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.
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.