Gautam Gupta has gone from VC investor, to startup founder, and now back to investing in other entrepreneurs. Gautam co-leads the $460M TCV Velocity fund. He and his team are open for business and may be one of the few actively looking to invest in world-class startups.
On the Dealmakers Show Gautam talked about funding from a VC’s perspective, testing your business ideas, the process of recapitalizing a business, acquisitions, and the startups he’s looking to fund now.
Listen to the full podcast episode and review the transcript here.
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Funding From A VC’s Perspective
Gautam Gupta was born to parents who had immigrated to the US from India. Both his father and his grandparents had been entrepreneurs. They knew how to hustle to put food on the table, as well as what it was like to have to skip a few meals.
From a young age, he was a witness to dinner-time conversations about these businesses, and that inspired him to want to become an entrepreneur himself.
Even at school, he was always selling something to other kids out of his backpack or online.
When it came time to pick a college, he visited Babson, and absolutely fell in love with it. Today, he credits applying and getting accepted there as probably the one decision that changed his life more than anything else.
As a sophomore, he had the opportunity to intern with General Catalyst. Which was still a very young and new VC firm at the time. When he joined, they were maybe on their third fund, with around $300M. Recently they announced their latest fund is $5B.
Initially, he thought that he would hang out there for a couple of years before going to start his own venture and operating his own company. However, he found the work so fun and engaging that he ended up staying for the next eight years.
He enjoyed learning from the founders there, and from their business experience. He also learned how much sales were involved in being on the investor side too.
As a new fund, with no brand recognition, he would be out there scouring the web to evaluate businesses, hunt down contact information, and call on behalf of General Catalyst to pitch startups on taking their money.
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From Investor To Entrepreneur
Gautam connected with a long-time friend from college who wanted to start a business together. He had just exited another venture, and Gautam felt like he was at a point where he needed to make the leap, or just hunker down and commit another 10 years to his role there at General Catalyst.
They began bouncing around business ideas together. Gautam was especially passionate about health food and nutrition. He had long struggled with his weight, before learning more about nutrition and being able to lose 70lbs in six months through a combination of a better diet and exercise.
They came up with the idea of Naturebox. A box of healthy snacks they could sell online, and through some retail stores.
To test the idea out, they went to a local farmers market and picked up a bunch of snacks that were similar to their vision. They photoshopped some pictures of the products, and put up a single landing page with four bullet points, and a buy now button.
They ran some ads, and in one weekend, had 100 people Paypal them money for this box.
The problem was that their product didn’t exist yet. They could either refund the money or find something to ship. So, they ran down to the local Costco, grabbed some similar products, repackaged them in their own branding, and sent them out.
It worked, and in three years, they grew that business to $50M in revenue.
Recapitalizing The Business
At that point, they were burning a lot of cash. Capital markets changed their appetite for direct-to-consumer brands, and in 2018 they found themselves down to one month of payroll left in the bank and defaulting on venture debt that they had taken on.
While it was stressful, he now says that “I learned in that experience that ideas and people are way more durable than we give them credit for.” As a company, they banded together and were able to keep the business going. No matter how messy it gets, he says there is always a way to figure things out.
In this case, they did that by recapitalizing the business with new outside investors. Some initial investors decided not to participate and were willing to sell their shares or be diluted. Others did participate.
It ended up working out. After they got through that, Gautam says that he had grown tired of being in the operating seat and managing people. He preferred being on the front lines. So, they brought in a new CEO.
Over the course of that business, they had raised $70M before their acquisition.
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The Velocity Fund
Next, Gautam decided to go back into investing, where he could lend the benefit of his operating experience to help other entrepreneurs.
Today, he is doing that as a general partner with TCV, and working with their $460M velocity fund.
So far, TCV has made around 396 investments, through 12 funds, with 197 exits.
Listen in to the full podcast episode to find out more, including:
- What the Velocity Fund is looking to fund right now
- How TCV helps founders grow their business
- How to get in touch with Gautam
- His top advice when launching a business