In a landscape where new funding rounds and unicorn statuses often dominate headlines, Karthik Reddy, co-founder and Managing Partner of Blume Ventures, offers a nuanced perspective on the less-discussed but equally crucial aspect of a fund’s lifecycle: exits. Originally shared only with our Limited Partners, we’re now making this analysis accessible to the broader ecosystem.
At Blume, we've always emphasized the critical role of exits in the venture ecosystem, showcasing success stories like the 17 largest exits from our Fund 1/1A that delivered 4x+ returns at Blume Day. We take it a step forward by offering a deep dive into the three exit strategies for venture funds: Secondaries, M&A, and IPOs, based on both Blume portfolio and non-portfolio data. Here's a glimpse of what the article unpacks.
Secondaries: The secondary market is a strategic liquidity tool, with varying attractiveness across company growth stages and fund sizes. Angels often exit first at lower valuations, followed by micro-VCs as companies scale, while larger institutional funds like Blume find secondaries attractive only at valuations exceeding $500M, which usually happen after 7 to 8 years of writing the first check.
M&A: Most M&As within the first five years occur at sub $20M valuations. These are typically acqui-hires with modest returns. As companies mature, M&A in the $50M to $500M range become more common and are most often undertaken by a financial or strategic investor. Super-large M&As ($500M+) remain rare in the Indian ecosystem.
IPOs: The entry barrier to an IPO is lower than commonly thought, with companies successfully listing at market caps as low as $100-300M. Smaller, profitable firms with $4-5M revenue can access the SME exchange. Larger IPOs, typically 8-10 years into a company's lifecycle, are reserved for market leaders with a path to profitability. The Indian public market rewards companies that deliver on profitability promises, even if not profitable at listing.
To know more, read the full article here.
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