Team Startupcity

• Bengaluru-based VC firm Blume Ventures has achieved the first close of its $250-275M Fund V, led by cofounder Karthik Reddy.
• Fund V targets consumer, fintech, healthtech, and deep tech startups, with early investments in Mave Health, Confido, Lucira, Ozi, PowerUp Money, and Ido.
• Blume eyes Turtlemint’s IPO as the first exit, with 10-15 portfolio IPOs expected in five years, aiming for $80M+ DPI by 2025.

Early-stage venture capital outfit Blume Ventures has achieved the first close of its newest fund at $175 million, cofounder and partner Karthik Reddy. The Bengaluru-based VC outfit has invested in Purplle, Unacademy, Spinny and Cashify among others. Its new fund, which is looking to raise a corpus of $250-275 million, will make its final close announcement by early next year.

Some VC funds have been raising capital to invest in early-stage startups. They include India Quotient, which raised $129 million for its fifth fund, Bengaluru-based Prime Venture Partners that has raised $100 million, Campus Fund that has raised $100 million, Cornerstone's $200-million fund, and Bessemer Venture Partners $300-million fund.

Blume Ventures' Fund V, which has already invested in companies like healthtech companies Mave Health and Confido, consumer tech firms Lucira and Ozi, fintech company PowerUp Money, and deep tech Ido, will have consumer, fintech, healthtech and deep tech as its mostly focus, Reddy said.

The fundraise for Fund V has mainly come from accredited investors of Blume Ventures, as well as new institutional investors, multilateral institutions, corporates and family offices.

The initial target for Fund was approximately $300 million, but Reddy stated the firm would most probably make a final close at $250-275 million, pointing to 'difficult fundraising environment'.

Reddy said Blume Ventures, which had raised more than $110 million from domestic investors for its previous fund, focused more on larger limited partners for the latest vehicle. “We’re trying to stay away from those experimental small checks today, which means we’re probably shutting out anywhere between $60 million to $75 million of Indian money”, he said.

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Blume Ventures' earlier flagship fund, which closed for the final time in 2022, was sized at $250 million but was oversubscribed to $290 million. "Our fourth fund was about $50 million per partner, reserves and fees included. This allows us to actually respond to the early criticism that we did not have sufficient capital to double down on our winners", said Reddy.

The India-specific company, started by Reddy and Sanjay Nath in 2010, generated more than five times its capital invested from the return of its initial fund, as well as an extension fund. The first fund has returned cash of almost 3.8 times, while the remaining 0.5 times will be repaid, he said. The second fund has returned over 1.1 times the amount invested in cash and is poised to reach almost 3x.

"Fund-II has come down quite a bit from its high. We had Dunzo, Koo, and Unacademy there, all of which we've written down substantially or write-offs on", Reddy said. Fund-III and IV have not yet seen any exits, he added.

The firm said that its initial public offering (IPO) pipeline will begin with insurtech firm Turtlemint, which has already submitted its draft red herring prospectus (DRHP) with the markets regulator.

“A lot of our DPI (distribution to paid-in capital, or cash returns) is going to come from companies on the path to IPOs; it’s not going to come through small-ticket M&As”, said Reddy. “I believe that over the next five years, we’ll probably see over 100 new IPOs, in addition to what’s already in the market; roughly 20 a year. I’m hoping 10-15 of those will come from Blume’s portfolio”.

The company hopes to have a combined DPI of more than $80 million from all the funds in 2025. With the exception of Turtlemint, Reddy hopes that Purple, IntrCity and IDfy from the first fund will go public within the next 24 months. Servify and Spinny from the second fund are set to receive listings, while the third fund can expect IPOs from Classplus, Leverage and Ultrahuman. “Markets like stability. So, we’ll focus on variables, stability and profitability”, he said.