Indian venture firm Blume has raised more than $250 million for a new fund, its fourth and largest, as it looks to become more aggressive in courting early-stage startups and deepening support for its portfolio companies. at a time when business flow activity in the South Asian market has been affected by the broader global reversal in public markets.
The 12-year-old firm, which employs about three dozen people, said it initially sought to raise $200 million but expanded its goals following incoming applications. Some of India’s best family offices, global family offices, Indian sovereign wealth funds and funds of funds from emerging markets and abroad have endorsed the new fund, she said without disclosing any names. (Venture capitalists rarely reveal the identity of their LPs.)
Blume Enterprises – which manages more than $600 million in assets under management – will roll out the largest fund to back around 35 startups, up from 25 for the previous fund.
The broader approach is writing bigger checks and participating in multiple rounds of portfolio signings, Karthik Reddy, founder and general partner at Blume Ventures, told TechCrunch in an interview. It’s something the company couldn’t afford to do before because of its size, he said. “The founders now know that we can support them for a longer time. We didn’t have the firepower before, but now we do.”
The fund will also look to back more expensive start-ups, typically those with second- or third-time founders, he said. “Now I have the money power to make such deals, go 50-50 with someone. We could never have done it before. We didn’t have the courage or the risk model,” she said.
India has evolved into one of the world’s greatest playgrounds in the past decade as entrepreneurs scrambled to find technological solutions to rebuild or improve the efficiency of a variety of infrastructure problems affecting more than a thousand million 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-biggest wireless and internet market, in 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 over the past half-decade, as many of its earlier picks garnered wider adoption and generated follow-up rounds. bigger. Its portfolio includes Unacademy, Slice, Spinny, Dunzo, Classplus, Servify, Exotel, Lambdatest, Smallcase, Euler, and Pixxel.
As global public markets jumped in 2021, thanks to low interest rates and the infusion of stimulus checks into the system, Indian startups benefited from the euphoria. raising a record $39 billion in the year. Tiger Global, SoftBank and Alpha Wave Global aggressively wrote checks and minted dozens of unicorns in the country.
But as markets reverse most of the gains from the 13-year bull run, deal activity has slowed dramatically in the country. In a notable 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 deal with “a lot of turmoil and volatility.”
Reddy, a little uncomfortable talking about larger funds, said many of the companies that have aggressively deployed capital in the country may not be venture players.
“It’s not venture capital, it’s classic growth investing. They can wake up one day and move all allocation to public markets, move to PE assets, move to commodities. They can do what they want. Some of them tried to venture out. 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 equipment and issues that new-age startups are trying to address. But he agreed that many startups that raised capital at unrealistic valuations later or early this year will have to prove themselves with rapid, sustainable growth or cut prices in subsequent rounds.
“Thanks to an increasing reality of IPO exits and M&As, there is a resurgence of 2x founders and operators, as well as higher quality first-time founders. We are excited that Blume will become the preferred seed partner for both categories,” said Sanjay Nath, co-founder and general partner of Blume Ventures, in a statement.
As India’s start-up ecosystem grows and shows signs of maturing, another trend at play in the country has been the rise in equity and the rapidity with which it has expanded its own fund sizes over the past few years. last years.
Chiratae Ventures, Arkam Ventures and 3One4 Capital have raised larger funds, sometimes surpassing the $300 million mark. (Blume itself 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 local 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 deep into their sectors and have the margins of existing portfolio startups to show road signs. to the prosperity of the LPs. Many companies have returned funds, he said.