India’s Blume Ventures more than doubles in size, raises over $250 million for new fund • TechCrunch

Indian venture firm Blume has raised more than $250 million for a new fund, its fourth and largest, as it looks to be more aggressive in courting early-stage startups and deepening its backing of portfolio firms in period when deal activity is flowing in The South Asian market has taken a hit from the broader global reversal 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 following in-bound requests. Some of India’s top family offices, global family offices, Indian and overseas sovereign wealth funds and emerging market funds have backed the new fund, it said without disclosing any names. (VCs rarely disclose the identity of their LPs.)

Blume Ventures – which holds more than $600 million in assets under management – ​​will deploy a larger fund to support around 35 startups, up from 25 in the previous fund.

The broader focus is to write bigger checks and participate in multiple rounds of portfolio firms, Karthik Reddy, founder and general partner of Blume Ventures, told TechCrunch in an interview. It’s something the company couldn’t do earlier because of its size, he said. “The founders now know that we can support them better. We didn’t have the firepower then, but now.”

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The fund will also look at select pricier startups, usually those from second- or third-time founders, he said. “Now I have the financial power to do such deals, go 50-50 with someone. We couldn’t do it before. We didn’t have the courage or the risk modeling,” he said.

India has evolved to become one of the world’s biggest startup playgrounds over the past decade as entrepreneurs rush to find tech solutions to reinvent or bring efficiencies to a range of infrastructure problems affecting the over a billion people in the country.

Several 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 one of the most founder-friendly in the ecosystem, has also grown in stature over the past half-decade as many of its early picks have gained wider exposure. -adopted and raised a larger following in the rounds. Its portfolio includes Unacademy, Slice, Spinny, Dunzo, Classplus, Servify, Exotel, Lambdatest, Smallcase, Euler and Pixelel.

As global public markets jumped in 2021, thanks to low interest rates and an 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 have aggressively written checks and created dozens of unicorns in the country.

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But as markets reversed most of the gains from a 13-year bull run, deal activity slowed dramatically in the country. In a remarkable exchange, Flipkart chief executive 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 grapple with “a lot of chaos and volatility.”

Reddy, a little uncomfortable talking about larger funds, said many of the companies that have aggressively deployed capital in the country are unlikely to be venture players.

“This is not venture capital, this is classic growth investing. They can wake up one day and switch all allocation to public markets, switch to PE assets, switch to commodities. They can do whatever they want. Some of them tried the adventure. Some will stick around, others might retreat,” he said without naming anyone.

Despite the market slump, Reddy said Blume has written several checks in recent months and continues to see an improvement in the quality of the teams and the problems new-age startups are trying to tackle. But he agreed that many startups that raised capital at unrealistic valuations late or early this year will need to prove their worth with rapid and sustainable growth or take a haircut on pricing in subsequent rounds.

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“Thanks to the increasing reality of IPOs and M&A exits, there is a resurgence of 2x founders and operators, as well as higher quality first-time founders. We are excited for Blume to be the preferred 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 country is the rise of homegrown funds and how quickly their own funds have grown in recent years.

Chiratae Ventures, Arkam Ventures and 3One4 Capital have raised larger funds, sometimes more than $300 million. (Blame itself grew from a $20 million fund in 2011, to 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 acquired the underlying belief that they can go deeper into their sector and have mark-ups from existing portfolio startups to show signs of a path to prosperity for LPs. Many companies have returned funds, he said.

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