Artha India Ventures, which has invested in companies like OYO and Purplle, is getting ready to close its Artha Select Fund after raising INR 400 crore in investment commitments.
Anirudh Damani said that the firm is talking to a few family offices to raise another INR 50 crore. In total, they expect to raise between INR 400 and INR 450 crore by the time the fund closes.
The Artha Select Fund (ASF) will invest more money in startups than its first fund, Artha Ventures Fund I, backed. It will also participate in Series B and C funding rounds, typically investing approximately $2.5 million in each company.
Mumbai-based Artha India Ventures has already made its first investment from the Artha Select Fund (ASF). It invested $2.4 million in space tech startup Agnikul Cosmos as part of the company’s Series B funding round.
The firm announced the first close of the fund at INR 330 crore in March this year.
According to Damani, only the most promising startups will get more investment. Each one will be carefully checked at every funding stage using the company’s SCOUT^E™ method.
This framework enables Artha to track the performance of its portfolio companies by examining key factors.
These include whether the startup solves a real problem, is a leader in its field, has solid business fundamentals, is run by a strong and growth-focused founder, leverages technology effectively, and has clear potential for growth.
“We love tech-enabled companies. We don’t like tech-first businesses, “Damani added.
Damani also said that before putting more money into a startup, Artha writes a report for its investment committee. This report explains how the startup still meets the key points of the SCOUT^E™ framework.
“If at any point we feel in our follow-on round that SCOUT^E ™ is not being matched, then we look to exit the company, ” he added.
“We have another four or five companies that are going to raise Series A rounds in the next 10-12 months, and that is where the bulk of the remaining capital will go,” he said.
Damani said that the firm plans to invest the remaining money over the next 12 months. At first, Artha planned to invest in 40 startups at the seed stage, 20 at the pre-Series A stage, and 10 at the Series A stage.
However, because more startups performed better than expected, the fund ultimately invested in 32 seed-stage startups, 16 at the pre-Series A stage and eight at the Series A stage.
Artha India Ventures has also begun gathering startups to prepare for its next major fund, known as Artha Ventures Fund II.
Earlier this month, Artha’s first fund, Artha Ventures Fund I (AVF1), which focuses on seed-stage startups, reported a strong internal rate of return (IRR) of 61%. This is an important way to measure the performance of investments over time.
The fund was started in FY19 and closed in July 2021. It raised ₹225 crore and has already invested over ₹175 crore in 32 seed-stage startups.
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