Indian venture firm Blume has raised over $250 million for a new fund, its fourth and largest, as it looks to get more aggressive in courting early-stage startups and go deeper into backing its portfolio companies on a time when deal flow activity in the South Asian market has taken a hit from the broader global turn in public markets.
The 12-year-old company, which employs about three dozen people, said it initially sought to raise $200 million, but expanded its goals after extensive requests. Some of India’s finest family offices, global family offices, sovereign wealth funds in India and overseas and emerging market funds of funds have backed the new fund, it said without disclosing any names. (VCs rarely disclose the identity of their LPs.)
Blume Ventures — which handles over $600 million in assets under management — will deploy the larger fund to support about 35 startups, up from 25 in the previous fund.
The broader focus is writing bigger checks and participating in multiple rounds of portfolio companies, Karthik Reddy, founder and general partner of Blume Ventures, told TechCrunch in an interview. It’s something the company couldn’t afford to do in the past because of its size, he said. “The founders now know that we can support them for a longer period of time. We didn’t have the firepower before, but we do now.”
The fund will also seek to support select higher-cost startups, usually those from second- or third-time founders, he said. “Now I have the money to do deals like that, go 50-50 with somebody. We could never have done that before. We didn’t have the guts or the risk modeling,” he said.
India has evolved to become one of the biggest startup playgrounds in the world in the last decade as entrepreneurs rushed to find technological solutions to rebuild or bring efficiency to a range of infrastructural problems affecting over 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 decade as they rush to win the market.
The Indian fund, whose partners are widely respected and considered among the most founder-friendly in the ecosystem, has also grown in stature in the past half-decade as many of its past picks have seen wider adoption and increased adherence to rounds. Its portfolio includes Unacademy, Slice, Spinny, Dunzo, Classplus, Servify, Exotel, Lambdatest, Smallcase, Euler and Pixxel.
As global public markets rallied in 2021, thanks to low interest rates and the infusion of stimulus checks into the system, Indian startups benefited from the euphoria, raised a record $39 billion in the year. Tiger Global, SoftBank and Alpha Wave Global aggressively wrote checks and minted scores of unicorns in the country.
But as markets reverse most of the gains from the 13-year bull run, trading activity has slowed just as dramatically in the country. In a remarkable exchange, Flipkart CEO Kalyan Krishnamurthy warned the ecosystem last month that the so-called funding winter is likely to continue for another 12 to 18 months and the industry may have to contend with “a lot of turmoil and volatility.”
Reddy, who is a little uncomfortable talking about larger funds, said many of the firms that aggressively raised capital in the country are arguably not venture players.
“It’s not venture capital, it’s classic growth investment. They can wake up one day and move the entire allocation to public markets, move into PE assets, move into commodities. They can do whatever they want. Some of them tried to dare. Some will stay, others may withdraw,” he said without naming anyone.
Despite the market downturn, Reddy said Blume has written several checks in recent months and continues to see quality improve in the teams and problems new-age startups are trying to tackle. But he agreed that many startups that raised capital at unrealistic valuations last or early this year must either prove their worth with rapid and sustainable growth or take a cut in pricing in subsequent rounds.
“Thanks to an increasing reality of IPO and M&A exits, there is a resurgence of 2x founders and operators, as well as higher-quality first-time founders. We are pleased that Blume will become the seed partner of choice for both categories,” said Sanjay Nath, Blume Ventures co-founder and general partner, in a statement.
As the Indian startup ecosystem grows and shows signs of maturing, another trend in the game in the country has been the rise of homegrown funds and how quickly their own fund sizes have been scaled in recent years.
Chiratae Ventures, Arkam Ventures and 3One4 Capital have raised larger funds, sometimes over $300 million. (Blume himself has grown from a $20 million fund in 2011 to raising a $60 million fund in 2015 and $102 million in 2018.)
Reddy said that homegrown companies in India, many of which are focused on specific sectors, raising more capital shows that they have gained the underlying belief that they can go deeper into their sectors and make the margins of existing portfolio startups show sign on the way. to the prosperity of LPs. Many companies have returned funds, he said.