Indian limited partners (LPs) — predominantly large family offices and SIDBI — accounted for 40% of the money raised in Fund-IV, with the rest coming from overseas-based family offices, foundations, sovereign funds and corporates.
Founder 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.
Speaking to ET, Reddy said: “Clearly, the last 3-4 years of performance have led to a lot of faith in us as an emerging leader in the pack, which is why we have a whole bunch of new LPs (limited partners) from different geographies betting on us”.
Blume’s Fund-IV will be managed by its investment team of over 15 members, led by Sajith Pai, Arpit Agarwal, Ashish Fafadia, Sanjay Nath and Reddy.
Through this fund, the firm plans to back 30-35 companies across different technology verticals such as fintech, deep-tech, robotics and artificial intelligence, healthcare, and consumer internet.
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Blume’s first three funds had a corpus of $20 million, $60 million and $102 million were closed in 2011, 2015-16 and 2018-19, respectively.
The fourth fund’s first close of $105 million was announced in November 2021. In addition to these, Blume also manages continuity funds, which include secondary funds (Fund I winners), opportunity funds (Fund I and II winners) and SPVs.
Reddy said that through Blume’s secondary structure, it has been able to clock cash returns of 2.5x to its Fund-I investors. “ We have another 2-2.5x returns depending on when we are able to sell those positions, so we’ll end up between 4.5-5x 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.”
VC capital raising at new highs
Even as the global macroeconomic downturn poses uncertainty on fundraising for Indian startups, several venture funds focused on the region have been raising record capital. Recently, early-stage investors Axilor Ventures and Athera Venture Partners (formerly Inventus India) launched their funds.
Even prominent VC firms, including Accel, Elevation Capital and Sequoia Capital, have raised record capital to back opportunities in India and Southeast Asia.
Talking about inflation of round sizes, Reddy said: “Despite having seen a funding winter out there, high-quality founders surface to the top, and they do not come cheap.. if you look at seed inflation, high-quality founders are not settling for $1-1.5 million cheques anymore. They want $2-2.5 million cheques. Whether we co-invest with somebody or we lead with $2-3 million, the ability to have a larger fund means we are able to play more emphatically.”