Aug 27, 2014

Youre given only one little spark of madness. You mustnt lose it Robin Williams

BLUME VENTURES FUND I ~ QUARTERLY INVESTOR LETTER

Investment Scheme: Multi-Sector Seed Capital Fund

Report Period: Jan 1 to Jun 30, 2014

Preamble

This Quarters Investor letter comprises of A) Market Commentary, B) Fund Update,

C) Portfolio Companies Update and D) Investment Details

Schedule for 2014 Quarterly Reports

I. Feb 15 H2 2013 Report (ending Dec 31, 2013)
II. May 15 Q1 2014 Report (ending Mar 31, 2014)
III. Aug 15 H1 2014 Report (ending Jun 30, 2014)
IV. Nov 15 Q3 2014 Report (ending Sep 30, 2014)

Half-yearly reports will layout a more detailed state of the Fund (part of which is
purposed for wider circulation) while Quarterly reports will focus on financial
performance of the Fund and Mark-to-Market (MTM) etc. (meant for the Funds
investors Only)

A) Market Commentary

B) Fund Update

C) Portfolio Companylevel Business Updates

D) Portfolio Investment Details

Investment data: Funds deployment of capital into each of the portfolio companies,
including bridge / follow-on rounds

Section D) is strictly confidential and meant for Investors ONLY.

Note: We appreciate and respect investors feedback and continue to work towards
incorporating it gradually into the reporting process, to enhance the quality and
quantity of information for all Investors.

hk@csir.res.in
 Dear Investors,

SECTION A: MARKET COMMENTARY

Something Ventured? in India?

If you are reading this, theres a good chance youre directly (or indirectly) interested or
connected to Venture Capital. While some of our US friends may have already seen the
documentary Something Ventured, we usually draw blanks when we ask folks in
India if theyve seen it. It should be mandatory viewing for anyone who is reading this
report, especially in India. [It was mandatory viewing for the Blume team a few weeks
ago at a mini-offsite]

[The feedback / reactions of all our team members has been consolidated and posted on
this blog post - http://blumeventures.wordpress.com/2014/08/31/something-ventured-a-
blume-team-review-and-analysis/]

The blog post makes several points. However, we would like this Section to cover one of
the more fundamental points we grapple with everyday, sitting at the lower end of the
VC food chain.

- Can a tech entrepreneur wanting to build a world-class company in record time (every
VC wants records to be broken) build it by bootstrapping? Very tough
- Can such a company build without the VCs belief that it is capable of disruption at
scale? Very tough
- Can an ecosystem that doesnt believe in its own capabilities ever beat the deep
pockets of startups that are funded in China or the USA? Very rarely

Repeatedly, the fast-growth $1 billion Unicorns in India have been lead-invested into
by global investors such as Softbank, Tiger Global, Naspers and a few others.

Flipkart

Let us examine the case of Flipkart to illustrate this point, even though we
acknowledge that its an unusual extremity.

hk@csir.res.in
 The first cheque was from Accel India a great seed cheque play, that we guess is
clearly in 500-1000x territory today
Thereafter, there has been no lead investor (in any of the fives rounds since) that
even sits in India!
From a $5 million range (when Accel invested) to a $7 billion range today, none of
the value creation (other than for the two Bansals, their team and Accel India on
the board) was even enabled by someone sitting in India, from a financing
standpoint. The large cheques continued, without exception, from overseas.
At some point, the company becomes so hot that the existing Board can choose not
to take Indian capital, even if it were keen to participate, though we doubt that any
Indian capital was willing to make the leap of faith in believing Flipkarts valuation
at any of the points where it was offered.

inMobi, too, would look like a very similar story, with KPCB, Sherpalo, and Softbank
as the lead investors who helped script the story there.

Summary

Yes we will venture as far as saying that without the belief of the Flipkart investors
(as importantly as its great founding team and executives), ecommerce in India would
be about 3 years behind at least in terms of its reach, infrastructure, competition and
potential growth path.

It takes bold and committed investors to build path-breaking ideas. While were
collectively developing the DNA to make such commitments in India at early stage and
gradually up the value chain, our existing base of wealth pools, public market investors
and even Indian decision makers sitting in VC/PE shops are still far from consistently
defying the odds and building $billion+ companies in India (it was the same when
Infosys public issue devolved back in the early 90s and the underwriters rescued the
IPO).

The silver lining in all this is that at least the Indian arms of Accel, Sequoia, Matrix,
Bessemer etc. and some indigenous funds like Kalaari and Nexus are now making the
big bold bets that discover these great startups and sometimes, are bold enough to
stand upto the global giants e.g. in Cab services (of course, Tiger was first off the mark
there too!), ecommerce (Snapdeal, Myntra), mobile devices (Micromax). We need a lot
more funds of this nature across all stages.

As we publish this, the investors who led inMobi and Flipkart to leadership, also
invested into Hike it doesnt matter whether Hike beats Whatsapp, WeChat and Line
in India to become a market leader or fails in attempting to do so, what matters is that
we have investors who want to try and make it happen! Sadly, there is nothing Indian
about these two investors Tiger and Softbank (though we can argue that we need to
invite Lee Fixel of Tiger to take honorary citizenship).

As Indians, we need to notch up the belief quotient a bit. Were seeing it in more LPs
backing new GPs (we were a 100% domestic fund) and were seeing Premji Invest,
Ratan Tata and others making early strides in playing directly.

Nothing Ventured & Nothing Gained.

Something Ventured & Anythings Possible!
3

hk@csir.res.in
 SECTION B: FUND UPDATE

From this report onwards, we will begin Section B by highlighting the companies where
a material positive event has occurred (all financial implications will be covered in the
financial section of the Report). This list does NOT include Bridge Rounds led by Blume
and or peer seed round investors.

Com pany N am e Event Investor(s)

Series As & more

Hotelogix Series A Accel*

Mettl Series A Kalaari*

Zipdial Series A Jungle + Unilazer +

500Startups + Times *

Mobstac Series A / Series B Accel* / Accel + Cisco *

Reviews42 Series A / Series B Nirvana* /

Tiger Global + Nirvana

Taxiforsure Series A / Series B / Series C Accel + Helion * /

Bessemer + Accel + Helion * /
Accel(US) + above 3

Covacsis Series A Reliance GenNext + Cisco *

Grey Orange Robotics Series A Tiger Global*

WeAreHolidays Series A Matrix*

M&A / Exits

Qubecell Acquisition (company) Boku

Adepto Acquisition (asset) # Kuliza

Gharpay / Clink Acquisition (asset) # Delhivery / Ezetap

Skoolshop Acquisition (asset) # Hopscotch

Karmic Acquisition (asset) # Cliantha

Note:
* indicates that Blume participated in the round;
4

hk@csir.res.in
 Text in BLUE indicates that the latest event occurred in the 6 month period preceding
this Reports Quarter ending date OR has been publicly announced prior to publishing;

# indicates that the there was a positive event but the value exchange (at least at the
time of the event) was less than the value of the original Investment i.e. <1x

NEW INVESTMENTS (closed officially in Q4 2013, Q1 2014)

As mentioned in the last report, some investments that were made into overseas-
domiciled companies as well as the final few investments that spilt into the first Q of
2014 were brought into the portfolio. This brings the SEED program in Blume Fund I
to a completion and all reserves are for the Follow-On Rounds into these companies.

LEAD Investments made during Jan Jun 2014 (details in Section C -

Appendix)

Greytip / Internet & Mobile / SaaS / Payroll & HR / Blore

Girish & Sayeed, www.greytip.com, www.greytHR.com
Co-investor: Individual Angel

Intellocut / Enterprise Software / Manufacturing / Apparel / Blore & Noida

Manasij, Mausmi, Abhishek & Bratish, www.intellocut.com
Co-investors: Individual Angels incl Rajan Anandan

SYNDICATE Investments made during Jan - Jun 2014 (details in Section C -

Appendix)

Snapbizz / Internet & Mobile / Retail / Ecomm Enabler + Marketing / Blore

Prem & Yash
Co-investors: Qualcomm, Qualcomm Ventures, Taurus (Spore)

Snaplion / Internet & Mobile / Mobile Publishing / Retail & Ent / Delhi NCR
Nikhil, Tapan & Rohan www.snaplion.com
Co-investors: Rehan Y Khan, Rajan Anandan, India Internet Group

SocialBlood / Internet & Mobile / Healthcare / Blore + NYC

Karthik N, www.socialblood.com
Co-investors: Ravi Gururaj, Rajan Anandan, Ramesh Shah

hk@csir.res.in
 2014 Scorecard

If you recall Report #9, you will remember this section:

At your fund, were beginning to spot some Blu Swans in the distant horizon. Its an
incredible feeling to see them emerge. Yes, these are forward-looking crazy statements.
But, were happy to make them transparently to our investors.

We would like to share our 2014 outlook. We anticipate the portfolio to deliver:
8-10 Series As (in addition to the existing 6)
2-3 Series Bs (from the existing 6 that raised Series A pre-2014)
2-3 Small acquisitions/exits (in addition to the 2 that happened in 2013)
1-2 Tiny specks on the horizon, probably Blu Swans (subset of the above A/B list)

As of writing this report

* 3 additional Series As Completed GreyOrange + Covacsis + WeAreHolidays

* 2 Series Bs (Reviews42, Taxiforsure)
* 1 Series C (Taxiforsure)
* 1 part-secondary exit + 3 full exits (sales of assets, even if not material to returns)

hk@csir.res.in
 SECTION C: Portfolio-Company Level Business Updates

Notes to Section

BLUME ALPHA Group

This comprises of
a) Lead Investments
b) Syndicate Investments where total exposure in the seed round or Seed+Follow-
on rounds has exceeded INR 10 million (Rs. 1cr or approx $160K as per current
exchange rates)

BLUME BETA Group

This group has been shrinking. With every passing quarter, Syndicate investments are
- either moving to the ALPHA Group since the companies begin to perform and
Blume invests more in a Bridge or a Series A round to increase its exposure
- The company doesnt progress to the next stage and the option cheque is written
down

The exhibits to present the State of the Portfolio

EXHIBIT 1A / 1B : A CITY-WISE representation of the portfolio and the division is

along the lines of the Alpha/Beta groups as described above

EXHIBIT 2: SECTORAL representation of the Portfolio along Enabling Technologies &

Verticals / Domains that they cater too

hk@csir.res.in
 EXHIBIT 1: GEOGRAPHIC SPREAD of PORTFOLIO, by City

1A: BLUME ALPHA

Movement to Alpha (from Beta Group)

Shephertz and WeAreHolidays (in Delhi NCR)
Rolocule and Shantani (in Pune)
Nowfloats (in Hyderabad)
New Additions Greytip and Intellocut (Bangalore)

hk@csir.res.in
 1B: BLUME BETA

INDIA
Snaplion
Voxapp

Delhi
Giftery NCR
Instamojo
RedQuanta
Paletly
Voxpop Framebench
Mumbai
Pune
NowFloats
Snapbizz Hyderabad Active portfolio only
Socialblood
shown here
Cherish Printo
Dataweave SportingMindz
emo2 Systemantics Bangalore Cos in RED, BOLD +
Explara Tripvillas Italic are additions since
Hashcube Tookitaki last Half-year Report
Level10 Unamia
emo2

!
!

Additions: Snaplion (Delhi NCR), Snapbizz and Socialblood (Bangalore)

hk@csir.res.in
 EXHIBIT 2: SECTOR-WISE DEPICTION of PORTFOLIO

BLUME&FUND&I&PORTFOLIO I&&N&&D&&U&&S&&T&&R&&Y&&&&&&&&&&V&&E&&R&&T&&I&&C&&A&&L&&S
(As$of$Jun$30,$2014)
Internet$&$Mobile$ LARGE$INDUSTRY$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
[CoreTech$+$Infra$OR$ Retail$+$ Real$
Additions$to$the$portfolio$in$last$ Gaming$+$ Media$+$ Information$+$$ Advertising$+$ Travel$+$ Education$ Financial$ Health$+$ [Pharma$/$Chemicals$/$Textiles$/$
Payments$OR$ Jobs$+$HR Commerce$+$ Estate$+$
6mths$in$BLUE Entertainment Publishing Data$/$Analytics Marketing Location$OR$
Hospitality +$Training [ Services$+$Tech] Medical Energy$/$Manuf$/$Auto$/$
Brands Constrn
Platforms] Logistics]

Promptec&&&&&&&
CLEAN&TECH&/&ENERGY
CCS
OTHER&&
&TECH.&

Shantani&&
LIFE&SCIENCES&/&HEALTHCARE
Karmic

GreyOrange&
MANUF&TECH&/&ROBOTICS
Systemantics
T&E&C&H&N&O&L&O&G&Y&(or&IP)&&&&&D&R&I&V&E&R&S&

Covacsis&&&
ENTERPRISE&Software
INTERNET, MOBILE & Intellocut

Mobstac&&
&Zipdial&
RedQuanta& Nivaata&&&&&&&
MEDIA Large
NowFloats&& Dataweave
Gharpay&&&&&&& Qubecell Enterprise
Snaplion
Internet&&&Mobile&X& Eki
ENTERPRISE&+&SMB Voxapp& E2E&&&&&&&&&&&&&&&&&&&&
CareerVita&
SOFTWARE&&

Explara& Tookitaki& Exotel&&&&&&&& Valgen& Sportsnest&+&

Mettl&&&&&
TECH.&

Framebench& Adepto& Shephertz&&&&&&&&& Hotelogix Playground&

IDfy
Webengage emo2 SkoolShop&
Instamojo&&& BedBathMore&
Tripvillas& Purplle
Level10 Zopper SportingMindz Snapbizz 1Click&&&&&&&&&&&& Greytip Sparsha Socialblood
Audiocompass
UMA
Internet&&&Mobile&X& 23spaces&&&
Indianstage& Paletly&&&&&&
CONSUMER Rolocule&&&& Insieve&&&
TaxiforSure&
Giftery&&&&
Batchcar& Moneysights
Hashcube&&&&&&&&&&&&&&&&&&&&&&&&&
Homeveda& Unamia&
Weareholidays&&
Glamrs Voxpop
Polama
MadRat
&Missisippy&
CONSUMER&X&Offline&/&Brand&/&IP&/&
SERVICES&+&
SOFT&I/P&

Services&/&Content
Cherish&
PescaFresh
ENTERPRISE&+&SMB&X&Services Infollion Kuliza Printo Remma

There have been only a few final additions to the FUND I portfolio. As reported before,
you will see 3 Distinct Buckets, defined by the sub-sectors where the investments
currently are:

* Internet & Mobile Tech the predominant focus of Fund I, within which we see that
our favorite risk buckets are Digital Media, Ad/Marketing Tech, Internet/Mobile Infra,
Travel and Hospitality, Retail+Commerce. Gaming and HR are the other sub-sectors

* Consumer Brands, Finance and Services very selectively done, based on strong
references, co-investors and niches

* Emerging and alternative Technologies one of our best decisions to allocate about
15-20% of the Fund to this strategy - Clean Tech & Efficiency, LifeSciences and
Robotics round up a very impressive set of companies

10

hk@csir.res.in
 Section C Addendum [attached separately]

A comprehensive Addendum has been designed to be a ready reckoner to the portfolio,

a Directory of sorts, which is ONLY shared with Fund Investors and select VCs. All of
the Actively managed BLUME ALPHA and BETA Group Companies are covered in
this Addendum

(*Alpha and Beta are classifications from a Risk Management perspective for Blume Fund I and
represent investments where total aggregate investment is greater than and less than 1% of the Total
Fund, respectively).

D) Portfolio Investment Details

[Attached as a separate file]

Sincerely,

Karthik Reddy and Sanjay Nath

Co-Founders and Managing Partners

Blume Venture Advisors Pvt Ltd.

[Blume Venture Advisors Pvt Ltd. is the Fund Manager for Blume Ventures Fund I, a
SEBI-approved Domestic Venture Capital Fund]

11

hk@csir.res.in