Early-stage venture capital firm Blume Ventures announced on Friday that it has successfully closed a differentiated secondary vehicle fund at ₹350 crore in partnership with Avendus, a leading investment banking firm, topping its target of ₹300 crore.
The Blume Ventures Fund IX is set to “allow interested new investors, existing Blume Fund I and allied entities’ investors, to hold the top performers in Fund I for an additional four to five years.”
According to the firm, six of the Blume I portfolio companies are packaged into the new portfolio, and their positions are being acquired by the new fund, Fund IX. The firms are robotics start-up GreyOrange, beauty products marketplace Purplle, insurance platform Turtlemint, cloud telephony company Exotel, background verification firm IDfy and user engagement platform WebEngage.
According to Blume Ventures, secondary structures are common as fund lives reach their natural limits – however, secondary transactions have been a rare occurrence in India’s venture capital industry. Historically, buyers in such funds have been offshore institutional investors, who specialize in taking risk of this nature but the challenges of a “pandemic” year allowed for innovation onshore. “Avendus also saw merit in the opportunity and built an exclusive product for its wealth customers,” Blume said in a press release.
“There is tremendous potential in our country as wealth creators get savvy and demand solutions that are differentiated and on par with global offerings,” said Nitin Singh, MD, and CEO, Avendus Wealth Management.
Ashish Fafadia, Partner, Blume Ventures, who led the effort, said, “We continue to be in further discussions for the select assets including global-first innovation businesses and those targeting the Indian consumer from the remainder of the portfolio to be part of another similar portfolio basket.” He added that the investor continued to be in further discussions for its other portfolio firms to be a part of such a deal.
Karthik Reddy, founding partner, Blume Ventures added, “We believed that the capital markets were harsh to some of our best Fund I founders (pre-2015 era) and we wanted to back them further as they begin to shoot up to their true potential.”
Friday’s fund will also allow Blume’s Fund 1 and fund 1A investors to see gross cash returns of over two times. The firm added that investors can expect additional one or two times returns from residual positions that were not a part of the secondary portfolio.
Blume has been one of the most active investors in the country, having backed more than 100 start-ups. In February 2020, it became the first home-grown venture firm capital to cross the milestone of $100 million in a single fund. It also closed its Opportunity Fund (Fund IIA) at $41 million in 2020.