Indian venture capital firm Blume has raised more than $250 million for a new fund, its fourth and largest, as it seeks to become more aggressive in wooing early-stage startups and deepen its support for companies in its portfolio at a time when deal flow activity in the South Asian market has been hit by the broader global reversal in public markets.
The 12-year-old company, which employs around three dozen people, said it was initially looking to raise $200 million but expanded its targets following incoming requests. Some of India’s top family offices, global family offices, Indian sovereign wealth funds and foreign and emerging market funds of funds have backed the new fund, he said without disclosing names. (VCs rarely disclose the identity of their LPs.)
Blume Ventures – which manages more than $600 million in assets under management – will deploy the largest fund to support around 35 startups, up from 25 in the previous fund.
The larger goal is to write bigger checks and participate in multiple rounds of portfolio companies, Karthik Reddy, founder and general partner of Blume Ventures, told TechCrunch in an interview. This is something the company could not afford to do earlier due to its size, he said. “The founders now know that we can support them longer. We didn’t have the firepower before, but we have it now.
The fund will also seek to support some more expensive startups, typically those of second- or third-time founders, he said. “Now I have the financial power to do such transactions, do 50-50 with someone. We could never have done this before. We had neither the courage nor the risk modelling”, a- he declared.
India has evolved into one of the world’s biggest startup playgrounds over the past decade as entrepreneurs race to find tech solutions to rebuild or bring efficiencies to a series of infrastructure problems affecting more than a billion people in the country.
Dozens of global tech giants and investors, including Google, Meta and Amazon and Sequoia, Accel and Lightspeed, have poured tens of billions into India, the world’s second-largest internet and wireless market, over the past the last decade as they rushed to conquer the market.
The Indian fund, whose partners are widely respected and considered among the most founder-friendly in the ecosystem, has also gained momentum over the past half-decade as many of its top picks have been more widely adopted and have prompted larger monitoring cycles. Its portfolio includes Unacademy, Slice, Spinny, Dunzo, Classplus, Servify, Exotel, Lambdatest, Smallcase, Euler and Pixxel.
As global public markets surged in 2021, thanks to low interest rates and the injection of stimulus checks into the system, Indian startups rode the euphoria, raising a record $39 billion in course of the year. Tiger Global, SoftBank and Alpha Wave Global aggressively wrote checks and hit dozens of unicorns nationwide.
But while markets are reversing most of the gains from the 13-year bull run, trading activity has also slowed dramatically in the country. In a remarkable exchange, Flipkart Managing Director Kalyan Krishnamurthy warned the ecosystem last month that the so-called funding winter is set to continue for another 12-18 months and the industry may face ” a lot of turmoil and volatility.”
Reddy, slightly uncomfortable talking about larger funds, said many companies that have deployed capital aggressively in the country are arguably not venture capitalists.
“It’s not venture capital, it’s classic growth investing. They can wake up one day and shift all allocation to public markets, shift to private equity assets, shift to commodities. They can do whatever they want. Some of them have tried the adventure. Some will stay, others may retreat,” he said without naming anyone.
Despite the market crash, Reddy said Blume has written several checks in recent months and continues to see quality improving in teams and the problems that new age startups are trying to solve. But he agreed that many startups that raised capital at unrealistic valuations last year or early this year will either have to prove their worth with rapid and sustained growth or cut prices in subsequent cycles.
“Thanks to a growing reality of IPO and M&A exits, there is a resurgence of 2x founders and operators, as well as new, higher quality founders. We are thrilled to have Blume become the partner of choice for both categories,” Sanjay Nath, co-founder and general partner of Blume Ventures, said in a statement.
As India’s startup ecosystem grows and shows signs of maturing, another trend at play in the country has been the rise of local funds and the rate at which their own funds have grown in recent years.
Chiratae Ventures, Arkam Ventures, and 3One4 Capital have raised larger funds, sometimes exceeding the $300 million mark. (Blume himself went from a $20 million fund in 2011 to a $60 million fund in 2015 and $102 million in 2018.)
Reddy said homegrown companies in India, many of which focus on specific sectors, raising larger capital shows they have an underlying belief that they can go deeper into their sectors and that startups’ margins of Existing portfolios show signs of a path to prosperity for LPs. Many companies have returned funds, he said.
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