Blume views AI as a horizontal capability that improves products across categories—such as AI‑powered features in software as a service (SaaS) to streamline operations, AI in fintech risk and service, and AI in medical and healthcare workflows.

“We are strong believers that there will be application areas rather than fundamental AI in our portfolio,” Karthik Reddy, managing partner, said in an interview with Mint. “There’ll be a lot of application areas that could be what conventional SaaS, consumer or fintech once were. So we think 40-50% of our portfolio, if not more, will have an AI flavour or architecture.”

On exits, Blume has logged more than 20 to date, including ZipDial (acquired by X), TaxiForSure (acquired by Ola), Runnr (acquired by Zomato), E2E Networks (listed on NSE Emerge), Chillr (acquired by Truecaller) and TapChief (acquired by Unacademy), among others.

Some of the other leading startups Blume has backed include Battery Smart, Cashify, Classplus, Pixxel, Purplle, Servify, slice, Spinny, Turtlemint, and Ultrahuman.

The firm, known for its early bets across India’s consumer internet, fintech, and SaaS sectors, plans to continue backing those themes, according to Reddy.

Reddy said the share of India-based limited partners in Fund V will likely reset to about 20-25%, down from roughly 40% in Fund IV. The change reflects a move away from many small family office cheques towards larger institutional commitments.

Changing preferences

“Our preference now is for larger institutional Indian commitments over numerous small family-office cheques,” he said, adding that several Indian institutional commitments are in progress for later closes.

According to Karthik, “We ended up with 40% Indian money in Fund IV, and it got very ‘retail’—family offices would spend time and say they want to put $2 million but end up putting ₹2 crore, so the numbers don’t add up while the effort does—hence the shift.” Still, family offices remain an important source of funds for the VC firm, even as the total contribution as a percentage has reduced.

Key Takeaways

  • Blume Ventures has achieved a $175 million first close for Fund V, targeting a final corpus of $275 million.
  • The firm is intensifying its focus on artificial intelligence, viewing it as a horizontal capability that will be integrated into 40-50% or more of its portfolio companies across all categories.
  • Blume is pivoting its funding sources by significantly reducing the share of small family-office cheques and prioritizing larger institutional commitments from India.
  • The exit strategy is evolving to favour small, profitable Indian IPOs as a more scalable and accelerated path to liquidity for Limited Partners, over scarce M&A or waiting for mega private rounds.
  • Blume is adjusting its entry point, comfortable with micro-VCs ‘grooming’ ultra-early rounds and plans to enter later with larger ownership stakes once early execution is proven.

Reddy said Blume will continue to invest across the four buckets it has refined over several funds. The India fintech bucket covers consumer and business finance, including payments, credit, wealth, insurance and enabling rails.

The second bucket included the ‘non‑fintech India’ bucket spanning consumer and small-business plays such as marketplaces, brands and commerce, and entertainment.

The third bucket includes deeptech-led companies in medical diagnostics and healthcare technologies, electric mobility, advanced manufacturing and automation.

Lastly, the cross‑border SaaS bucket focuses on software built in India for global customers—especially in US—across workflows, productivity and enterprise stacks, according to Reddy.

A recent Tracxn report stated that India’s tech startup ecosystem retained its rank as the world’s third-largest by venture funding in 2025, despite a softening of inflows. Startups raised $7.7 billion in the first nine months of 2025, according to the report.

The early pipeline remains mixed. Seed-stage funding fell to $727 million, down 39% year-on-year, while early-stage funding slipped 10% to $2.7 billion. Despite this, a report from the startup news platform Inc42 highlighted no slowdown in new fund announcements—particularly among micro-VCs. Over $2.5 billion was announced in Q3 2025 alone by 25 investors across stages, with 17 targeting early-stage startups.

Reddy said the rise of micro VCs is reshaping the market’s early layers. “India’s micro‑VC managers have grown from single digits a decade ago to about 175-200 today, many of them sector‑specialist,” he said. “We’re comfortable letting micro‑VCs groom ultra‑early rounds and coming in later with larger ownership at a higher price once early execution is visible.”

Looking to invest

While a large share of Blume’s exits have been through secondaries and M&A, Reddy expects the mix to shift as Funds III, IV and V mature. From the 2018-vintage Fund III, he said Blume is “a year or two away from two to three” public-market outcomes, adding that the firm sees Indian IPOs as a more scalable liquidity path for limited partners.

“Small, profitable IPOs in India can compound better than waiting for mega late‑stage private rounds,” he said. “Indian small‑cap fund managers will buy quality tech IPOs, unlike the US where sub‑$3-5 billion tech IPOs struggle today.”

Blume’s primary assets under management across its four core funds stand at about $650 million, rising to nearly $825 million when including its opportunity and continuity vehicles, Reddy said.

He added that lifetime DPI has crossed $200 million, driven primarily by Funds I and II, and that the firm aims to accelerate near‑term DPI through Indian public listings rather than wait for scarce all‑cash M&A.

DPI, or distribution to paid-in capital, is a performance metric that helps limited partners understand how much of their investment has been returned in actual cash.