How Gauntlet Founders Used Quant Talent to Build a Crypto Unicorn

  • Before founding Gauntlet, Tarun Chitra and Rei Chiang worked in quant trading.
  • To scale up quickly, they hired other quants sitting out the industry’s onerous noncompetes. 
  • The startup, which helps companies manage risk for their crypto-lending operations, became a unicorn in March.

This story is part of series highlighting top quant-trading experts who quit Wall Street to build startups.  

Tarun Chitra first started building trading tools for cryptocurrencies as a hobby in 2016, while working full time as a quant researcher and developer at high-frequency-trading firm Vatic Labs.

He’d dabbled in bitcoin mining starting in 2011, while he was a programmer at D.E. Shaw Research, the biomedical research arm of the famed quant hedge fund. But he didn’t take the movement — relegated then to the societal fringes — too seriously at the time, selling all of his bitcoin “way too early,” in 2013.

The movement gradually gained momentum amid a flurry of papers from cryptographers and academics, as did demand for Chitra’s talents. By 2016, Chitra was becoming a frequent face at crypto meetups, where budding entrepreneurs frequently courted him to join forces.

The quirky characters inhabiting crypto in this era were rough around the edges, especially compared to the MIT and Harvard Ph.D.s Chitra was accustomed to working with. 

“I just didn’t really trust any of them, so I was like, ‘I’ll consult for you instead,'” Chitra told Insider.

By 2018, Chitra’s work moonlighting for crypto startups had ballooned, and he decided to take a calculated leap: He quit Vatic to consult full time — and he began building a company of his own. 

Ditching the lucrative world of systematic trading was a gamble.   

A key factor in Chitra’s decision was that Vatic, like many quantitative-trading firms, enforced a lengthy noncompete that banned him from working for competitors in any capacity for up to two years after he left the company.

Because Vatic would continue to pay his salary for the duration of his noncompete, he viewed the contract as an insurance policy. It bought him time to gamble on uncertain and entrepreneurial ideas far afield of a trading floor while still earning a solid income, regardless of whether the efforts succeeded.

“I was like, ‘I’ll be on noncompete anyways, so who cares?'” Chitra said.

If the adventure in tech didn’t work out, he could always head back to Wall Street once his noncompete expired.

But that didn’t happen.

In mid-2018, he met Rei Chiang through some mutual quant-trading friends. Chiang had worked in high-frequency trading at Getco and 3Red Trading before spending three years at Uber, and he’d been considering pursuing a similar idea. The pair joined forces. 

They quickly got validation that they were onto something that summer when Facebook tried to acquire Gauntlet — about a year before it would announce its own ill-fated digital coin, libra. 

“People are putting real money in this. We should just go raise money and actually make a run for it,” Chitra remembered thinking.

They rebuffed the offer from Facebook, and instead the duo tried to ramp up as quickly as possible. They raised a seed round from First Round Capital. 

They also intentionally exploited the noncompete dynamic at Wall Street quant firms to bootstrap Gauntlet.

“Our first few hires were actually just people on noncompetes. That was our network — we also knew, and they knew, that they would just be sitting out doing nothing during that time period,” Chitra said. “It was a great way to bootstrap a startup.” 

As of March, Gauntlet is a unicorn and a leading provider of software that helps financial institutions stress test and manage risk for their crypto-lending operations.

The firm, now with more than 40 employees, raised $24 million in its Series B from VCs including Ribbit Capital, Paradigm, and Polychain Capital. 

Chitra thinks more Wall Street quants, who have a reputation for risk aversion borne from their daily grind of obsessing over Sharpe ratios, would benefit from learning to live a little bit and taking a calculated career gamble every once in a while.

“They’re so unwilling to do something with a tiny amount of risk,” Chitra said. “Life is a little too short to be always focused on that.”

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