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Feb 23, 2015 There is little that can withstand a man who can
conquer himself Louis XIV BLUME VENTURES FUND I + IA ~ QUARTERLY
INVESTOR LETTER Investment Scheme: Multi-Sector Seed Capital Fund
Report Period: Jul 1 to Dec 31, 2014 This Quarters Investor letter
comprises of A) Market Commentary, B) Fund Update, C) Portfolio
Companies Update and D) Investment Details Schedule for 2015
Quarterly Reports I. Feb 15 H2 2014 Report (ending Dec 31, 2014)
II. May 15 Q1 2015 Report (ending Mar 31, 2015) III. Aug 15 H1 2015
Report (ending Jun 30, 2015) IV. Nov 15 Q3 2015 Report (ending Sep
30, 2015) 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 C) Portfolio Companylevel
Business Updates D) Portfolio Investment Details Investment data:
Funds deployment of capital into each of the portfolio companies,
including bridge / follow-on rounds Section D) is strictly
confidential and meant for Investors ONLY there will be 2
independent Reports for Fund I and Fund IA investors 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.
Please send us feedback regularly.
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Dear Blume Investors, SECTION A: MARKET COMMENTARY Indias Chance
to Fly
Borrowing from the Economist cover this week, its apt to suggest
that this present moment is Indias Chance to Fly. It comes with a
giant pre-condition: the Government has to allow the innovation-led
economy to break free from the shackles of its onerous rules of
doing business. The rank #142 in ease of doing business across its
global peers is but a shame for an economy thats aspiring to be in
the top 3-5 countries (within 3-5 years) in Total Internet users,
GDP growth, Mobile (& Smartphone) penetration. As the Economist
suggests, if the government made it easy to draw local capital and
local talent and not burden them with wasteful regulation and
layers of taxes, the entrepreneurial spirit and technology prowess
of the country can transform the country across many sectors over
the next 10-15 years. If there is a possible pecking order in
economic savvy, its probably: Indian consumer > Indian SMB owner
> Indian Startup > Indian Enterprise > Indian investor
> Indian Government And we can hazard a guess that this will
hold true for quality of Technology Adoption as well since its a
good proxy for how each of the above market participants optimize
time and economic benefits. More powers to the above order = more
accelerated the progress of Indias flight
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Learnings from 2014 and Outlook for 2015 Go BIG or Go HOME This
is pretty much the theme for the year across the Blume portfolio.
While it was touted in the popular press and credited to Vijay of
PayTM, Valerie of Zipdial in our portfolio was also a proponent of
the phrase for a few years now and it became the rallying cry for
the portfolio at the beginning of the year. It helped that Twitter
has now purchased Zipdial!...and given credence to what Val set out
to achieve with Amiya and their team. The idea was NOT to suggest
that there are only two polar outcomes i.e. GO BIG = a multi-$100
million sale of the business or GO HOME = the painful alternative
of shuttering down. It was to suggest that everyone think afresh
and push limits to achieve their best possible outcomes. Go BIG was
to push our founders to play for the outsized outcome and their
stretched capabilities. Imagine disruption and scale as one
possibly can without cash as a constraint (humor yourself for a
fleeting moment) and then see if one were executing their ideas to
their fullest potential or shortchanging the opportunity that they
themselves created. This was the Go Big theme.
The second variant of the Go Big theme was to be cognizant of
the current market environment and maximize / optimize gains for
all stakeholders. Zipdial made it so easy to explain this by
scripting their exit story. It was not a multi-$100 million outcome
perhaps, but it was near perfect on many counts.
- the founders discovered last year that only a Strategic
investor can see the true potential of the idea and the scale at
which it can impact its audiences
- ZD worked with several such partners, most prominently
Facebook and Twitter - It demonstrated that the missed call was but
a calling card for the company, but
not the business model any more and it took forward-thinking
emerging market-focussed giants like TWTR and Facebook to get the
Big picture
- On the back of a commercial partnership, the conversation
became much more, and eventually led to an acquisition
- It meant that most of the ZD team gets to work with a
world-class company and builds innovative solutions as it did but
to audiences that are larger by a huge factor
- The founders will earn their rewards in the short, medium and
long-term in more ways than monetary
- All shareholders made smart returns with large multiples on
their cheques
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The Go Home message is a little bit more nuanced. Its easy to be
cynical and simply assume that the minute the bank account gets
depleted, its time to pack up and leave. However, weve seen that
2-3 years of effort means that there are enormous learnings at the
founder level, great teams have been built and sometimes, great
products. Is there a way to salvage that value and absorb it into a
Bigger Home rather than killing all of it and walking away with
just the experience? We think so and were proud to see a lot of our
founders at least attempting to do so. These are not choice sets
for just Blume founders. I think every early stage founder (and at
times, even post-Series A/B/C companies) would benefit from
constantly reviewing his or her startups within this framework. The
Vinglish Internet The Fund Investment team believes in the rapid
movement to everything needing to Mobile-first and, in some cases,
even perhaps Mobile-Only. This thesis is further strengthened by
the fact that 200-300 million first time Internet Users will be
added on the mobile device directly and a large percentage of them
will not have the benefit of English as a primary language. This
calls for a new chapter in Indian Internet and content. The
Vernacular-English blend is what we term the Vinglish Internet.
Blog related to this @
http://yourstory.com/2015/01/india-2015-english-internet-vinglish-internet/
The Surge of (Foreign) Capital for Consumer Internet A staggering
amount of capital is being brought into the country, not just
simply to bet on the teams that are building very interesting
solutions around consumer problems in India but the capital is
arguably ahead of the curve in terms of valuations and capital
required. This, in some parts, has the characteristics of what
would be termed as a bubble.
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We think that there are some shades of the bubble but the charge
is simply not being led by hedge funds and hot money. The surge is
being led by strong constituents like Alibaba, Softbank, Google
Capital and Tiger, looking to replicate the successes of similar
stories in China. Some of them are setting up physical offices here
(see above) What these players are able to do is fundamentally
accelerate the pace of adoption and user behavior change in markets
like local commerce, local delivery, micropayments, services
marketplaces such as cabs and temporary labor etc. Coupled with the
advent of powerful handsets and imminent upgrade of networks, we
think the Mobile will become the most powerful consumer good ever.
This in-house infographic gives you a sampling of this frenzy -
Witness the surge of valuations and the belief in the India
Internet story. 15 months ago, half these companies didnt belong in
these circles and the other half of them were 1-2 circles lower
than where they are today.
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Its not about just Making in India, its about the Innovation in
India Despite the bullishness around the consumer (and the small
nimble entrepreneur/SME) suddenly doing everything through a mobile
Internet device, we still believe that true world-class innovation
is being overlooked. Most of the large cheque writers whove entered
the market so far are not looking at this segment necessarily they
are here since they believe in the Indian market potential. The
Indian innovator-entrepreneur offers a significant opportunity to
conquer regional and global markets and Blume is a big believer in
this theme.
Half of our Fund I portfolio reflects this belief and we think
our Fund II portfolio will continue to reflect this trend. Blume
Fund II Clearly, we are bullish about both the India consumer and
small business theme (where usage will be dominant on mobile
devices) and we like Indian innovation that can be exported
overseas. Taxiforsure, Zopper and Purplle all built or are building
scale on the former while Zidpial, Grey Orange Robotics, Carbon
Clean Solutions etc. are leading the charge on the latter. With
these examples of early success in the current portfolio and with a
strong thesis around these investing themes, Blume Venture Advisors
have launched their fundraise in the overseas institutional markets
for a $50-60 million fund. We would be keen and pleased to see all
our existing investors participate deeper into Fund II (we are in
the process of setting up a domestic structure as well). We
continue to be fiercely focused on seed/early-stage investing which
is not a distinct focus area for most funds in the market. And we
think our brand strength will continue to drive some of the best
tech company founders to work with us not just for the next few
years, but for the next few decades.
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SECTION B: FUND UPDATE Section B highlights 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.
Company Name Event Investor(s) Series As & more Hotelogix
Series A / Series B
Accel* / Accel + Saama
Mettl Series A
Kalaari*
Mobstac Series A / Series B Accel* / Accel + Cisco *
Zopper Series A / Series B
Nirvana* / Tiger Global + Nirvana
Taxiforsure Series A / Series B / Series C
Accel + Helion * / Bessemer + Accel + Helion * / Accel(US) +
above 3
Covacsis Series A Reliance GenNext + Cisco *
Grey Orange Robotics Series A Tiger Global*
WeAreHolidays Series A Matrix*
Instamojo
Series A Kalaari
Hashcube
Series A Nazara Tech *
Purplle
Series A IvyCap Ventures *
Nowfloats
Series A Omidyar Network *
Tookitaki Series A Jungle Ventures + Rebright *
M&A / Exits Qubecell Acquisition (company)
Boku
Adepto Acquisition (asset) #
Kuliza
Gharpay / Clink Acquisition (asset) # Delhivery / Ezetap
Skoolshop
Acquisition (asset) # Hopscotch
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Karmic Acquisition (asset) # Cliantha
Moneysights
Acquisition (asset) # Times Internet
Zipdial Acquisition (company) Twitter
Note: * indicates that Blume participated in the round; 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.
Series As (in addition to the 5 achieved to date) 3-4 Positive Exit
Outcomes Company Sales (in addition to 2 to date)
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SECTION C: Portfolio-Company Level Business Updates Notes to
Section BLUME ALPHA Group 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 1% of the
Funds Capital) BLUME BETA Group This group list continues to
shrink. More Syndicate investments have
- either moved to the ALPHA Group - since the BETA 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 position
is written down The exhibits present the State of the Portfolio
EXHIBIT 1A / 1B : A CITY-WISE representation of the portfolio and
the division is along the lines of the Alpha/Beta groups as
described above Since Additions to the portfolio have stopped, we
are showing the Portfolio Companies that have raised Series A (and
above) and significant Second Seed Rounds on the Maps using Green
and Blue colors respectively.
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EXHIBIT 1: GEOGRAPHIC SPREAD of PORTFOLIO, by City 1A: BLUME
ALPHA Group
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1B: BLUME BETA Group
Section C Addendum [attached separately] A comprehensive
Addendum has been designed to be a ready reckoner to the portfolio,
a Directory of sorts, which is ONLY shared with Fund Investors and
select VCs. All of the Actively managed BLUME ALPHA and BETA Group
Companies are covered in this Addendum (*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).
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D) Portfolio Investment Details [Attached as a separate file]
Sincerely,
Karthik Reddy and Sanjay Nath
Co-Founders and Managing Partners Blume Venture Advisors Pvt
Ltd. [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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