Homegrown venture capital firm Blume Ventures has marked the close of its opportunity fund at $41 million, which will be used to invest in the follow-on rounds of its portfolio companies.
Coming days after the close of its third fund at $102 million, the opportunity fund, dubbed Blume Ventures Fund IIA, will take the firm’s total capital under management to about $262 million.
The fund was raised from both domestic and international investors, many of whom are existing Blume investors. The capital from the opportunity fund will be used to invest in successful companies from funds I, IA and II portfolios, the Mumbai-based firm said in a statement.
Fund IIA will invest in 10-11 companies this year as it reaches the end of the investing cycle for this fund.
“As many Fund I and II companies began to break out, there were two counterintuitive trends that were playing out. We were playing a very active role in most of them even beyond Series B -- on boards and leveraging the Blume platform team -- whereas we had little or zero reserves for any of these stars. Our limited partners saw the rationale and sponsored our opportunity fund strategy,” Karthik Reddy, co-founder at Blume Venture, said.
“An opportunity fund is a distinct animal from the main fund. It is used for investing in follow-on rounds in companies that are doing well and raising follow-on rounds. In our business, 70-80% of investments will struggle or fail, and it is the 20-30% that breakout and pay for all of these (and some more), we have to back our winners and maintain our stakes in the follow-on rounds,” the statement said.
Founded in 2010 by Reddy and Sanjay Nath, the firm closed its debut fund in 2011 at Rs 100 crore (around $20 million then). In October 2016, it marked the final close of its second fund, Blume Ventures Fund II, at $60 million.
Blume’s portfolio includes over 100 startups. Apart from funding, it also offers its portfolio companies allied services such as hiring, fundraising, business development, founder learning and development.
These allied offerings include firm offshoots such as Constellation Blu for financial and legal assistance, Passion Connect for talent acquisition, Arka Venture Labs for business-to-business cross-border accelerator joint ventures with US-based funds, and Blu Swan for internal growth capital advisory. The firm also set up a research and development investment programme BUDHA with Japanese strategic partner University of Tokyo Edge Capital (UTEC) to back technology ideas. Blume has expanded its physical presence to New Delhi and Bengaluru over the past 18 months and scaled its teams in these cities.