India’s Blume Ventures raises $105 million in the first close of its fourth fund

Blume Ventures said on Wednesday it has raised $105 million in the first close of its fourth fund, less than two years after finalizing its previous fund, as investment activity intensifies in the world’s second largest internet market.

The 11-year-old firm, one of the largest Indian venture funds, said it expects its new fund to balloon to close to $200 million by March next year, which is when it hopes for the final close. Its current LPs include some multi-family office wealth management funds, sovereigns, and some corporates across Asia and Europe.

With the new fund, the investment firm will continue to focus on backing early stage startups in their pre-seed and pre-Series A rounds, said Karthik Reddy, co-founder and managing partner at Blume Ventures, in an interview with TechCrunch.

Blume Ventures — which counts online learning platform Unacademy, fintech Slice, hyperlocal delivery service Dunzo, edtech Classplus, used-car marketplace Spinny, and insurer Turtlemint among its portfolio startups — backs early stage startups and typically writes its starting check in the range of $1 million to $2.5 million.

Over the years, Blume Ventures has become one of the most respected venture firms in the country. Even the startups that don’t end up getting a check from the fund speak highly of its partners, according to many entrepreneurs with whom TechCrunch has spoken.

Wednesday’s announcement comes at a time when Indian startups are raising record amounts of capital. Sequoia Capital India, Tiger Global, Falcon Edge Capital, and SoftBank have increased the pace of their investments in India in recent quarters as they double down on finding winners in one of the last great growth markets.

The pandemic has also seen many firms aggressively scramble for new strategies. But Blume Ventures appears to follow the more conservative approach. The venture firm has written about 25 checks from its previous fund and still has some reserves to do follow-on rounds, said Reddy.

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At the height of the pandemic, Blume Ventures was “slow and thoughtful” as it was not very comfortable with assessing firms over Zoom calls, he said. “We took our own time to write the last few checks,” he said.

“We are getting amazing love from large investors,” he said, adding that it may appear that some of the startups larger firms have backed in recent quarters have seen multi-fold jumps in valuations, but he pointed to some business-to-business e-commerce marketplaces and noted that their growth build-up had been in the works for three to four years.

With the firm’s $102 million third fund, Blume Ventures backed a number of firms in edtech and deep-tech SaaS spaces, he said. Reddy said it was too early to say how the third fund has performed, but added that it has probably never seen its portfolio firms reach the $50 million to $100 million valuations stage faster.

“But that’s natural. If you have a good founder, good story to tell, you don’t need a boat load of revenue to go and raise a double-digit round today,” he said, adding that by March the firm expects valuation of 10 portfolio startups from the third fund to be over $75 million. “This is a first-time experience for us. It took us much longer in previous funds.”

With the new fund, the largest for Blume Ventures, the firm expects to participate for longer in the lifecycle of its portfolio startups.