The first four parts of the series highlighted our thoughts around Portfolio construction and selection and how founders should think of relevance of an institutional venture capital fund in their lives. Here they are: 1, 2, 3, 4A, 4B
The Curtain Raiser
If you’ve survived the series so far, you may realise that we (Venture Capitalists) are an absolute pain in the ass as a breed. Expectations are sky high, we’re shooting for Blu Swans, if not Unicorns, we have crazy expectations on corporate governance, we offer crazy terms according to people who don’t understand their impact (or lack of) in the success of a company (such terms mostly kick in in failures btw) and so on and so forth. So, why bother with the damn VC?! I’ll let you ponder over that on your weekend rants with your friends, advisors and mentors.
At some point in 2016, we’ll be a hundred investments old as a firm across a few funds (Fund I, Fund IA, and now, the newly minted and yet to be fully closed Fund II).
Yes, 100! In Jan 2011, we were at Zero – yes, zero! By US standards, kind of active, but not of the charts or anything like that. We were told we spray and pray, we were told that our model doesn’t yield meaningful returns for our investors, we were told that our stakes were too small to matter to anyone and we were told that the economics of small funds isn’t worthwhile.
Sometime, in 2020, we will write, with hindsight, reflecting on the success and failures of the Blume Fund I model, even as we evolved into a stronger force in Fund II (Fund II quietly kicked in a couple of quarters ago, the first investment from the fund being RoadRunnr)
Instead of picking on the most transparent fund house in Indian VC history (all of 10 years old as an industry, so not much of a history really), no one critiques the opacity of every other VC firm (the price of transparency that Blume ends up paying is ironic at best), where you have bloated fund sizes – either chasing Unicorns all night long (I hope people realize that they’re more common in dreams than daily life) or concocting new seed strategies and opportunity funds at either end of their sweet spot to justify the additional flab.
Why do we do what we do at Blume?
It goes back to the challenge of balancing Conviction, love for an idea you want to see in the world, having the courage to find a great team and backing them and somehow finding enough returns on a portfolio basis to justify a decade of work and then, and only then, making money alongside the best founders – for your investors and yourself.
The money may or may not be very large but if you’ve done a good job, it should balance out the madness of surviving the lives, success and death of a 100 companies (there are almost always two funds in play simultaneously, if not three in a Fund house) …while making the returns that one expects to, as a Capitalist of the ‘venturing’ kind.
And are we waiting for others to signal to us where the world is going?
Not at all! We play when we believe in something and/or someone. We are not afraid to reveal why we chose to play. When we say we want to lead/co-lead most investments in Fund II, we are playing on the front foot and with a straight bat (cricket analogies)– so, all the more reason we should have very strong reasons. We can’t be waiting for Series A VC’s to buy into a thesis and then follow with me-too plays! That would be absurd – the proverbial tail trying to wag the dog – we don’t have capital to compete with them and on that count alone, would lose out many a time (clearly, we’ve learnt a few things from the first 5 years).
So, we need to state our Conviction in the public eye (refer Part 1 of this series re: Conviction Criteria). We decided, as a team, that if we are convinced enough to transcribe our beliefs in a team & their startup into an IC (Investment Committee) note, should we not be able to write a quick blog about why we backed them? So, more often than not, we will publish!
The occasions when we don’t publish, the reasons maybe that the business is changing very rapidly, or pivoting as people like to call it, OR there is too much competition and the founders feel it too premature to talk about the company OR we’re just a bit lazy and guarded ourselves. Despite all that, we will try and summarize the reasons for the decision made and publish as often as we can and as soon as we feel we are ready – and thus, will be marked the many chapters of the Blume Portfolio Chronicles.
The first of these chronicles will be on a company we invested into last year – Belong.co – one of the few new investments from Fund IA. Watch this space!
Adit, from our team, already technically posted the first of the Chronicles earlier this week, in honour of our first Fund II portfolio company – Runnr. And yes, the entire series so far was a Foreword, a wider comprehensive framework to be able to kick off the perpetual series – on our portfolio companies and their founders.