When Anirudh Damani returned to India after selling a venture in the US, he encountered something in India’s entrepreneurial landscape that changed the trajectory of his journey and led to the creation of Artha Venture Fund.
Damani says he noticed a stark mismatch in the startup environment and the business models many founders were trying to replicate. “India was still very much obsessed with creating clones of US businesses. But the Indian ecosystem resembled nothing like the US, yet we wanted to create ventures like the US.”
Driven by a desire to understand how Indian entrepreneurship worked, Damani began backing startups. “In India, you can’t expect to give gyan or expect to receive ‘gyan’ without putting some money into it,” he quips. The early investments were more of an educational pursuit than a financial strategy. “I started investing in startups with the pure intention to understand how Indian entrepreneurship works.”
Artha began as a family-backed initiative, co-investing with other family offices. By 2019, after several successful exits and a positive track record, the vision expanded. “The idea came up, why don’t we also set up a fund for our family?”
Other family offices, impressed by Artha’s performance and ethos, opted in. “They said, ‘If you are going to create a fund, and because you are thinking as a family office and not as a fund manager, can we also join the journey?'” The result was India’s first micro VC fund.
According to Damani, Artha Venture Fund currently manages close to USD 200 million in assets under management (AUM), backed by approximately 150 family offices.
The Family Office Advantage
Artha’s family office roots define its investment approach, setting it apart distinctively from traditional capital firms. “For a typical fund, it’s all about AUM. They’re all about deployment velocity,” Damani says. “Our intent here is liquidity and wealth.”
According to Damani, the firm’s operation is outlined by three core principles that guide its investments. First, being capital protection, second, emphasizing a disciplined process for generating returns. He says funds shift their strategy mid-stream.
“You may be a deep tech fund or a woman-focused fund. But because the deal isn’t what you expected, you pivot to crypto or AI. That doesn’t happen with a family office fund.”
Third, being pride, and investing in ventures that the firm can proudly showcase to peers. “We want to invest in things we want to talk about,” he says. One such investment is space-tech startup Agnikul. “Even today, I am very excited about the company. Any family office that knows me knows about Agnikul.
Focused on DPI, Not Just AUM
Damani said that he prefers the term “venturepreneur” to describe his role, which means an entrepreneur whose business is backing other entrepreneurs. He credits veteran investor Sudhir Sethi of Chiratae Ventures for coining that perspective. “We are also in the business of entrepreneurship, but our business is backing entrepreneurs.”
But this focus fundamentally translates into a different metric of success. “Our metrics are: how much capital do we return? How can we beat the Nifty risk-adjusted? We have to beat the Nifty by at least 3 times in the same time period,” Damani says. According to the partner, Artha remains fixated on value creation and capital return.
The patient, principle-driven strategy looks to have paid off, as Damani recounts a meeting with a founder who sought a USD 10 million valuation despite recording zero revenue. “I said, when you reach INR 2 lakh a month in revenue, call me.” A year later, the founder did. Artha then invested at an INR 5 crore valuation. According to Damani, the startup today does INR 1.6 crore in monthly revenue and has built an AI-driven recruiting platform for freshers within just four years.
Investor Risk
Talking about investor risk, Damani feels that the risks are fairly simple. The ecosystem in general has lost money in the last 24 months, and the number of investors has gone down dramatically.
“The amount of liquidity available to investors has gone down. But there is money for companies that are going to be profitable or are profitable. Capital has become way more discerning and judicious.”
The capital is not freely available like it used to be, Damani says. Companies and founders who are cash-burn first will never be profitable and will have a hard time raising capital.
“But the founders that focus on the unit economics, that are building scalable ventures, that are self-sustaining, there is lots of money available. You can get as much as you want. But to do that, you have to create a business,” added Damani.