US-based VC firm Romulus Capital enters India with new $75 mn fund

Romulus Capital, a US-based venture capital firm, has added India to the list of its target markets after raising $75 million in its third fund that it says will stay away from e-commerce companies and capital-intensive businesses.

Romulus, which was founded out of Massachusetts Institute of Technology (MIT) in 2008 by Krishna K Gupta and Neil Chheda, invests mostly within the US, with some preference for East Coast, while selectively looking at opportunities in Europe.

The firm has made its first investment in India, in a Delhi-based healthcare company Vyome Biosciences Pvt Ltd, from the third fund--Romulus Capital III LP--and will look at investing in another three to four companies in the country, Gupta told VCCircle.

The third fund is backed by a large group of investors including the chairman of MIT, three royal families, a large Chinese conglomerate, the finance chief of Japan's SoftBank, and the Dalmia family in India, Gupta said.

Romulus has previously invested in technology-enabled startups in sectors such as real estate, healthcare, hospitality, construction and automotive. It has also backed several machine-learning and artificial-intelligence spinouts from the MIT Media Lab.

It typically invests anywhere from $100,000-500,000 in the seed stage. Romulus also does a follow-on round, Gupta said, adding that it generally stays in a company for five to 10 years.

The first fund of Romulus had a corpus of $850,000. This was followed by a second fund of $50 million. It currently has assets under management of about $150 million.

The fund's portfolio of companies includes Placester, which provides site creation and other tools to help real estate agents do business online, and, an app that tracks a user’s mental health and then alerts and helps them when they need counseling.

Prior to Romulus, Gupta spent time at McKinsey & Company and JPMorgan, where he helped execute M&A deals in technology, media and telecom. Co-founder Neil Chheda was a product manager at Zynga and was also earlier associated with McKinsey before Romulus.

Vyome deal

Gupta, general partner at Romulus, said the VC firm has invested about $2 million out of its third fund in Vyome, a biopharmaceutical company that is developing dermatology products.

"I am a believer in India's growth story and we like innovation-driven companies. Vyome is an example of that," said Gupta.

Vyome co-founder Shiladitya Sengupta said the investment from Romulus is part of a larger fundraising that the company expects to close soon. He did not elaborate. 

The company had closed a Series B financing round worth $8 million (Rs 48 crore then) led by private equity firm Sabre Partners in 2014. 

Earlier this year, the US Food and Drug Administration accepted Vyome's application to start clinical trials for its lead molecule VB 1953, a topical therapeutic candidate for the treatment of moderate-to-severe acne. Vyome plans to start the Phase I clinical trials soon.

Investments in drug discovery companies are seen as a long-term and risky bet but investors have been pouring money into such firms. Successful development of lead molecules could make such companies attractive potential investment or acquisition targets.

"Larger pharmaceutical companies are always on the lookout to enhance their research pipeline. If a company already has a molecule which has passed the early-phase clinical trials, then it will attract interest," Prashant Jain, director - healthcare and life sciences at investment bank o3 Capital, had told VCCircle recently.

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