We want to bridge gap between angels and $100 mn funds: Artha Venture Fund

Artha Venture Fund will lead a $500,000 investment in a Gurugram-based food tech start-up called Daalchini, a smart vending machine company. The company, like many in China, plans to set up vending machines in technology companies and encourages customers to make payments via their mobile wallets, select a food item and it falls off its rack into the slot. The food is typically frozen and stacked in the machine. 

If you can’t quite place either Artha Venture Fund or Daalchini. It is fine. Daalchini is way too small right now but does have a few interesting founders — Prerna Karla formerly of Paytm Bank and Vidya Bhushan of Jio. The machines occupy valuable real estate in start-ups like Paytm and OYO currently. 

Artha Venture Fund was originally known as Artha India Ventures, the family office of Artha Group of Companies, which is run by two former directors of the BSE. The family fund was famous for investing in OYO and then exiting almost completely in the big bang SoftBank round. 

The family office since then has evolved to a venture fund. The fund has raised capital from its own family office and a few others, which took the fund size to Rs 100 crore and so far invested in five companies, including Daalchini. 

But doesn’t the name on the door bother the new LPs and ent­repreneurs? “Our exit in OYO helps and so does our investment in Purplle and Exotel,” says Anirudh Damani, managing partner, Artha Venture Fund. But the OYO exit, which came in within seven years of the first round, is the hallmark. The corporate connections that a family fund can bring when it comes to making an exit is also an added bonus. 

The evolution has been interesting. As a lead angel investor, he found being attached to a family fund difficult. “Sometimes it would take me 45 days to get back to a founder with a yes or a no,” he says. Now, the turnaround is faster. “I had to deal with a lot of angel investors who I didn’t know or who didn’t know me,” he says. A lot of them couldn’t follow on either. 

All of this changes now. Damani explains that his investments are in the Rs 1-5 crore. “Typically, to raise Rs 3 crore, entrepreneurs need to get almost a dozen angels on board to reach that mark,” he says. This makes growth difficult because all of these have different points of view and giving exits to all of them later is difficult. 

“Most of these angels don’t have the ability to do follow on rounds,” he adds. He wants to bridge this gap. “Earlier, Kae Capital and Blume would write $300,000 and $500,000 cheques. But they have moved on to bigger fund sizes and for them these are too small and that’s where we fit in,” he explains. Artha acquires anywhere from 10-25 per cent of the firm and then works with them to raise bigger rounds. “Through a company’s lifecycle, we may end up investing close to $3 million-$5 million,” he says. Artha also has an exit plan, which it believes works. It  plans to exit in about seven years when the company reaches Series C or D.  

Talking about exits, what about Daalchini? Swiggy or a FMCG major maybe? “Or a wallet company who want to increase use cases,” he says.