Blume Ventures’ First Fund Achieves Over Fivefold Returns, Eyes More Success in Future

• ByStartupStory     |    December 21, 2023

Blume Ventures, an early-stage venture capital firm based in India, has announced remarkable returns from its first fund, including an extension fund, amounting to over five times the invested capital. The firm, established in 2010 by Karthik Reddy and Sanjay Nath, aimed to fill a void in seed-stage funding for startups at the time.

Having invested a total of Rs 114 crore between 2010 and 2015 through its Fund-I and Fund-IA (the extension fund), Blume Ventures has reaped significant gains, with 98% of the returns coming from just 17 companies, comprising a fifth of the portfolio of the first fund.

Some of the notable startups backed by Blume Ventures include GreyOrange, Carbon Clean, Cashify, Purplle, Zopper, Taxi For Sure, and WebEngage. Despite its growing fund sizes, the firm remains committed to delivering substantial returns. Reddy emphasized that raising a larger fund means committing to returning a higher amount, signifying the firm’s confidence in generating profitable and exitable unicorns.

The firm has raised four funds to date, with its latest being a $290 million fund launched in 2022. Notably, Blume Ventures has already realized Rs 549 crore through exits from its investments, with an additional Rs 102 crore expected to be realized in early 2024. The firm is poised to exit positions in startups such as Instamojo, Printo, and GreytHR in the coming year.

Despite the impressive 5.7x return multiple from its first fund, Blume Ventures encountered challenges, with almost half of the fund’s portfolio, consisting of 34 startups, returning zero capital. Additionally, nine companies returned between 0.1-1x. The firm’s first fund had 80 Limited Partners (LPs), including Bennett, Coleman & Co. Ltd, the publisher of the Economic Times.

According to a Bengaluru-based venture capital investor, a sector-agnostic fund like Blume Ventures’ typically aims for a 3-5x return on investment, considering various factors such as the investment stage and market conditions.

Blume Ventures also passed on investments in certain startups that later saw significant valuation growth, including Whatfix, Freshworks, Swiggy, Sugar Cosmetics, Oyo, and Ola, citing competing interests in its portfolio. Reddy acknowledged that every investment cycle brings new discoveries and emphasized the firm’s growth in confidence and market opportunities over the years.

Notably, Blume Ventures’ two most successful investments, GreyOrange and Carbon Clean, both deeptech companies, accounted for nearly 40% of the gains from its first fund. Despite initial challenges in selling their products in India, these companies thrived internationally, highlighting the potential of Indian startups in global markets.

Blume Ventures’ success with its first fund sets a promising precedent for its future endeavors, as it continues to identify and nurture high-potential startups in India’s dynamic entrepreneurial landscape.

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