinsey gave me a peek inside some large corporations. That was eye-opening, to say the least. And the third thing is this whole ethos of building and not betting,” he adds.
Krishna is grateful to the alumni network, which he describes as “hugely helpful.” It was through the alumni network that he first met his business partner Neil. Romulus also gives back to the Firm, having sent several of its “campus associates” — students at MIT and Harvard that the company trains — on to McKinsey.
“I have to say that McKinsey alums and McKinsey as a Firm have something a little bit extra, a little bit special. McKinsey’s focus has always been on cultivating leadership. It is a factory of leaders. That’s what makes it distinctive.”