Artha Venture Fund targets funding two startups a month, until FY22-end

Artha Venture Fund, which backs early-stage startups, will invest in 10-11 new firms before the end of financial year 2021-22 (FY22), Anirudh A. Damani, the investment firm’s managing partner, told YourStory. 

With little over five months left for the fiscal to end, Damani's ambition could translate into an average two deals a month for Artha Venture Fund.

The cheque sizes will be between Rs 1.5 crore and Rs 4 crore in exchange for 13-18 percent equity. 

“When we start working with our portfolio companies, more than half of our team is involved in building the firm with them. We do take a higher equity share but in return they (startups) get an investor, who understands their business area in and out. One of our portfolios has grown their revenue by 4x in 6 months with no increase in the burn, which means the growth was fully funded by customers — not investors.” Anirudh told YourStory.

Artha Venture Fund claims to increase their cheque size to Rs 18 crore - Rs 20 crore during the follow-on or Series A rounds, depending on the startup’s performance. At least six of their existing portfolio startups are in the process of getting an investment in follow-on rounds. 

Started in 2018 by Anirudh, Artha Venture Fund is backed by Artha India Ventures — the managing director’s family fund — which has previously invested in IPO-bound Oyo Rooms’ seed round and beauty marketplace Purplle’s angel round, among other bets. 

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The Mumbai-based venture capital firm has so far committed to disburse 35 percent of Rs 225 crore, its maiden fund. Since its inception, Artha Venture Fund has invested across 12 startups including peer-to-peer lending platform LenDenClub, Daalchini Technologies, a Noida-based kiosk provider, and Bengaluru-based sports platform Kabaddi Adda. 

Anirudh claims the fund only invests in early-stage startups, which have monthly revenue of Rs 7-10 lakh.

“A sound business model is important because firms should use venture capital money to build assets. But when it comes to growth, it should be funded by a firm's paying customers,” says Anirudh.

At the moment, the Indian startup ecosystem is riding a funding boom. Large cheques are being handed out to startups across all stages. 

According to the State of Venture Q3 report by CB Insights, a New York-based research firm, the September-ended quarter saw $9.9 billion being invested across 519 deals compared to $3.3 billion investment during the same time last year.