At 15, Blume Ventures targets $275 million for Fund V, leaning on AI and institutional LPs
Blume sees AI as a horizontal capability that develops products in categories such as AI-powered features in software as a service (SaaS) to streamline operations, AI in fintech risk and services, and AI in medical and healthcare workflows.
“We believe we will have application areas rather than core AI in our portfolio,” managing partner Karthik Reddy said. Mint. “There will be as many application areas as traditional SaaS, consumer or fintech once did. So we think 40-50% of our portfolio, if not more, will have an AI structure or architecture.”
In exits, Blume has more than 20 entries to date, including ZipDial (acquired by
Some of the other leading startups supported by Blume include Battery Smart, Cashify, Classplus, Pixxel, Purplle, Servify, slice, Spinny, Turtlemint and Ultrahuman.
According to Reddy, the firm, known for its early bets in India’s consumer internet, fintech and SaaS sectors, plans to continue supporting these themes.
India-based limited partners’ stake in Fund V will likely drop to 20-25% from roughly 40% in Fund IV, Reddy said. This change reflects a move away from many small family office controls towards larger corporate commitments.
Change preferences
“Our preference now is for larger corporate Indian commitments rather than lots of small family office checks,” he said, adding that many Indian corporate commitments remain for later closures.
According to Karthik, “We had 40% Indian money in Fund IV and it became very ‘retail’; family offices would take their time and say they wanted to put in $2 million, but they would end up putting money in.” ₹2 crore, so while the efforts are increasing, the sum of the numbers is not increasing, hence the change.” Even though the total contribution has decreased in percentage terms, family offices still remain a major source of funds for the VC firm.
Key Takeaways
- Blume Ventures completed an initial close of $175 million for Fund V, targeting an eventual corpus of $275 million.
- The firm is intensifying its focus on AI and sees AI as a horizontal capability that will be integrated into 40-50% or more of its portfolio companies across all categories.
- Blume is shifting funding sources, significantly reducing the share of small family office checks and prioritizing larger corporate commitments from India.
- The exit strategy is evolving to favor small, profitable Indian IPOs as a more scalable and accelerated route to liquidity for Limited Partners, pending mergers and acquisitions or mega private rounds, which are in short supply.
- Blume is adjusting the entry point, pleased 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 in the four divisions it has refined through various funds. India fintech scope; It covers consumer and business finance, including payments, credit, wealth, insurance and enabling rails.
The second group included the ‘non-fintech India’ group, covering consumer and small business plays such as marketplaces, brands, commerce and entertainment.
The third group includes deeptech-led companies in the fields of medical diagnostics and health technologies, electric mobility, advanced manufacturing and automation.
Finally, the cross-border SaaS group focuses on software built in India for global customers (especially in the US) across workflows, productivity and enterprise stacks, according to Reddy.
A recent Tracxn report stated that India’s tech start-up ecosystem retains its position as the world’s third largest venture financing ecosystem in 2025 despite softening in inflows. According to the report, start-ups raised $7.7 billion in the first nine months of 2025.
The initial pipeline remains mixed. Early-stage funding fell 39% year over year to $727 million, while early-stage funding fell 10% to $2.7 billion. Despite this, a report from startup news platform Inc42 highlighted that there is no slowdown in new funding announcements, especially among micro VCs. In the third quarter of 2025 alone, over $2.5 billion was disclosed across stages by 25 investors, with 17 of them targeting early-stage startups.
Reddy said the rise of micro VCs is reshaping the early tiers of the market. “The number of India’s micro-VC managers has grown from single digits a decade ago to around 175-200 today, and most of them are industry experts,” he said. “We are comfortable allowing micro-VCs to stage ultra-early rounds and then come in with greater ownership at a higher price when early execution becomes visible.”
I want to invest
While the bulk of Blume’s exits come through secondary companies and mergers and acquisitions, Reddy expects the mix to change as Funds III, IV and V mature. Blume is “one to two years away” from its legacy Fund III in 2018 to a public market outcome, he said, adding that the firm sees Indian IPOs as a more scalable avenue for liquidity for limited partners.
“Small, profitable IPOs in India may do 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 tech IPOs below $3-5 billion are struggling today.”
Blume’s core assets under management across its four core funds stand at about $650 million, rising to about $825 million when opportunity and continuity tools are included, Reddy said.
He added that lifetime DPI has exceeded $200 million, mainly driven by Funds I and II, and the firm aims to accelerate short-term DPI through public listings in India rather than waiting for mergers and acquisitions, which are all cash scarce.
DPI, or allocation to paid-in capital, is a performance measure that helps limited partners understand how much of their investment is returning as actual cash.
