Home >Companies >News >Blume expects 10-12 portfolio firms to be IPO-ready

Bengaluru: Early-stage investor Blume Ventures, which has invested in Dunzo, Instamojo among others, believes 10-12 of its portfolio firms can potentially go public or turn unicorns over the next decade, as startups are taking first steps towards initial public offerings (IPOs), said a top executive.

The decade-old firm which is nearing the end of the deployment cycle of Fund III, closed in 2018, has looked at various ways to stay invested in its growing portfolio.

In January, it closed the 350 crore Fund 1X, which bought stake in six portfolio firms from its Fund 1. This secondary sale or transfer of stake, at current valuations, allowed Blume to give exits to its limited partners (LPs) in Fund I, that was launched in 2011.

Fund 1X can invest further in these six firms during future fund-raises, allowing LPs through Blume to increase their stake in these startups.

The companies which are now a part of Fund 1X include automation warehousing startup GreyOrange; beauty marketplace Purplle; insurtech firm Turtlemint and B2B startups Exotel, IDfy and WebEngage.

According to Blume, secondary structures are common as fund lives reach their natural limits. Historically, buyers in such funds have been offshore institutional investors, who specialize in taking risk of this nature. However, the challenges of a covid-year allowed for innovation onshore.

Ashish Fafadia, partner, Blume Ventures told Mint the new fund was also aimed at remaining invested in portfolio startups while being relevant to their needs at growth stage.

“With Fund I maturing, we were not keen to sell off our stakes in the portfolio and yet be able to deliver respectable exit outcomes within the fund life. Among the reasons were - that we would have to wait for follow-ons, with July last year not being a conducive time for fund raising. We felt the performance of the companies was good with an IPO potential, showing a strong path to profitability. Hence, instead of quick stake sales, we began figuring out new partnership opportunities," said Fafadia.

Blume partnered with Avendus Capital which took the opportunity to its wealth services client base to invest in these startups, leading to the creation of Blume’s latest Fund 1X.

“Our learning was that for a 2011 rupee-capital vintage fund, 10 years wouldn’t be the right period for returns, since the ecosystem was still shallow back then and more time was needed," added Fafadia.

Through Fund 1X, Blume also claims to have allowed Fund 1 and Fund 1A investors to see gross cash returns more than double, while they can still expect an additional 1-2x from the residual positions that were not a part of this secondary portfolio.

“Blume is making focused investments with deeper conviction, and wants to deliver the same value to founders, while being relevant right from early to different growth stages, until the exit. We have been vested in the portfolio and now want to be catalysts to create more unicorns, and deliver 5x plus returns to our LPs, in the process," said Fafadia.

He added that the firm makes 25-30 investments in each fund cycle and parks on an average 60% of the capital to continue making follow-on investments into these companies, and support founders.

It continues to be bullish about early stage, making 8-10 investments annually across health, fintech, logistics and SaaS among others.

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