Early-stage venture capital firm Blume Ventures has completed the initial close of its newest fund at $175 million, according to cofounder and partner Karthik Reddy.
The Bengaluru-headquartered investor, which has previously backed companies such as Purplle, Unacademy, Spinny and Cashify, is targeting a total corpus of $250-275 million for this vehicle and expects to complete the final close by early next year.
The fundraising comes amid heightened activity from other early-stage venture firms in India. Recent capital raises include India Quotient with $129 million for its fifth fund, Prime Venture Partners with $100 million, Campus Fund with $100 million, Cornerstone with $200 million, and Bessemer Venture Partners with $300 million.
Blume Ventures’ Fund V has already begun deploying capital into startups across healthtech, consumer tech, fintech, and deep tech. The fund’s early investments include healthtech companies Mave Health and Confido, consumer tech startups Lucira and Ozi, fintech firm PowerUp Money, and deep tech venture Ido.
Most of the capital for Fund V comes from existing LPs, alongside fresh participation from institutional investors, multilateral agencies, corporates, and family offices. Although the initial aim was to raise close to $300 million, Reddy said the final close is now expected around $250-275 million, citing the “difficult fundraising environment”.
He also noted that the firm has shifted its capital sources compared to the previous cycle. Blume Ventures had secured more than $110 million from Indian investors for its last flagship fund, but this time the firm chose to focus on larger limited partners. “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’s previous flagship vehicle, which reached its final close in 2022, was sized at $250 million and later oversubscribed to $290 million. Reddy said, “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.”
Founded in 2010 by Reddy and Sanjay Nath, the India-focused venture firm has delivered returns of more than five times the invested capital from its first fund (including the extension fund). Between 2010 and 2015, it deployed a total of Rs 114 crore across Fund-I and IA, and the first fund has returned nearly 3.8 times in cash, with another 0.5 times expected. The second fund has already returned over 1.1 times and is projected to reach nearly 3x.
However, not all bets performed as anticipated. “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,” Reddy said. Funds III and IV are yet to register exits.
Blume Ventures’ IPO pipeline is now expected to open with Turtlemint, which has already filed its draft red herring prospectus. Reddy said, “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 M&As.” He added, “I believe that over the next five years, we’ll probably see over 100 new IPOs, in addition to what’s already in the market; roughly 20 a year. I’m hoping 10-15 of those will come from Blume’s portfolio.”
The firm projects a total DPI of more than $80 million across all funds in 2025. Beyond Turtlemint, Reddy expects companies such as Purplle, IntrCity and IDfy (from Fund I) to potentially list over the next two years. From its second fund, Servify and Spinny are likely to go public, while Fund III could see IPOs from Classplus, Leverage and Ultrahuman.
“Markets like stability. So, we’ll focus on variables, stability and profitability,” he said.
