If You're Not Reaching Back To Help Anyone Then You're Not Building A Legacy. Karthik B. Reddy
"Over 7 years of Blume, with every passing year, the answer is even more clearer - its the founders and their ability to build a team and obsess about solving a problem."
Blume's portfolio is impressive, what combination of signals convince you to write the cheque?
In that simple line are embedded other essential cues - tenacity to build over a decade if not more, passion to fix the way customers use the product being built, ability to build great teams and become orchestrators of scale than just virtuoso solo players.
Once we sense this strong signal, we are almost always half way to the decision point. Then comes the layer of market size and scale of ambition and the opportunity that the industry offers - for whom the problem is being solved.
Market sizes allow for not only scaled outcomes and exits, but for pivoting to solve more important problems as you discover them. Large market sizes are a must for large outcomes and since the entire VC industry is built around this paradigm, there is unfortunately no escaping this. Both of the above contribute a lot towards speed of achieving scale, and the absolute possible scale of business itself and we give them both almost equal weightage.
When we are writing the cheque though, its usually because we have a strong view on the market beforehand.
"Market sizes allow for not only scaled outcomes and exits, but for pivoting to solve more important problems as you discover them"
What's the ideal revenue milestone/ customer base milestone for a venture to attract Blume's attention?
We write cheques from an early seed stage all the way to a pre- Series A stage.
What that means is that we are willing to price risk in companies which are addressing massive problems and are run by great founding teams, but where a 500K-$1 million cheque makes some impact and gives the ability for the company to demonstrate either proof of concept or rapidly scale.
Accordingly, we could be entering companies that are $1 mill in valuation to $10 mill in valuation - and we measure the associated risk for such valuations basis the traction they've achieved on revenues/customers and blend it with the team quality metric.
We may choose several ways of defraying the capital risk by picking great co-investors. Therefore, its very difficult to give a set of specific numbers as an answer to this question.
Like most things, the answer is "it depends"; albeit within the above construct.
"We are willing to price risk in companies which are addressing massive problems and are run by great founding teams"
What will be the focus of the next fund that you raise?
We are currently in the last phase of investing from our $60 million Fund II. We will soon have capital only for follow-on rounds into our Fund II portfolio.
We would like to raise a $80-90 million fund and extend the same investing principles as we had in Fund II.
"We continue to believe in both the "India Consumption" story as well as the "Indian Engineering" story"
By India consumption we mean both consumer and SMB marketplaces th"at are leveraging smartphones to solve problems in the areas of Financial Services, Education, Healthcare, Media, and SMB operations.
India Engineering is a theme where we see startups in software, hardware, IoT, biotech and clean tech build uniquely for global or regional pain points, but at Indian price points / cost structures.
We think we can build many a world-beating firm out of India in the next decade using an Indian Engineering base.
"In Fund II, we invested approximately in the 2/3rd and 1/3rd ratio of these two themes and we will likely maintain a similar ratio in Fund III."
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