Blume Ventures closes its largest India-dedicated fund at $250 million
Blume Venture's Karthik ReddyEarly-stage venture capital firm Blume Ventures has made the final close of its fourth India-dedicated fund with a corpus of $250 million, its biggest so far and more than double the previous fund.
Indian limited partners — predominantly large family offices and the Small Industries Development Bank of India — accounted for 40% of the money raised in Fund-IV, with the rest coming from overseas family offices, foundations, sovereign funds and corporates.
The final close of Blume’s Fund-IV comes at a time when venture funds focused on investing in the region have been raising record capital despite a global macroeconomic downturn and a year-long funding crunch, compounded by the public market rout of technology stocks in the US.
Recently, early-stage investors Axilor Ventures and Athera Venture Partners (formerly Inventus India) launched their funds. Even large prominent VC firms, including Accel, Elevation Capital and Sequoia Capital, have raised record capital to back opportunities in India and Southeast Asia.
Founded by Karthik Reddy and Sanjay Nath, Blume typically invests in pre-seed to pre-Series A funding rounds of technology companies and has built a large portfolio over the past decade, holding positions in edtech firm Unacademy, quick-commerce platform Dunzo, fintech firm Slice, used-car selling platform Spinny, beauty e-tailer Purplle and full-stack customer engagement platform Exotel.
Blume’s Fund-IV will be managed by its investment team of over 15 members, led by Sajith Pai, Arpit Agarwal, Ashish Fafadia, Nath and Reddy. Through this fund, it plans to back 30-35 companies in technology verticals such as fintech, deep-tech, robotics and artificial intelligence, healthcare and consumer Internet.
Emphasising that venture funds need to be cognisant of realistic exit outcomes given the limitations of cash generation in the current scenario, Reddy told ET in a chat that India founders should focus on building for public listings at $300-400 million valuations, which is more realistic for the local market.
“It’s fiction that you can get a $3 billion listing magically. There’s nothing like that … If you think you can rationalise by artificially pushing something to a unicorn status, then justify how it can go up from there, and then try to list it at a premium from there, you’re asking for trouble,” Reddy said.
Blume’s first three funds had a corpus of $20 million, $60 million and $102 million, and were closed in 2011, 2015-16 and 2018-19. The fourth fund’s first close of $105 million was announced in November 2021. In addition, Blume also manages continuity funds, which include secondary funds (Fund I winners), opportunity funds (Fund I and II winners) and SPVs.
Reddy said Blume has been able to generate cash returns of 2.5x for its Fund-I investors.
He pointed out that the Fund-I cash returns were on account of the firm raising a secondary fund that bought out some of the original investors in Blume's first fund.
“We have another 2.0-2.5x returns depending on when we are able to sell those positions, so we’ll end up 4.5-5.0x in returns for Fund-I,” he said.
“For Fund-II, we’re tracking very well at above 7x as of now. But we have only returned 30% as of now. So, what’s called multiple on invested capital (MOIC) is tracking at over 6x, but in hard cash we have only given 0.3x, which is 30%,” he added. “Fund-III is relatively new — it will be four years this month. We have half a dozen companies with valuation over $100 million, and it’s tracking well at close to 2.5x in the fourth year.”
Talking about increasing round sizes and the need to raise large funds, Reddy said that despite the funding winter, cheque sizes to “high-quality” founders are growing.
“Despite having seen a funding winter out there, you look at seed-stage inflation, high-quality founders are not settling for $1-1.5 million cheques anymore. They want $2.0-2.5 million. Whether we co-invest with somebody or we lead with $2.0-3.0 million, the ability to have a larger fund means we are able to play more emphatically,” he said.
Going ahead, Reddy said: “You have to find founders, who build carefully and profitably to an exitable state of mind.” He added that among Blume’s portfolio companies, Exotel, Purpple and Turtlemint “are all listing-worthy in the next three years”.
Indian limited partners — predominantly large family offices and the Small Industries Development Bank of India — accounted for 40% of the money raised in Fund-IV, with the rest coming from overseas family offices, foundations, sovereign funds and corporates.
The final close of Blume’s Fund-IV comes at a time when venture funds focused on investing in the region have been raising record capital despite a global macroeconomic downturn and a year-long funding crunch, compounded by the public market rout of technology stocks in the US.
Recently, early-stage investors Axilor Ventures and Athera Venture Partners (formerly Inventus India) launched their funds. Even large prominent VC firms, including Accel, Elevation Capital and Sequoia Capital, have raised record capital to back opportunities in India and Southeast Asia.
Founded by Karthik Reddy and Sanjay Nath, Blume typically invests in pre-seed to pre-Series A funding rounds of technology companies and has built a large portfolio over the past decade, holding positions in edtech firm Unacademy, quick-commerce platform Dunzo, fintech firm Slice, used-car selling platform Spinny, beauty e-tailer Purplle and full-stack customer engagement platform Exotel.
Blume’s Fund-IV will be managed by its investment team of over 15 members, led by Sajith Pai, Arpit Agarwal, Ashish Fafadia, Nath and Reddy. Through this fund, it plans to back 30-35 companies in technology verticals such as fintech, deep-tech, robotics and artificial intelligence, healthcare and consumer Internet.
Emphasising that venture funds need to be cognisant of realistic exit outcomes given the limitations of cash generation in the current scenario, Reddy told ET in a chat that India founders should focus on building for public listings at $300-400 million valuations, which is more realistic for the local market.
“It’s fiction that you can get a $3 billion listing magically. There’s nothing like that … If you think you can rationalise by artificially pushing something to a unicorn status, then justify how it can go up from there, and then try to list it at a premium from there, you’re asking for trouble,” Reddy said.
Blume’s first three funds had a corpus of $20 million, $60 million and $102 million, and were closed in 2011, 2015-16 and 2018-19. The fourth fund’s first close of $105 million was announced in November 2021. In addition, Blume also manages continuity funds, which include secondary funds (Fund I winners), opportunity funds (Fund I and II winners) and SPVs.
Reddy said Blume has been able to generate cash returns of 2.5x for its Fund-I investors.
He pointed out that the Fund-I cash returns were on account of the firm raising a secondary fund that bought out some of the original investors in Blume's first fund.
“We have another 2.0-2.5x returns depending on when we are able to sell those positions, so we’ll end up 4.5-5.0x in returns for Fund-I,” he said.
“For Fund-II, we’re tracking very well at above 7x as of now. But we have only returned 30% as of now. So, what’s called multiple on invested capital (MOIC) is tracking at over 6x, but in hard cash we have only given 0.3x, which is 30%,” he added. “Fund-III is relatively new — it will be four years this month. We have half a dozen companies with valuation over $100 million, and it’s tracking well at close to 2.5x in the fourth year.”
Talking about increasing round sizes and the need to raise large funds, Reddy said that despite the funding winter, cheque sizes to “high-quality” founders are growing.
“Despite having seen a funding winter out there, you look at seed-stage inflation, high-quality founders are not settling for $1-1.5 million cheques anymore. They want $2.0-2.5 million. Whether we co-invest with somebody or we lead with $2.0-3.0 million, the ability to have a larger fund means we are able to play more emphatically,” he said.
Going ahead, Reddy said: “You have to find founders, who build carefully and profitably to an exitable state of mind.” He added that among Blume’s portfolio companies, Exotel, Purpple and Turtlemint “are all listing-worthy in the next three years”.
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