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Early-stage venture capital firm Blume Ventures has made the initial close of its latest investment vehicle at $175 million, cofounder and partner Karthik Reddy told ET.The Bengaluru-based VC firm has backed companies such as Purplle, Unacademy, Spinny and Cashify. Its new fund, which is targeting a corpus of $250-275 million, will announce its final close by early next year.Several VC firms have been raising money to deploy into early-stage startups. Among them are India Quotient, which has raised $129 million for its fifth fund, Bengaluru-based Prime Venture Partners which has raised $100 million, Campus Fund which has raised $100 million, Cornerstone’s $200-million fund, and Bessemer Venture Partners $300-million fund.Blume Ventures’ Fund V has already invested in startups such as healthtech firms Mave Health and Confido, consumer tech companies Lucira and Ozi, fintech firm PowerUp Money, and deep tech Ido. The primarily focus of the fund will be consumer, fintech, healthtech and deep tech, said Reddy.The capital for Fund V has primarily been raised from Blume Ventures’ existing investors, along with new institutional investors, multilateral institutions, corporates and family offices.The initial target for Fund V was around $300 million, but Reddy said the firm would likely make a final close at $250-275 million, alluding to “difficult fundraising environment”.Reddy said Blume Ventures, which had raised more than $110 million from domestic investors for its previous fund, focused more on larger limited partners for the latest vehicle. “We’re trying to stay away from those experimental small checks today, which means we’re probably shutting out anywhere between $60 million to $75 million of Indian money,” he said.Blume Ventures’ previous flagship fund, which made a final close in 2022, was sized at $250 million, but was oversubscribed, taking it to $290 million.“Our fourth fund was around $50 million per partner, including reserves and fees. This lets us effectively address the earlier concern that we didn’t have enough capital to double down on our winners,” Reddy said.The India-focused firm, founded in 2010 by Reddy and Sanjay Nath, achieved returns exceeding five times its invested capital from its first fund, including an extension fund. ET had reported this in December 2023. Between 2010 and 2015, the firm deployed a total of Rs 114 crore across Fund-I and IA (the extension fund).The first fund has delivered cash returns of nearly 3.8 times, with an additional 0.5 times to be returned, he said. The second fund has generated cash returns of over 1.1 times the capital invested and is on track to touch nearly 3x.“Fund-II has fallen a lot from its peak. We had Dunzo, Koo, and Unacademy there, all of which we’ve taken significant markdowns or write-offs on,” said Reddy. Fund-III and IV have not seen any exits yet, he said.According to the firm, its initial public offering (IPO) pipeline is expected to kick off with insurtech startup Turtlemint, which has already filed its draft red herring prospectus (DRHP) with the markets regulator.“A lot of our DPI (distribution to paid-in capital, or cash returns) is going to come from companies on the path to IPOs; it’s not going to come through small-ticket Mundefined roughly 20 a year. I’m hoping 10-15 of those will come from Blume’s portfolio.”The firm expects to achieve a total DPI of over $80 million across all funds in 2025.Apart from Turtlemint, Reddy expects that companies such as Purple, IntrCity and IDfy from the first fund could go public over the next 24 months. From the second fund, Servify and Spinny are expected to get listings, while the third fund may see IPOs from Classplus, Leverage and Ultrahuman.“Markets like stability. So, we’ll focus on variables, stability and profitability,” he said.
