Artha India Ventures marks first close of Rs 250 Cr Fund II to back seed-stage startups
The micro VC firm’s second fund has a total target corpus of Rs 500 crore with a Rs 100 crore green-shoe option.
Artha India Ventures has raised Rs 250 crore for the first close of its second fund with a target corpus of Rs 500 crore and a green-shoe option of Rs 100 crore to back seed-stage startups in India.
The company said the fund has already secured more than 50% of its target commitments and will look to invest in 36 seed-stage startups across four themes—premium consumption, fintech infrastructure, applied AI, and deeptech.
Artha, which has backed firms like Agnikul Cosmos, Everest Fleet, and InstaAstro, will look to write initial cheques of Rs 4 crore and is looking to make follow-on investments of between Rs 8-16 crore under its proprietary 1-2-4 model. The fund targets 15-20% ownership in its top portfolio companies and will work on a four-year deployment cycle.
According to the firm, the fund’s limited partner (LP) base will constitute 80% of domestic capital and about 20% of foreign capital, with 90% of its first close commitments coming in from Indian LPs, including family offices, and exited founders. The remaining 10% came in from international investors.
Some of the fund’s early backers include DSP Family Office, Shahi Group, and several founders from Arthi’s earlier investments, among others.
“AVF II is launching at a time when the startup ecosystem is undergoing a reset. In the last 8 months, barring one, India has recorded fewer than 100 seed investments per month, the lowest in nearly a decade. More tellingly, the graduation rate from Seed to Series A, historically 1 in 9 startups or around 12–13% over 36 months - that rate has dropped to as low as 5-6% in recent months. That tells you how capital-starved the early-stage investment ecosystem has become,” said Anirudh A Damani, Managing Partner at Artha Venture Fund.
The firm’s second fund comes on the back of blockbuster returns recorded by the firm under its first fund with a target corpus of Rs 225 crore, which was launched in FY19 and closed in July 2021. In June, the firm reported an internal rate of return of 61% with its portfolio valuation surpassing Rs 750 crore.
In June, Fund I’s Distributed to Paid-In Capital (DPI) was approaching 20%, supported by a partial exit from Everest Fleet last year and a new exit. DPI tells you how much actual money (cash or stock) a fund has returned to its investors, relative to the amount they originally invested.
Additionally, YourStory, in June reported that the firm is looking to make the final close of its Artha Select Fund with the firm already receiving commitments for Rs 400 crore. The fund will look to make follow-on investments in its Fund I portfolio companies.
Edited by Megha Reddy