Blume Ventures raises $250 mn in its fourth and biggest fund so far | The Financial Express

Blume Ventures raises $250 mn in its fourth and biggest fund so far

Blume’s investment corpus has grown from $20 million in its first fund to $60 million in the second and $102 million in the third fund where it invested in about 25 new-age companies.

Blume Ventures raises $250 mn in its fourth and biggest fund so far
Such funds have mopped up Rs 10,800 crore, or around 40% of the total equity NFO collection of Rs 27,300 crore, data from Value Research show.

Blume Ventures, the early-stage focused venture capital (VC) firm, has raised over $250 million in its fourth and biggest fund till date to back 30-35 startups across sectors like consumer internet, financial services, deep tech, software-as-a-service (SaaS) and other. On an average, the VC firm will invest about $1.5-$2.5 million in each company with the potential to go up to $6-7 million.

Blume’s investment corpus has grown from $20 million in its first fund to $60 million in the second and $102 million in the third fund where it invested in about 25 new-age companies. Blume said it had targeted raising $200 million in its latest fund but it was oversubscribed even at a time when startup funding has been on a declining trend in most months of H1CY22.

“The latest fund allows us to be a little bolder with our decisions. We want to back the best founders and they’re still not coming cheap. The command a premium. That will require us to write bigger cheques. So, the $500,000 rounds are not enough anymore, we need more $1.5-2 million rounds,” Karthik Reddy, founder and general partner, Blume Ventures told FE.

“And if we’re chasing second time founders, who are better experts, they’re not raising $2 million rounds now, they’re doing $5-7 million rounds. We don’t want to play weak, we want to come with an equal footing and that will require us to step our game up.”

“Our previous fund sizes increased to keep up with inflation, but now the fourth fund is a real corpus which allows us to play our early-stage, pre-Series A strategy more freely where we can invest in companies to get around 15-20% stake in them, as we need a meaningful ownership for the risk we are taking. All this, while ensuring that we have enough reserves to go deeper in existing companies,” Ashish Fafadia, partner, Blume Ventures told FE.

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For every dollar in early-stage, Blume will reserve two dollars towards follow on investments in the winners. Fafadia added that the VC firm had already made about 10-12 investments from its fourth fund and two more were in the pipeline.

Historically, Blume – whose assets under management (AUM) have now breached the $600 million mark – backs edtechs, fintechs, health, commerce, consumer internet companies, robotics, artificial intelligence (AI) to SaaS and enterprise software in the former to in the latter category. Dunzo, Slice, Unacademy, Purplle, Cashify, Smallcase, Koo and Yulu are some companies that Blume has backed till date.

Going forward, Blume will stay away from investing in startups building in the cryptocurrency and real money games (RMGs) sectors as long as there are regulatory overhangs, Fafadia added.

Of the total $250 million raised, about 60% came from international institutional investors while 40% came from domestic retail and institutional funds in equal halves.

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Speaking on the exits from portfolio companies and the returns generated, Fafadia said, “the first fund is in the exit mode and we’ve already returned more than 2X of the first fund net to our limited partners (LPs) and we’re now on the verge of doubling that.”

Last month, Chiratae Ventures – a tech focused VC firm – announced its maiden growth fund of around $200 million, of which it has already raised the first half and the next tranche was likely to come by January as VC firms continue to back startups but have become more selective in picking the winners.

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First published on: 07-12-2022 at 16:31 IST