Early-stage venture capital (VC) firm Blume Ventures has, since its founding in 2010, backed more than 150 start-ups including unicorns like Unacademy, Slice, Purplle, Spinny and Ola.

Ashish Fafadia, partner at Blume Ventures, shares his take on the opportunities and challenges in the sector. Edited excerpts:

Q

What are the major changes taking place in the start-up ecosystem in India over the last few years?

Over the years, start-ups have evolved into a broad-based ecosystem, wherein investors have acknowledged that ‘a winner takes it all’ approach may not work in the type of country India is today. There are more kinds of players — micro-VCs, specialised funds, corporate VCs — in the ecosystem; the engagement with companies with a digital-first approach has increased. Further, there has been greater acceptance of the uniqueness of the Indian market, which has encouraged the need to back companies in diversified areas of business.

Q

How has the funding winter impacted start-ups?

There has been consistent funding for early-stage and mid-level start-ups if it is clear that the business can run well and become efficient. We have seen a healthy traction over the last 18-20 months across portfolios, with at least one start-up receiving funding each month. However, at growth stage it is tough to get capital. The key factor will be a greater thrust on profitability, and companies will be rewarded for efficiency, which was missing during the last couple of years. It is not so much a funding winter, because there is greater balance between the cheque receivers and cheque writers.

Q

How much funding have you raised till date? Which sectors are you excited about?

Till date, we have raised $600 million. We are particularly excited about SaaS [software-as-a-service], fintech, consumer ideas, and environment.

Q

What does your current portfolio look like?

In our current portfolio we have made well over a dozen investments across sectors. Overall, the intention is to continue to go deep and reinvest in the ecosystem.

Q

When was your latest fund launched, and what are the sectors of interest?

The last fund was announced in 2022; that’s when we closed our Fund Hope. We are currently in the midst of raising our ₹400-crore Opportunity Fund, which is for growth and secondary investments, and will likely be closed next month.

Q

In terms of exit, what is your preferred route?

We have had 30 exists till date through secondary sale and mergers and acquisitions. However, IPO [initial public offering] is our most preferred route, even though they have been far and few. We have a host of companies which are ready and ripe to start preparing for IPO and we anticipate a few of these IPOs over the next two to three years.

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