Blume Ventures

What does Blume 2023 look like then?

Conviction Capital #1 = cheque size at seed no bar, ownership of the journey is the bar

We love what we invest in - the people, the problem they are solving, and all other elements of the journey We then implicitly know that we’d like to be meaningful partners on this journey When we play our core cheques, we either back young first-time entrepreneurs with a ~$1-2 million (~7-15 Cr INR) solo or co-led cheque, or be an emphatic deep partner to a seasoned repeat founder with half of a 5-10$ mill round they may be raising These founders could be one of our alums from prior portfolio companies or someone who built without us, but with whom there is mutual respect and admiration Our late buildout of Fund III and the first year of Fund IV is replete with such examples

Conviction Capital #2 = hold depth of reserves to play compelling follow-on cheques when the founders deliver.

Given the limited reserves in Funds I ($20 mill) and Fund II ($60 million), we went to great lengths to raise additional capital through Opportunities and Secondary Funds Between 2018 and 2022, this has allowed us to continue investing in our Fund I and II winners It allowed us to demonstrate conviction; to both our LPs and our portfolio companies We now want to ensure that we have adequate depth within the fund corpus and reduce dependency on our growth pools till companies reach Series B or C Our “reserve ratio” (loosely defined as aggregate capital set aside for ALL follow-on rounds across all companies: aggregate capital across ALL first cheques) is now projected to be 2:1 It has grown from 1:1 (Fund I) to 1 3:1 (Fund II) and then to 1 6:1 (Fund III)

A $250+ mill Fund IV allows for our core cheque conviction to go deeper

Conviction Capital #3 = thesis-backed investing by individuals who are OGs in their thinking around a sector.

We’ve often told our LPs that “you pay us to be ahead of the curve”, not to invest with the herd or, god forbid, behind the curve The only way to be ahead of the curve is for a sectoral lead at Blume to take a bold view of the future of a certain market We then marry it to the firm’s collective read of a great founder with high integrity in building her or his own inter-generational leadership and business

More importantly, being ahead of the curve is what generates outrageous returns in venture, when those one-off mega-hits are born from the portfolio That’s the role of early-stage VC, not lazy post-facto trend-spotting You need to be the trend writer with the entrepreneurs you back As a generalist tech-VC, this is tough

I recall the Blume investment team war cry from 2016 - “the era of generalization at Blume is over Long live the era of specialization” This forces the team to choose sectoral expertise and commensurate love for the underlying problems, to keep pace with that manic obsession we see in the founders we back in the corresponding sector Without that, you’re just money and gyan With that shared passion and obsession, you are a financing co-founder

We worked hard to shape the firm into buckets of technology risk over the last 6-7 years

• Deep tech and emerging technologies (read EV, Robotics etc),
• Software (read SaaS, dev tools, Enterprise vertical software etc),
• Fintech (both infra / rails as well as applications of tech to Financial Services), and lastly,
• (Indian) Consumer and SMB internet (includes edtech, health, commerce, media etc) Now, with an accomplished track record in each of these sectoral buckets and able leadership in each of them, we begin the depth journey Across verticals and across sectoral team leads, we aspire to generate best-in-class returns

The $250+ million fund allows us to imagine each of these market opportunities to be modelled and pursued as 50-60$ mill buckets of risk and portfolio construction

Conviction is where the blood, sweat and money will flow

I will wrap up with how and why we pitch Blume’s Conviction Capital paradigm to all our stakeholders Our reward is in their conviction and our new responsibility of Fund IV - one that is 1 5x larger than our first three funds put together

Our founders and LPs have now witnessed and sensed this conviction along the 12-year Blume journey We would also like to prove the same to all of our co-investors The idea is to build a compelling anti-portfolio for each of our partner firms, which is equal to or better performing than our joint portfolio

It is also why we don’t start selling for the sake of selling We add to positions for much longer than any seed fund in the world! (We’ve only tested this empirically with our LPs and prospective LPs and no one has come up with a counter or a parallel elsewhere) Co-founders don’t sell early do they? Why should we then? We share that conviction most of the time with the CEO-founder When we don’t share it anymore and/or when we reach the natural limits of a fund cycle, we shall indeed sell When all of us, along with the founders, collectively feel the company has reached a certain limit, we shall find an acquirer together Every one of our portfolio M&As have been engineered this way - a collective decision with little or no angst other than the ruefulness of what may have been If the time’s up on the fund life, we’ll find a mechanism to provide liquidity

Over a decade, Blume has demonstrated its beliefs and principles amply Even the hardened naysayers and sceptics who turned us down in Funds II and III are slowly joining us as backers and partners in our journey We hope to keep adding such deep-thinking, super long-term custodians of capital to our impressive growing base of world-class LPs

• Karthik Reddy Karthik Reddy founded Blume with Sanjay Nath in 2011
• Karthik has shaped Blume’s investment approach and philosophy over the years, and in turn has overseen investments in some of Blume’s leading portfolio companies such as… Current Section Co-founder & Partner Sector Gaming, Media, ConsumerTech

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