An early-stage micro-VC fund, Artha Venture Fund (AVF), has launched Artha Access to invest in pre-seed funding rounds, through its associations with multiple accelerators across the country.

AVF's portfolio includes Agnikul, LenDenClub, HobSpace, PiggyRide, Daalchini, Kabbadi Adda, and more. AVF is part of Artha Group with investments in 85 plus startups across India, the US, and Israel like OYO Rooms, Purplle, Tala, Coutloot, Karza Technologies, Mobilewalla and Interstellar. The team has backed six unicorns and 15 startups cumulatively, valued at over $40 billion.

Under the Artha Access program, AVF has till now partnered with three accelerators including India Accelerator, Huddle and IIM Calcutta Innovation Park and will be adding seven more accelerators in the coming months. As part of this, select startups will have an opportunity to secure funding upwards of ₹18 crore($2.5m) in follow-on rounds from AVF.

The accelerators will carry out the due diligence and onboarding process, while AVF will provide the startups with access to its widespread network and ecosystem, besides co-investing with the accelerators. AVF has already closed a deal through these partnerships by investing in a blockchain start-up, TheRollNumber in August 2021. Businessline spoke to Anirudh A Damani, Managing Partner, Artha Venture Fund about the specifics of the new program and fund’s growth till now.

How much funds have you earmarked for Artha Access? Do you have any focus sectors?

We have initially earmarked ₹5 crore from its recently closed fund of ₹225 crore for Artha Access program and it can go up to ₹6 crore. Under this program, we will invest up to ₹25 lakh in each deal and plan to invest in 40 such deals by 2025. Some of the sectors that we are focusing on currently include blockchain, gaming infrastructure and D2C enablers.

What was the vision behind starting Artha Access?

We came up with the idea of Artha Access, because a lot of accelerators were reaching out to us with an interesting inflow. But it was taking a long time to close these deals because after completing the acceleration programs, start-ups had to again go through due diligence with us. In fact, there were a few deals that could have been closed in two or three months after getting approvals but it took about nine to ten months because the accelerator that they were coming from, had not done their bit, in terms of setting up the right compliance processes.

So these companies that were supposed to do well, were getting stuck in processing funds, so we thought of bringing in the right processes and then since we've already spent three, four months with them during the acceleration phase, that could serve as our due-diligence time. So, when we want to do a larger round, we would have already seen them for three to four months and we can make the process much faster.

How has the euphoria in the Indian startup ecosystem impacted your investment thesis?

I have traditionally been a contrarian by heart and it's also been a feature of our investments. Whenever there's a bull cycle, we have traditionally kept our hands empty and looked at selling and not buying. But today, I think the market is very different from the previous bull cycles of 2015-16, 2014-15 or 2010-2011. I think the market has fundamentally changed because of Covid, the massive internet adoption, and the government getting involved in building platforms (like UPI) on which scalable companies can be created. So, I think we're still excited about the early-stage investments.

AVF has reported that portfolio-wide revenues grew 5x in the past year. What would you attribute this growth to?

That’s where the value of this active handholding comes into play. Last year after the pandemic, we had revised budgets for each and every startup in our portfolio by April 2020. We were doing multiple calls in a week to ensure that our portfolio was not getting disoriented with all the noise in the ecosystem, both on the business and personal level.

Even today, revenues continue to scale, many of our portfolio companies are doing 25 per cent to 30 per cent month over month. In fact, some of them are growing 100 per cent month over month. We have always focused on investing in businesses that are tech-enabled, instead of companies where tech is the core business. Further, positive unit economics and strong defensibility are some of the filters that have helped us ensure that companies grew very quickly. Last month, we posted revenues of over ₹16 crore- ₹17 crore across 13 portfolio companies, which means an average revenue of ₹1 crore per company.

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