India’s Blume Ventures expects 10-12 portfolio cos to launch IPO

Sanjay Nath and Karthik Reddy, founders of Blume Ventures. Photo: Abhijit Bhatlekar/Mint

Early-stage investor Blume Ventures expects 10-12 of its portfolio companies to either go public or become unicorns over the next decade, Ashish Fafadia, partner, Blume Ventures, said in an interview.

The venture capital firm, set up in 2010 by Karthik Reddy and Sanjay Nath, is nearing the deployment cycle of its $102-million third fund, and is looking at ways to stay invested in its growing portfolio. Blume Ventures had announced the final close of its Fund III in February 2020.

In January, it announced the final close of its 350-crore Fund 1X, which bought stakes in six portfolio firms from the first fund. The secondary sale, or transfer of stake, at current valuations, allowed Blume Ventures to offer exits to its limited partners, or investors in Fund 1, which was launched in 2011. Fund 1X can infuse more money into the six firms during future fund-raises, allowing the LPs to raise their stakes in the startups.

The companies which are now a part of Fund 1X include automation warehousing firm GreyOrange, beauty marketplace Purplle, insurtech firm Turtlemint and B2B startups Exotel, IDfy and WebEngage.

According to Blume, secondary structures are common as funds reach their natural limits. Historically, buyers in such funds have been offshore institutional investors, who specialize in taking risks. However, the challenges of a covid-year allowed the VC firm to innovate onshore. Fafadia said the venture capital fund will remain invested in portfolio firms while being relevant to their needs at the growth stage.

“With Fund 1 maturing, we were not keen to sell off our stakes in the portfolio and yet be able to deliver respectable exit outcomes within the fund life. Among the reasons were that we would have to wait for follow-ons, with July last year not being a conducive time for fund raising. We felt the performance of the companies was good with an IPO potential, showing a strong path to profitability. Hence, instead of quick stake sales, we began figuring out new partnership opportunities,” he added.

Blume has partnered with Avendus Capital, taking advantage of its wealth service client base, to float Fund 1X. “Our learning was that for a 2011 rupee-capital vintage fund, 10 years wouldn’t be the right period for returns, since the ecosystem was still shallow back then and more time was needed,” added Fafadia.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.