Ask people to tell you about the Kraft Group’s activity in local startup investing and suddenly everybody gets as quiet as a Tuesday in Foxborough. Some send e-mails that begin with “off the record,” and others, such as one from Flagship Pioneering founder Noubar Afeyan, assert that they just don’t know much about the investment arms of business helmed by billionaire New England Patriots owner Robert Kraft. “I think they keep a low profile on purpose,” says Steve Dickman, a consultant who helps biotech companies with fund-raising.
The Krafts themselves would rather remain mum, as well. When I asked Robert Kraft’s son Jonathan for an interview last December, he passed. He wasn’t any more willing in August, as the new NFL season was gearing up. “We do not talk about our passive investing,” he wrote in a very brief e-mail. “The companies we invest in should talk about their businesses.”
The Kraft Group’s investing in startups is what is called a “family office,” charged with putting the money of one very well-off family into fledgling companies, in the hopes of an above-market return. Bill Scalzulli, a Kraft Group employee since 1992, oversees the Krafts’ family office investing, and sometimes serves on the boards of startups the Krafts put money into. Another executive, D. David Lee, joined the team last year from Cambridge Associates, an investment management firm.
What kind of startups does the Kraft Group, best known for its ownership of cardboard packaging producers and sports teams like the New England Patriots, invest in?
The most recognizable investment of the past decade is DraftKings, the Boston fantasy sports site that enables users to play with real money at stake. The most recent deal, according to the data provider CB Insights, is a Boston startup called Stackwell, which announced a first funding round of $3.5 million in August. That company has built a stock investing app specifically targeted at Black consumers, and has a mission to help to reduce the racial wealth gap.
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At DraftKings, chief executive officer Jason Robins said via e-mail that “even more valuable” than the Kraft Group’s money “has been the guidance and mentorship that Jonathan and his team have so graciously given to us. Over the course of time, I have found Jonathan to be the person I look to most for advice, and there are multiple instances that I can recall where without his ideas, DraftKings would not be where we are today.”
Much of the Kraft Group’s investment activity over the last decade has focused on biotech and medical device companies in the Boston area. They include Cambridge’s Scholar Rock, which went public in 2018 and is developing drugs for cancer and spinal muscular atrophy.
“Their financial support definitely helped power and advance our innovation at a critical stage of Scholar Rock’s development,” said Nagesh Mahanthappa, a founding employee of the company who is now serving as interim chief executive.
In June, the Kraft Group put money into Evolved by Nature, a Medford startup. It uses a kind of silk protein as a protective coating on apparel as a more sustainable replacement for petroleum-based products. It also sells skincare products that use the silk protein to create a protective barrier for the skin. In July, the Kraft Group participated in a funding round for Camp4 Therapeutics, a Cambridge startup developing a new type of drug to attack forms of epilepsy and early-onset dementia.
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Other investments are related to sports and entertainment, like the Premier Lacrosse League, which played its inaugural season in 2019; Sports IQ, which seeks to use machine learning software to produce better sports odds for the betting industry; and Mythical Games, which is creating online games built atop blockchain technology.
Not every Kraft Group investment has worked out — which is true of most family offices and traditional venture capital firms, as well. In 2017, I wrote about a synthetic biology startup called Gen9, which, despite $50 million in funding, couldn’t reach profitability, and had its assets bought by another local company, Ginkgo Bioworks, for an undisclosed sum. Plum TV, a cable network targeting affluent viewers in places like Nantucket, the Hamptons, and Aspen, filed for Chapter 11 bankruptcy protection in 2012. Lineage Labs, a Boston startup that made a hard drive to help organize family photos and display them on a television, shut down in 2016. The Kraft family also put $1 million into Theranos, the failed Silicon Valley startup that sought to make a new kind of blood testing device. But that investment doesn’t show up in either CB Insights or a similar database, Pitchbook, and was likely made independently by Robert Kraft, the Kraft Group’s chief executive. Elizabeth Holmes, Theranos’ founder, was convicted of four counts of defrauding investors in July.
On the Kraft Group’s website, you won’t find a list of the privately held company’s startup investments, or a person to contact. (According to Forbes, it had nearly $6 billion in revenue in 2021, and is #77 on the list of biggest private companies in the United States.) The site says that deals are “sourced from the Kraft Group’s unique network of relationships”; in other words, don’t e-mail us, we’ll e-mail you.
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Ankit Mahadevia, chief executive of Spero Therapeutics, said he got a personal intro to the Kraft Group through one of the company’s early investors. He says entrepreneurs tend to go to the Kraft Group’s office at the Gillette Stadium complex in Foxborough to make their pitch for funding. “The memorabilia everywhere is amazing,” he says.
His company was focused on creating new types of antibiotics, especially to fight infections resistant to existing drugs. “It was around the time that within the NFL, there was an outbreak of drug-resistant infections in NFL locker rooms,” Mahadevia said, which helped spur interest on the part of the Kraft Group.
The Kraft Group decided to join the company’s first round of venture capital funding in 2015, and Spero went public in 2017. Scalzulli, the Kraft Group’s vice president of investments, didn’t become an official board member at Spero, but was an observer at board meetings. While he is not a scientist — his undergrad degree from Northeastern University is in finance — Mahadevia said that he was “always impressed by how up to speed Bill was, given how many investments he has to look after. He was always a thoughtful contributor.”
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Not surprisingly, Scalzulli didn’t reply to my e-mail requesting an interview. The same was true in 2015, when I last asked him for comment on a story. Stacey James, a spokesperson for the Krafts, gave me an official “no comment” call.
The Patriots may be inconsistent on the field this season, but their parent company is perfectly consistent about keeping a low profile with its startup investing.
Scott Kirsner can be reached at kirsner@pobox.com. Follow him @ScottKirsner.