Indian Science & Engineering: A New Age Dawns

With the advent of new age startups who are focusing on core innovation, we thought it was befitting to have a sound panel discussion on “Indian Science & Engineering: A new age dawns” on the occasion of our annual flagship event – “Blume Day 2019”.  

The panel was moderated by Milind Shah who is a partner at Stratlead Advisors & an investor at Unitus Seed capital. In this panel, we had some distinguished guests, namely Noriaki Sakamoto, (Partner, University of Tokyo Edge Capital, Prof C S Murali (Chairman, STEM Cell at IISc), Dr. Charit Bhograj (Co-Founder, Tricog – An Insta ECG provider) & Saurav Kumar (Founder, Euler Motors – EVs as Light Commercial Vehicles).

We had an interesting discussion around intellectual property, University oriented Private capital Partnership models & more. We discovered the following key insights:

(1) Patents vs Publications: Where is India moving?

a.   Prof C S Murali highlighted that Indian Academia had been focusing on publishing their work, but with the recent advent of Entrepreneurship culture, academicians have started patenting their work as well

b.   Saurav Kumar added that another key driver for patent filing would be enforcement of stricter measures on IP infringement by our judicial system

(2) Is India ready to explore private capital models in partnership with Universities?

a.   Noriaki San from UTEC highlighted that their relationships with 5-7 universities across the globe has been the “secret sauce” of identifying the best hard-tech startups across globe

b.   Prof Murali added that IISc is exploring similar models and with time (probably 3-4 years down the line), India would see many such partnerships

(3) Recognition of Technology incubation as a CSR activity by Govt. of India has encouraged many corporates to set up R&D labs & centers which can be utilized by early stage startups.

P.S: When the panelists were asked where they would invest in this new age dawn of India, Dr Charit & Noriaki San went for Healthcare, whereas Saurav wants to bet on Sustainable energy and Prof. Murali wants to bet on Sustainable & clean water.

Deliver Traditional Services Full Stack (or Don’t Bother)

Over the last few years, to be or not to be ‘full stack’ has become a key business decision. The market leaders in all domains – Swiggy, Zomato, Oyo, Byju’s etc., are seeding their version of full stack by expanding vertically. The impact of this trend on early to medium stage startups is not insignificant. To throw some light on this, we invited our portfolio companies to share their thoughts and perspectives on their ‘full stack experience and journey’.

The panel consisted of Yash Sehgal (BeatO), Sanna Vohra (Wedding Brigade), Samir Bangara (Qyuki) and Mihir Mohan (Pitstop), with Sajith Pai from Blume Ventures moderating the panel. Sajith started off the panel by addressing how full stack is becoming a global phenomenon, where the likes of Netflix & Amazon are producing content, Opendoor is buying houses, and Swiggy, Zomato are exploring cloud kitchens. He then teed off the discussion by asking the following question – “What was the key driver for the decision to go full stack – higher margins, exclusive access to better data, better control over inventory and quality, better control over customer experience, or fundraising?”

To summarize, we’re listing a few takeaways from the discussion  –

1. The Wedding angle: Sanna Vohra (Cofounder, Wedding Brigade) said that providing ‘better & branded experience’ to the customer was the ultimate driver to go full stack. By exercising higher control over the entire process of wedding bookings ( beyond merely suggesting options), they feel closer to realizing the goal to provide the best wedding experience to the average middle-class Indian family. Wedding Brigade has also launched a private label brand ‘Kinna Sohna’ recently as another piece to their full stack story.

2. The content & commerce angle: Samir from Qyuki – a startup that serves a third of the total video watching base – said that data was the piece most valuable to them. Qyuki has become the holy grail for predictive analytics in the online content space – Samir believes they’re now best placed to answer questions like what will work, who will work, what must change. Owning Talent, Content, and Commerce, which is Qyuki’s version of full stack, has pinned them to this position.  

3. The healthcare angle: For Yash (BeatO), the journey to full stack was one full of learnings. They started off with a focussed offering and expanded to offering foods, insurance, glucometers and more. How did that happen? Because the customer expected a fuller range of services from BeatO as their trusted Diabetes coach, and often demanded of them.

4. The service delivery angle: Pitstop’s calling for rounded services came when they received a bunch of customer complaints regarding service areas that were controlled by third-party vendors, and not them – “Our facebook rating was 1.5!” They decided that they had to own the three pillars of customer experience – (1) the mechanic (2) his tools and (3) the car’s spare parts. Pitstop now has a Facebook rating of 4.5.

The panel concluded with closing remarks on hiring and capital requirements –

1. Horses for courses: Hiring team members suited to the areas you’re going deeper helps. For e.g., Pitstop hired automotive engineers as they started owning end-to-end car repair service. Wedding Brigade had to hire people who had experience in offline areas of the wedding industry, such as venue management.

2. Capital raising is not a big challenge as going full stack also means greater cash inflows, and this can be deployed carefully to meet the increased cash needs of going full stack. Broadly, panellists believe that cash spent on going full stack will lead to more cash earnt for them from the expanded billing amount.

In interest of the readers, we’ve tried to present a concise version of the discussion through this blog. For more, you can check out the enclosed video.

Reaching the Next Billion Users in Bharat

The Next Billion Users or NBUs has been a hot topic in the Indian startup ecosystem. Given the many questions milling around this topic, and with a view to clarify this concept, we hosted a panel discussion on this topic on ‘Blume Day’ – our annual flagship event. The panel saw participation from a cohort of Blume-funded startups – Sucharita Mukherjee (Co-founder, Kaleidofin), Ranjith Mukundan (Co-founder, Stellapps), Arjun Ahluwalia (Co-founder, Jai Kisan), and Jasminder Singh Gulati (Co-founder, NowFloats). The panel was moderated by Shyam Unnikrishnan, Partner at Bain & Company.

Shyam started with an interesting datapoint – “9 in 10 internet mobile users in India will soon speak in vernacular”. Furthermore, he briefly covered the current enablers for the NBU – democratization of internet, favourable public policies and unbundling of traditional services at the last mile. He kicked off the panel discussion with a key question – “Will this user base create a billion-dollar business for Indian entrepreneurs?”

Sucharita, co-founder, Kaleidofin, said “Only the top 3 percentile makes >=6 lakhs of income. So, it’s really the rest of the 97% that we consider as our target customer segment. It is really a multibillion-dollar opportunity.”

Jasminder from NowFloats highlighted that NBUs are not driven by need but aspiration. Nowfloats, which enables SMBs with website management tools, charges  Rs ~30k to every business-owner per annum. The fact that they shell out this much money would mean that the NBUs are looking for improved business outputs. The customer has clearly evolved.

An emerging consumer segment in the next billion users is the 100mn farmer base in India, interestingly one that gets almost a third of its income from dairy. JaiKisan and Stellapps, panellists in the discussion, act as enablers to farmer population of India – where one facilitates access loans for inputs, the other tracks and manages the dairy business for farmers.

Reacting to Shyam’s question on ‘How to build for this user base?’, Arjun from JaiKisan said – “Our aim is to simplify our offering for the farmer – simplify EMI, or any financial instrument they get offered.” This meant that technology should be applied to only the touch points it gets used’. Whereas, Stellapps’ Ranjith said, ‘We will have achieved our goal if we build grade A tools for dairy management like facial recognition & fitbits for cattle’.

The panel concluded, concurring with Sucharita’s view that building solutions and not products for the NBUs is the key. At Blume, we have placed early bets on startups catering to the next rung of users and believe that there’s a larger success story waiting to be unveiled.  

Changing Mobility Inside and Outside Cities

Mobility in India has come a long way since Blume’s maiden investments in ride-hailing aggregator TaxiForSure and intracity logistics provider Roadrunnr (later Runnr). The former was acquired by Ola in 2015 and the latter now functions as the core food-delivery arm of Zomato. Mohit Kumar, co-founder ‘Runnr’ and now heading delivery for Zomato, moderated a fascinating panel comprising Kabeer Biswas of Dunzo, Sriram Kannan at Routematic, Kapil Raizada at Railyatri and Amit Gupta of Yulu. All of them Blume portfolio companies, addressing the challenges and needs of moving Indians within and between cities.

Mohit kicked off the panel by speaking about the shift in priorities that the mobility segment has witnessed in recent times. In Metros, the mantra of all-out aggressive expansion has been replaced by one around economic sustainability. Growth is now expected to be fuelled from the aspirational needs of Tier 2 & 3 cities of India. “Our (Zomato) smallest town presence today is Tuni, Andhra Pradesh with a population of 53,425 people”, said Mohit, stating that “earning realization of the riders in Tier 2&3 is not so attractive; but consumer demand is driving our expansion.”

Micro-mobility and sustainability emerged as key themes, highlighted by our panellists. According to Amit Gupta, co-founder of Yulu – an electric bike rental service- “2/3rds of all trips in any city are under 5 kms. We want to enable this in an environmentally sustainable manner through our new Miracle electric bike offering.” Dunzo uses a similar approach. Kabeer, Dunzo’s founder, stressed on the need to invest in smart cities and bring all the stakeholders to the table. “Currently, who do you speak to about urban planning?”, Kabeer questioned, trying to highlight the disconnect between solutions offered by startups and long term infrastructure projects planned by government bodies.

The same seems to apply to office commute too. Sriram, founder of Routematic – an employee transportation management startup, mourned how crumbling infrastructure has “chocked” peak hour travel in cities like Pune where Routematic currently manages 60,000 optimised trips per day. Kapil of RailYatri reaffirmed that moving forward, startups face a balancing act between capital efficiency and quality standardization. “The segment is moving from value for money to money for value”, he said, where consumers are willing to pay for a better experience.


The Blume Day tee shirt tradition is well and alive. Celebrating our 8th Blume Day and the 5th year of tees now, the message is not simply a catch phrase every year but one that underlines a strong belief at the Blume partnership level. The hand that we are playing reads I N D I A and whatever the chips we can place on the table, we are recommending that every stakeholder goes ALL IN on the India startup opportunity. 

Blume Day 2019 [Feb 28th] fell right in the middle of our fundraise window for Fund III. While we are close to 60% done with the raise and the first cheques have been written, the work that goes into planning a new cycle started almost a year ago. 

As we’ve said before, we think, as Fund entrepreneurs who have built one of India’s leading early stage venture firms ground-up, the journey of raising a Fund is even more complex and as challenging as early venture rounds for a startup. To simplify, we think Fund I, Fund II and Fund III mimic a seed/angel round, Series A and Series B respectively. Post that, things change a bit – a fund house needs to create an equivalence of profitability – cashflows back to our investors i.e. cash exits, and at meaningful scale. Without that, growth can’t be marketed any more in isolation. 

Blume is at that cusp today. And much like a company’s idea of product-market fit and scale, a ground-up fund house like ours has to rethink all the variables every few years and reassess product-market fit and scale. The market in India is dramatically different from when we conceived of Blume in 2010 and raised Fund I in 2011, and surprisingly, drastically different along many variables in the startup ecosystem since even 2015, a mere 3.5 years ago when our Fund II was raised.     

Blume Fund III will signal what we are telling all our stakeholders – team, LPs, founders, co-investors – it is time, like never before, to KEEP CALM AND GO ALL IN!

What inspires this confidence and what does that translate to for Blume?

A. The local market: There’s been no better a set of raw ingredients to work with on the customer side – a prevalence of computing power + 500 million smartphone-wielding Indians clubbed with the lowest data costs in the world, exponentially increasing data consumption (if not revenues, as yet). This is also leveling the playing field for larger and larger swathes of the population – youth, women, rural, agri, low-income urban – to participate in the economy in ways never seen before.

B. Global markets for Indian product companies: This trend, from our perspective, is predominantly centered around world-class B2B companies that are beginning to emerge, at scale, from India. We are able to show that from robotics to data analytics, from productivity SAAS tools, from developer tools to security, and a host of vertical and enterprise software, India is now a factory of stellar companies that can compete with the best. It also means that we are beginning to encode the playbook for hundreds more to come – in terms of capital, sales forces across the world, product thinking for multiple geographies from India etc.

C. Even great founders need great teams and support from all corners to build great, lasting and eventually profitable and IPO’able companies. Capital alone, especially at the stage where we play, is a commodity, especially when seeking outstanding founders. This means building a platform effort as an integral part of our investment firm, one that can solve for similar problems across multiple portfolio companies. Whether that’s a smaller sub-fund idea from some of the larger funds or a Constellation Blu type services platform idea from Blume, we are doubling down further on this thesis. We added as many platform team members for Fund III as investment analysts / associates. That’s how much we want to GO ALL IN on building our platform efforts. Our conviction comes from seeing evidence of this across our best portfolio companies, whose initial momentum was supported by the efforts put in by members of Constellation and platform members. We are doubling down our platform focus for Fund III – dedicated team members for capital raising, market development, community and events, shared services on Finance and Legal, talent acquisition, and more to come in the future, all of whom work in step with the investment team.

D. Lastly, Blume is getting even more concentrated in portfolio construction. We dropped portfolio size by about 35% even as fund size grew 3x between Fund I and Fund III. We are growing fund size more gradually by 35% this time but no of portfolio companies are expected to come down further by 40%! So, what gives? Essentially, the learning phase is largely done – 2 funds and 8 years – mistakes, hits, losses, sectors, sub-sectors – all taken in in good measure. The ecosystem has grown in terms of co-investors, specialized investors, overseas investors, strategics – and all this means, the risks of the next cheque not coming in a great co / great team reduce. It is time to double down! Just as we have done in terms of fund size twice over – from $20 mill or so in Fund I to $80 mill in Fund III (the target we plan to achieve by mid year)! The simplified mantra to the team is simply – 2x the quality of diligence, 2x the emphasis on founders and market size, 2x in average entry cheques, 2x the reserves, 2x the ownership all through and 2x the absolute $ outcomes for Blume, from even Fund II levels. So, counterintuitively, while the noise around early stage peaks, suffice to say, BLUME is KEEPING CALM and GOING ALL IN.

Watch this space, for a multi-part series, detailing more of the above segments of Keep Calm And Go All In as Blume Fund III rolls out its first vintage of investments this year and Blume raises the bar on many counts for itself and its portfolio companies.

Mainstream Fintech: Many underserved segments

The 8th Blume Day held on 28th Feb, 2019, saw a fascinating discussion amongst the panel comprising Blume’s fintech portfolio. The panel comprised Puneet Gupta of Kaleidofin, Sampad Swain of Instamojo, Rajan Bajaj of Slicepay and Dhirendra Mahyavanshi of Turtlemint, and was moderated by Jitendra Gupta of PayU. Karthik Reddy, Managing Partner, Blume Ventures, introduced and moderated the panel for the first 5 minutes as Jitendra was delayed due to traffic.

We had set this panel up to generate an engaging discussion to understand if there are segments in the whole fintech landscape that are presently underserved.

Karthik Reddy started the discussion by describing the evolution of the term fintech. Traditionally, fintech, he mentioned meant the players who served the BFSI segments with their IT solutions – in some senses like Blume’s present portfolio members Kuliza, IDfy and Tookitaki. However, ‘fintech’ today means “financial services on steroids using digital infrastructure”.

From the panel discussion, we have highlighted four key discussion points that emerged underpinning the case for why there will be more fintech startups as well as more opportunities for these startups, tapping currently underserved segments.

  1. Existence of white spaces: Sampad, the founder of Instamojo, set out to address the needs of MSME (Micro Small & Medium Enterprises) Entrepreneurs. During the journey, instead of encountering the cliched, 45-year old, male entrepreneur leading a manufacturing enterprise, he saw that the median customer for Instamojo was a 28 year old female working from home in a tier 2/3/4 town! Typically, she was a first generation businesswoman seeing great demand for her product, who needed various tools to support her business. This completely changed Sampad’s view of his customer, and what he thought of as the MSME entrepreneur. Following this discovery, Sampad spends all his time trying to enable these micro entrepreneurs, a previously untouched white space, grow their business – be it payments, setting up channels for doing commerce like websites or even lending.
  2. Underpenetrated markets : Puneet Gupta of Kaleidofin outlined how not even a single company has been able to solve this problem of giving financial advice for the 800mn low income people of India. The cost of acquisition is high. Also, the behavioural nudges towards savings, investments and insurance is not easy to do because of the thin margins for savings and the volatility in cash flows. Kaleidofin had to figure out a unique ‘tech-and-touch’ model that ensured a low-cost acquisition model and enabled the right behavioral nudges. Finding out this particular model was in itself a challenging task. Given this complexity of the problem, no single large company has been able to solve this problem for the segment.
  3. Product innovation and variety: Rajan Bajaj of Slicepay mentioned that even though everyone is trying to get into lending, he is not worried about competition. There are many segments in lending across various risk and income classes, each with its own unique challenges and opportunities. With so much opportunity he feels there is ample space for Slicepay to create a large digital lending play in the market. To enable this, SlicePay has shifted from being an aggregator of lending to a lender themselves. To support this strategy, they have secured an NBFC (Non-Banking Financial Company) license, which helps him access funds at a lower cost of capital, thereby helping him offer loans at lower rates, and also enhances his ability to serve a wider base of customers.
  4. New opportunities led by regulatory changes: Dhirendra Mahyavanshi of Turtlemint, launched in a market which had a powerful incumbent, Policybazaar. He counts 2 major factors that contributed to Turtlemint’s growth. The first was a regulatory policy change that allowed even a less educated Class X graduate become an agent. The second was the Turtlemint product that helped this agent choose the best insurance policy for the customer. Both these factors fed into each other and helped him grow Turtlemint at a great pace, requiring only a sixth of the capital needed, and only half the time the market leader took, to reach where the market leader was when they started.

The above highlights reflect the different challenges and approaches that these four players, across different segments of fintech – payments, lending, savings, insurance – have adopted to grow and scale.

Indian Enterprise solutions startups begin global conquests

A recent ET article talked about the snowballing of B2B startups into multimillion-dollar successes and the new wave of entrepreneurs chasing the (formerly non-glamorous) B2B space. At Blume, this was no surprise to us, for we’ve always believed that B2B holds tremendous potential – after all, Blume’s first cheque was to B2B co E2E networks which went for IPO in 2018.

Having said that, our learnings inform us that domestic B2B businesses are never easy to build or scale, and an inevitable turn in the journey is exploring alternative or newer markets. With that context, we hosted a panel discussion, as part of our annual Blume Day event, on ‘Indian enterprise solution start-ups and their global conquests’.

Moderated by Nishant Rao, previously COO, FreshDesk and Country Manager, LinkedIn India, the panel comprised founders and leaders of key Blume B2B portfolio companies Covacsis (Tarun Mishra), Dataweave (Sachit Singhi), Exotel (Shivku Ganesan) and Servify (Sreevathsa Prabhakar). Nishant Rao kicked off the discussion by summarizing the B2B journey as “For B2B cos, unit economics is nothing but bringing in dollars and spending in rupees”, recalling his Freshworks time.

The panellists responded by uninhibitedly discussing strategies on market selection and sales, scaling product, organisation, and most interestingly, their failures. Through this blog post, we are summarizing the four big takeaways from their journeys:

1. Market selection (i.e. choosing a market to expand to) should be a factor of

a. consumer behavior – a large enterprise in India might behave very similar to a medium enterprise in the US.


b. geography – what are the common attributes between your homeland and the next target market? (Some factors could be population size, literacy rates, customer propensity to buy / use the product.)

2. There is no ‘one shoe fits all’ sales strategy (among inside, field or channel sales) for your business. However, the following pointers might act as hygiene –

a. Inbound sales work when the business offering is a no-brainer / absolutely must-have buy for the enterprise (e.g., customer engagement support)

b. Field sales can be efficient where you need to do a more proactive sale of the core offering

c. Channel sales is a high-touch, longer sales cycle effort. However, it will most likely reap sizeable outputs post sales conversion.

The panel concluded that startups should be agile enough to toggle between different sales strategy as they scale.

3. For Indian companies who’ve discovered bigger markets overseas, it might become critical to hire local bench strength (especially sales and support). A few of our panelists strongly believed that a native team, if trained well on the product pitch, can make a much more nuanced sale to the customer as it understands the local market better.

4. With sales and org building dominating the playbook formation, scaling product in terms of regulatory compliance shouldn’t take a backseat. Thinking about data security is non-trivial to the long-term success of the business.

The hour-long discussion also grazed upon topics such as pricing, product instrumentation (identifying the right metrics to track product success) etc. In the interest of our readers, many of whom are aspiring B2B entrepreneurs, we’ve tried to summarize the most important takeaways that would address their queries in the area of international expansion.

Artificial (Intelligence) is Now Solving Real (World) Problems

AI (Artificial Intelligence) & Machine Learning (ML) have certainly been a booming topic of discussion amongst the startup ecosystem across the world. In most ecosystems and in almost every new age startup, AI / ML have almost become a hygiene parameter.

With this reference, we had set up a panel on our annual flagship event – “Blume Day 2019”, moderated by Arpit Agarwal, who leads Deep-tech investments at Blume, to answer one specific question “Is AI really helping solve real life problems?”.

Our panelists included founders of Blume’s AI /ML firms who are solving core industry problems using these technologies – Nishith from Locus (Supply chain optimization), Abhimanyu from Agara labs (AI solutions for addressing customer interaction problem of enterprises), Rishabh from Belong (Outbound Hiring for Enterprises) & Apurv from SquadRun (Future of Work for Enterprises) spoke at length about the use of AI in solving different problems.

We would like to highlight the three key insights (with a few subpoints in some cases):

(1)    Does AI solve a classification problem or an optimization problem?

a.      Nishith from Locus says – “AI solves a classification problem for them (for ex: understanding unstructured data from addresses) rather than the core optimization problem”

b.      Abhimanyu & Rishabh were of the view that “AI helps them classify human communications and emotions, which in turn helps them with their prediction algorithms”

c.    Essentially, AI is a tool, which can be used for classifying real life data points, which in turn makes your optimization problem a bit easier to solve.

(2)    Expectation setting to the client is one of the key responsibilities for a founder

a.      Apurv highlights three types of customers – (1) Who understand AI & its limitations, (2) Who want to understand AI, (3) Who don’t understand AI

b.      Nishith added “50% of my time goes into helping my clients understand that AI is not magic”

(3)    Will India drive the “Big Data-ization of the world”? – Do we have good quality data?

a.      Basis learning from Squadrun customers in US, Apurv says that enterprises in U.S. have far more quality data than Indian ones, a view which was supported by others

b.     However, when it comes to unstructured data in healthcare, security etc., India has proven to be a good training ground for most early stage companies

There is no Vanilla in eCommerce

“Justdial for millennials” is how Suchita Salwan, the co-founder of Little Black Book (LBB) described her initial vision behind the venture. Just like LBB, most mature marketplace startups have not just diversified their product offerings but also evolved their core DNA from that of a lean counterpuncher to fullstack heavyweights. Today, LBB hopes “to be the reason our users make unique lifestyle choices”.

From L-R – Karthik Reddy of Blume, Manish Taneja of Purplle, Anant Goel of Milkbasket, Suchita Salwan of LBB, Vijay Subramaniam of KWAN and Mandeep Manocha of Cashify

The above emerged as part of a fascinating panel discussing the new flavours of ecommerce that are emerging across India. Joining Suchita Salwan of LBB were founders Mandeep Manocha of Cashify, Manish Taneja of Purplle, Anant Goel of Milkbasket and Vijay Subramaniam of Kwan. Shared below are highlights from their conversation with moderator Karthik Reddy from Blume.

Traditionally, Bollywood celebrities and sports personalities have been used by brands to capture the imagination of a highly fragmented consumer base. Vijay Subramaniam of Kwan hopes to add a third dimension in the form of Instagram-led micro influencers to “inject greater authenticity in the marketing dialogue between brands and their consumers”.

Personal care marketplace, Purplle, exemplifies this push to have a deeper engagement with the user. “The beauty quiz that you go through when you download our app tells us alot about your tastes. As a result, content and recommendations are customised as per your preferences and not brand sales since 75% searches are not brand driven but rather generic product needs like lipsticks for party wear” as per Manish, Purplle’s founder.  

Going deeper into the purchase and ownership choices of the consumer helps startups control the value chain better, explained Mandeep of Cashify, a resale platform for used mobile phones. “Your influence on customer experience is limited if someone else handles the last leg of the value-chain” he elaborated. In the future, Cashify plans to brand refurbished phones to let users have an experience similar to unboxing a new phone.

Milkbasket is another player who has benefited from specialising in customer behaviour for a particular consumption subset which in this case is daily essentials. As a result, they’ve succeeded in not just influencing the end user experience but also making unit economic sense in a particularly competitive business. “We used milk to get our foot through the door. Now we plan to go deeper and deeper into the needs of every household in any given society”, explained Anant, Milkbasket’s founder. At a time when acquiring adjacencies to justify valuations is all the rage amongst highly funded unicorns, Milkbasket’s approach comes across as calm and patient. Long may it continue.