Blume Ventures, an early-stage venture fund based out of Mumbai discounted all theories predicting a doomsday scenario, given the current rush of funds into the entrepreneurial eco-system. The venture fund which was one of the early investors into TaxiForSure felt the time is ripe for a new set of entrepreneurs who will tap into the 500 million non-English speaking smartphone enabled customers, said Karthik Reddy, Managing Partner, Blume Ventures in conversation with FE’s P P Thimmaya. Excerpts:

How do you view the current investment scenario given the talk that venture capital fund flow may see a slowdown?

I think it is still in early stages. If you take series A or B funds the fundamentals of those businesses have not changed. In fact a lot of venture capital (VC) funds have raised money and they are looking for exciting opportunities, and that has not changed. I cannot comment on the later stage stuff. Couple of our companies are breaking into that space, we have actually 3-4 companies which are doing well and breaking past the $50 million mark. If the fundamentals of the business is growing on a sound principle, I think investors are still willing to bet. If they are not growing or feel that they are in no way going to compete with the bigger players then somebody is going to get nervous. The good news is that over the last two years, if you see Myntra, TaxiForSure or Freecharge acquisitions, people are getting comfortable with the fact that big guys will actually not let a company die, and they will acquire.

Do you see more number of M&As in the near future?

Ninety per cent of exits in ventures are through M&A and not IPOs. We sold a company three weeks ago to Freshdesk. My concern was, it is not good enough to meet the series A filter, so I had to find a home for it. So please don’t say it is destroyed, or write off. It is not about whether this doomsday is coming. It is a question of how do you deal with the reality of a particular situation, which is either capital is drying up, too many ‘me toos’ or throwing money at consumers. If this is not sustainable, so you stop take a pause go back and figure out how to better consolidate. Look at what the cabs guys did in China. They realised that both the major players in that space were burning cash. Both were funded by the mega guys out there, but these were losing money. So they got merged. Uber is anyway there so you have to compete with them. Ola and Ttaxiforsure did the same thing. That to me is more sensible behaviour than going with the notion whether we are over funded and hence unsustainable.

What are the focus sectors for Blume Ventures?

It is difficult to say. I’m looking at the new India, a smartphone enabled India, and what they want – entertainment, education, healthcare, financial freedom and small businesses,  a few segments ignored for about five decades.

This generation of great startups will capitalise on the new set of consumers who are not just from the privileged lot, who speak English or drive cars. What are their concerns and we are going to build value for them is one big theme.

The other big theme I think which is still untapped is B2B, which by definition is a global theme. Look at Freshdesk, Google Capital invested in what is a great enterprise company sitting out of Chennai, building a way with $400 million plus valuation. I’m confident that we can build great global product companies now from India.

How do you view the government’s support to the startup community?

It is a good thing, positive. They are trying to help and want more local innovations. We can deliver on this.