Early-stage venture capital firm Blume Ventures, which has backed more than 150 startups including Unacademy, Spinny, Slice, Grey Orange, Turtlemint, Carbon Clean and Servify among others, has marked the first close of its new opportunity fund, Fund 1Y.
Fund 1Y is Blume’s third growth fund, and the VC firm has already raised Rs 200 crore (nearly $25 million) of the Rs 400 crore target.
Fund 1Y is backed by a high-quality LP base, with existing LPs in Blume Ventures’ other funds participating again, the VC firm said in a statement, adding that it has visibility for the remaining corpus.
Blume said that it will invest part of the capital from this new Fund 1Y to buy out its existing portfolio winners like Intrcity, Cashify, Carbon Clean, and Zopper from their legacy Fund I and allied investment vehicles. It will also use the corpus to invest in the existing winners of its other funds as well.
“Blume Ventures’ Fund I LPs have started seeing meaningful capital being returned, and having seen one complete capital cycle, many of them are confidently returning as investors in this new Fund 1Y,” the VC firm said.
The first close of Fund 1Y comes on the heels of Blume Venture raising $290 million for its Fund IV last year. It is looking to back around 30-35 startups from its fourth fund and has already made over a dozen investments.
“It’s a global practice for fund managers like Blume to provide exits to the existing LPs by finding new investors who can buy out a combination of assets from the original Fund,” said Karthik Reddy, co-founder and partner, Blume Ventures.
Reddy added that Blume is one of the first VCs in India to have executed this structure with the new investors also being onshore.
“The current environment and our unique strategy allow us to balance the interests of our current and incoming investors and hold the best of our companies for another 3-4 years before eventual public listing and create wealth for the local ecosystem. It's a win-win solution for all involved.”
Prior to this, Blume Ventures raised a similar-sized opportunity fund in 2021. The VC firm said that the last fund brought out strong performers from Fund 1, and a majority of the portfolio’s underlying metrics have grown at 35%+ CAGR (compound annual growth rate), resulting in follow-on rounds even in this market.
Blume Ventures also raised opportunity funds in 2018 and 2022 to double down on its investments in portfolio winners. It backed companies such as Exotel, Grey Orange Robotics, Smallcase, Slice, Unacademy, and WebEngage from these opportunity funds.
These funds either help Blume in buying out stakes of winning companies from its legacy funds to hold on to these positions or invest additional capital into break-out businesses on the back of follow-on investors to create effective ways for its LP (limited partner) base to continue generating returns from high-quality businesses.
Blume also runs Blume Founders Fund which makes small investments in startups outside its main funds. It typically invests $25,000-100,000 depending on the size of the round, and does not invest beyond the first cheque.
