Blume marks first close of its third growth fund at Rs 200 crore

Partners at Blume Ventures

Blume Ventures, which has backed unicorns like Unacademy, Slice, Purplle, Spinny and Ola, has marked the first close of its third growth fund at Rs 200 crore, adding to the pile of increasing venture capital (VC) dry powder.

Blume, through the new opportunity fund, named  Fund 1Y, is looking to raise Rs 400 crore for the remaining corpus, the Mumbai-based VC said in a statement on June 22. The first close is a landmark for a venture capital firm, beyond which the company starts deploying capital.

The launch and first close of the new fund comes just six months after Blume closed its fourth flagship and largest-ever fund of $250 million.  It adds to the billions of dollars of VC capital dry powder in India. Startup funding, however, has dried up in the past 18 months amid macroeconomic headwinds.

Fund 1Y is backed by existing LPs in Blume Ventures’s other funds as Blume Venture Fund I LPs have started seeing "meaningful capital being returned" after completing one capital cycle, the VC said.

As a part of this fundraise, Blume Ventures said it will invest part of the capital from the new fund to buy out "strong winners" such as Intrcity, Cashify, Carbon Clean, and Zopper from their legacy Fund I and allied investment vehicles and use the remaining to invest in the existing winners of their other funds.

Blume Ventures raised a similar-sized Opportunity Fund in 2021, which bought out strong performers from Fund 1, and a majority of the portfolio’s underlying metrics have grown at 35 percent CAGR, resulting in follow-on rounds even in this market, the VC said.

Blume Ventures also raised Opportunity Funds in 2018 and 2022 solely for doubling down on their investments in portfolio companies such as Exotel, Grey Orange Robotics, Smallcase, Slice, Unacademy, and WebEngage, the VC said.

“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. Blume is one of the first VCs in India to have executed this structure with the new investors also being onshore," said Karthik Reddy, Co-founder and Partner, of Blume Ventures.

Blume said through these continuity and opportunity funds, the VC buys out stakes of high-performing companies from its legacy funds at pre-validated price points discovered by follow-on investors and holds on to these positions as they brace up for a path to profitability and eventual public listing.

The VC said it also invests additional capital into break-out businesses on the back of follow-on investors, thereby continuing to create effective ways for its LP base to participate in certain high-performing businesses.

“We have a fabulous set of winners in our portfolio, and I am glad that we have been able to raise additional capital to stay invested longer and go deeper in our winners. We believe in the power of public markets and are confident that businesses such as Purplle, Zopper, Cashify and others in this portfolio are well entrenched on the path," said Vikram Gawande, Vice President, of Growth Investments, Blume Ventures.