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(Blume) Investment Report - 11A+B+C (H1 2014)
(Blume) Investment Report - 11A+B+C (H1 2014)
Youre given only one little spark of madness. You mustnt lose it Robin Williams
Preamble
Half-yearly reports will layout a more detailed state of the Fund (part of which is
purposed for wider circulation) while Quarterly reports will focus on financial
performance of the Fund and Mark-to-Market (MTM) etc. (meant for the Funds
investors Only)
A) Market Commentary
B) Fund Update
Note: We appreciate and respect investors feedback and continue to work towards
incorporating it gradually into the reporting process, to enhance the quality and
quantity of information for all Investors.
hk@csir.res.in
Dear Investors,
If you are reading this, theres a good chance youre directly (or indirectly) interested or
connected to Venture Capital. While some of our US friends may have already seen the
documentary Something Ventured, we usually draw blanks when we ask folks in
India if theyve seen it. It should be mandatory viewing for anyone who is reading this
report, especially in India. [It was mandatory viewing for the Blume team a few weeks
ago at a mini-offsite]
[The feedback / reactions of all our team members has been consolidated and posted on
this blog post - http://blumeventures.wordpress.com/2014/08/31/something-ventured-a-
blume-team-review-and-analysis/]
The blog post makes several points. However, we would like this Section to cover one of
the more fundamental points we grapple with everyday, sitting at the lower end of the
VC food chain.
- Can a tech entrepreneur wanting to build a world-class company in record time (every
VC wants records to be broken) build it by bootstrapping? Very tough
- Can such a company build without the VCs belief that it is capable of disruption at
scale? Very tough
- Can an ecosystem that doesnt believe in its own capabilities ever beat the deep
pockets of startups that are funded in China or the USA? Very rarely
Repeatedly, the fast-growth $1 billion Unicorns in India have been lead-invested into
by global investors such as Softbank, Tiger Global, Naspers and a few others.
Flipkart
Let us examine the case of Flipkart to illustrate this point, even though we
acknowledge that its an unusual extremity.
hk@csir.res.in
The first cheque was from Accel India a great seed cheque play, that we guess is
clearly in 500-1000x territory today
Thereafter, there has been no lead investor (in any of the fives rounds since) that
even sits in India!
From a $5 million range (when Accel invested) to a $7 billion range today, none of
the value creation (other than for the two Bansals, their team and Accel India on
the board) was even enabled by someone sitting in India, from a financing
standpoint. The large cheques continued, without exception, from overseas.
At some point, the company becomes so hot that the existing Board can choose not
to take Indian capital, even if it were keen to participate, though we doubt that any
Indian capital was willing to make the leap of faith in believing Flipkarts valuation
at any of the points where it was offered.
inMobi, too, would look like a very similar story, with KPCB, Sherpalo, and Softbank
as the lead investors who helped script the story there.
Summary
Yes we will venture as far as saying that without the belief of the Flipkart investors
(as importantly as its great founding team and executives), ecommerce in India would
be about 3 years behind at least in terms of its reach, infrastructure, competition and
potential growth path.
It takes bold and committed investors to build path-breaking ideas. While were
collectively developing the DNA to make such commitments in India at early stage and
gradually up the value chain, our existing base of wealth pools, public market investors
and even Indian decision makers sitting in VC/PE shops are still far from consistently
defying the odds and building $billion+ companies in India (it was the same when
Infosys public issue devolved back in the early 90s and the underwriters rescued the
IPO).
The silver lining in all this is that at least the Indian arms of Accel, Sequoia, Matrix,
Bessemer etc. and some indigenous funds like Kalaari and Nexus are now making the
big bold bets that discover these great startups and sometimes, are bold enough to
stand upto the global giants e.g. in Cab services (of course, Tiger was first off the mark
there too!), ecommerce (Snapdeal, Myntra), mobile devices (Micromax). We need a lot
more funds of this nature across all stages.
As we publish this, the investors who led inMobi and Flipkart to leadership, also
invested into Hike it doesnt matter whether Hike beats Whatsapp, WeChat and Line
in India to become a market leader or fails in attempting to do so, what matters is that
we have investors who want to try and make it happen! Sadly, there is nothing Indian
about these two investors Tiger and Softbank (though we can argue that we need to
invite Lee Fixel of Tiger to take honorary citizenship).
As Indians, we need to notch up the belief quotient a bit. Were seeing it in more LPs
backing new GPs (we were a 100% domestic fund) and were seeing Premji Invest,
Ratan Tata and others making early strides in playing directly.
hk@csir.res.in
SECTION B: FUND UPDATE
From this report onwards, we will begin Section B by highlighting the companies where
a material positive event has occurred (all financial implications will be covered in the
financial section of the Report). This list does NOT include Bridge Rounds led by Blume
and or peer seed round investors.
M&A / Exits
Note:
* indicates that Blume participated in the round;
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hk@csir.res.in
Text in BLUE indicates that the latest event occurred in the 6 month period preceding
this Reports Quarter ending date OR has been publicly announced prior to publishing;
# indicates that the there was a positive event but the value exchange (at least at the
time of the event) was less than the value of the original Investment i.e. <1x
As mentioned in the last report, some investments that were made into overseas-
domiciled companies as well as the final few investments that spilt into the first Q of
2014 were brought into the portfolio. This brings the SEED program in Blume Fund I
to a completion and all reserves are for the Follow-On Rounds into these companies.
Snaplion / Internet & Mobile / Mobile Publishing / Retail & Ent / Delhi NCR
Nikhil, Tapan & Rohan www.snaplion.com
Co-investors: Rehan Y Khan, Rajan Anandan, India Internet Group
hk@csir.res.in
2014 Scorecard
At your fund, were beginning to spot some Blu Swans in the distant horizon. Its an
incredible feeling to see them emerge. Yes, these are forward-looking crazy statements.
But, were happy to make them transparently to our investors.
We would like to share our 2014 outlook. We anticipate the portfolio to deliver:
8-10 Series As (in addition to the existing 6)
2-3 Series Bs (from the existing 6 that raised Series A pre-2014)
2-3 Small acquisitions/exits (in addition to the 2 that happened in 2013)
1-2 Tiny specks on the horizon, probably Blu Swans (subset of the above A/B list)
hk@csir.res.in
SECTION C: Portfolio-Company Level Business Updates
Notes to Section
This comprises of
a) Lead Investments
b) Syndicate Investments where total exposure in the seed round or Seed+Follow-
on rounds has exceeded INR 10 million (Rs. 1cr or approx $160K as per current
exchange rates)
This group has been shrinking. With every passing quarter, Syndicate investments are
- either moving to the ALPHA Group since the companies begin to perform and
Blume invests more in a Bridge or a Series A round to increase its exposure
- The company doesnt progress to the next stage and the option cheque is written
down
hk@csir.res.in
EXHIBIT 1: GEOGRAPHIC SPREAD of PORTFOLIO, by City
hk@csir.res.in
1B: BLUME BETA
INDIA
Snaplion
Voxapp
Delhi
Giftery NCR
Instamojo
RedQuanta
Paletly
Voxpop Framebench
Mumbai
Pune
NowFloats
Snapbizz Hyderabad Active portfolio only
Socialblood
shown here
Cherish Printo
Dataweave SportingMindz
emo2 Systemantics Bangalore Cos in RED, BOLD +
Explara Tripvillas Italic are additions since
Hashcube Tookitaki last Half-year Report
Level10 Unamia
emo2
!
!
hk@csir.res.in
EXHIBIT 2: SECTOR-WISE DEPICTION of PORTFOLIO
BLUME&FUND&I&PORTFOLIO I&&N&&D&&U&&S&&T&&R&&Y&&&&&&&&&&V&&E&&R&&T&&I&&C&&A&&L&&S
(As$of$Jun$30,$2014)
Internet$&$Mobile$ LARGE$INDUSTRY$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
[CoreTech$+$Infra$OR$ Retail$+$ Real$
Additions$to$the$portfolio$in$last$ Gaming$+$ Media$+$ Information$+$$ Advertising$+$ Travel$+$ Education$ Financial$ Health$+$ [Pharma$/$Chemicals$/$Textiles$/$
Payments$OR$ Jobs$+$HR Commerce$+$ Estate$+$
6mths$in$BLUE Entertainment Publishing Data$/$Analytics Marketing Location$OR$
Hospitality +$Training [ Services$+$Tech] Medical Energy$/$Manuf$/$Auto$/$
Brands Constrn
Platforms] Logistics]
Promptec&&&&&&&
CLEAN&TECH&/&ENERGY
CCS
OTHER&&
&TECH.&
Shantani&&
LIFE&SCIENCES&/&HEALTHCARE
Karmic
GreyOrange&
MANUF&TECH&/&ROBOTICS
Systemantics
T&E&C&H&N&O&L&O&G&Y&(or&IP)&&&&&D&R&I&V&E&R&S&
Covacsis&&&
ENTERPRISE&Software
INTERNET, MOBILE & Intellocut
Mobstac&&
&Zipdial&
RedQuanta& Nivaata&&&&&&&
MEDIA Large
NowFloats&& Dataweave
Gharpay&&&&&&& Qubecell Enterprise
Snaplion
Internet&&&Mobile&X& Eki
ENTERPRISE&+&SMB Voxapp& E2E&&&&&&&&&&&&&&&&&&&&
CareerVita&
SOFTWARE&&
Services&/&Content
Cherish&
PescaFresh
ENTERPRISE&+&SMB&X&Services Infollion Kuliza Printo Remma
There have been only a few final additions to the FUND I portfolio. As reported before,
you will see 3 Distinct Buckets, defined by the sub-sectors where the investments
currently are:
* Internet & Mobile Tech the predominant focus of Fund I, within which we see that
our favorite risk buckets are Digital Media, Ad/Marketing Tech, Internet/Mobile Infra,
Travel and Hospitality, Retail+Commerce. Gaming and HR are the other sub-sectors
* Consumer Brands, Finance and Services very selectively done, based on strong
references, co-investors and niches
* Emerging and alternative Technologies one of our best decisions to allocate about
15-20% of the Fund to this strategy - Clean Tech & Efficiency, LifeSciences and
Robotics round up a very impressive set of companies
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hk@csir.res.in
Section C Addendum [attached separately]
(*Alpha and Beta are classifications from a Risk Management perspective for Blume Fund I and
represent investments where total aggregate investment is greater than and less than 1% of the Total
Fund, respectively).
Sincerely,
[Blume Venture Advisors Pvt Ltd. is the Fund Manager for Blume Ventures Fund I, a
SEBI-approved Domestic Venture Capital Fund]
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hk@csir.res.in