Artha Venture announces second exit at 19-fold return from mobility firm

Company says Fund 1 drawing to a close after investing in 31 firms

Anirudh A Damani, managing partner at Artha Venture Fund (AVF), is clear about what founders of a company must do: Build a business and leave the work of funding to investors. The strategy appears to be working, for the fund has announced its first exit of the year with a nineteen-fold return.

Damani said AVF is India's first micro venture capital (VC) firm: It started operations in 2019 and has 31 startups in its portfolio in its AVF-I.

Artha recently made a partial exit from Everest Fleet, a mobility startup that secured $20 million in a series B raise from Uber and Paragon Partners. AVF’s partial exit from Everest Fleet materialised an internal rate of return (IRR) of 105 per cent. Moreover, limited partners who initially invested in the Everest Fleet alongside AVF have also opted for partial exits in this round.

“We were the first one to come up with a micro VC model when the trend was of large VCs. Our model is 2-4-8, under which we invest Rs 2 crore in seed, Rs 4 crore in pre-series A and Rs 8 crore in series A. The idea was to let founders do what they must do: Build the business and the funding part is taken care of for the most crucial period of a startup journey,” said Damani.

AVF, in 2019, invested a total of Rs 10 crore in Everest Fleet and the partial exit gave it $2 million (around Rs 16 crore).

Everest Fleet is the first exit by AVF this year and the fund expects to have one to two more before the end of Financial Year 2024. This is good news for investors who have been concerned about exits with the funding winter impacting the growth momentum among startups.

“Exiting companies with multiple returns, in today’s scenario, is like pure muscle power. But we are not completely exiting from Everest. We have done partial exit but we have recovered our principle and whatever we now have is pure profit. I personally believe this company has the potential to pull off a blockbuster IPO,” said Damani.

AVF has invested in 31 firms through its Fund-1 which has a total corpus of Rs 225 crore. Eight if these firms are profitable. “Everest faced everal challenges, especially when Covid-19 hit. But they have come out of it very well. Their pivot to an asset-financing model unlocked considerable capital and enabled them to transition to an asset-light model in a traditionally capital-intensive sector. They have been making profits for the last two years, and this year will too have big numbers,” he said.

With the first funds life coming to an end, it has already drawn 75 per cent capital for its investors. This exit from Everest Fleet adds to Artha Group's growing tally, marking its 31st exit from a diversified portfolio encompassing over 100 startups. Earlier this year Artha India Venture exited from Vista Rooms. As AVF commemorates this milestone, Artha Group is planning the launch of its next early-stage microVC, Artha Venture Fund II.

The company, in September, announced the launch of Artha Continuum Fund, which is tailored for family offices and ultra high net worth individuals.