Mumbai: Early-stage venture capital fund Artha Venture Fund aims to tap into India’s consumption growth story by betting on startups in consumer services and consumption enablers from its debut fund, which has raised ₹100 crore so far, said managing partner Anirudh Damani.
“The opportunity for building consumer brands is bigger than ever and companies are scaling to a ₹100 crore revenue faster than ever. This is the segment we want to tap into," said Damani.
Artha has marked a ₹100 crore second close of its debut fund, it said on Tuesday.
In July 2018, Artha made the first close of its fund at ₹40 crore. A close of private equity or venture capital fund is a milestone that allows it to start investing the capital raised, while continuing to raise funds from more investors. It expects to make the final close of ₹200 crore by April 2020
The fund’s maiden investment was in LenDenClub, a P2P lending company. Its other investments include Kabaddi-Adda, a web portal for kabaddi, Haazri, a quick service restaurant for corporate employees, and Jadooz, an entertainment zone developer for tier 2 and 3 towns.
Artha plans to tap the consumption market by investing in consumer brands and services and indirectly by investing in consumption enablers such as last-mile delivery, payment gateways and fintech platforms, said Damani.
“We are bullish on online as well as offline consumption. However, every business needs some tech to scale efficiently and to automate repetitive functions," he said.
Artha aims to maintain a consumption focus, but also plans to invest selectively in business-to-business startups, including software-as-a-service (SaaS), which reduces the cost of operations or increases a firm’s ability to get more customers.
The fund typically puts in ₹1-2 crore as seed investment and reserves another ₹10-15 crore for follow-on investments, maintaining a 1:10 ratio for follow-on investments. It plans to keep 65% of its capital for follow-on investments. So far, it has made four investments, committing ₹15 crore.
“We are very specific on valuations and want a 10-15% stake at a valuation of ₹7-10 crore," Damani said. He plans to increase the stakes to 30% by the Series A round, after which stakes generally get diluted as more investors come in.
Damani had previously invested in start-ups through his family office. These include hotel startup OYO Rooms, online beauty products retailer Purplle, and online parenting platform BabyChakra.
For its debut fund, Artha has raised capital from various investors such as business owners of listed companies who have invested through their family offices, HNI’s from India, the US and the Gulf and a large domestic financial institution, said Damani.