Invests in Founders Solving the Challenges of Indian Consumers & Businesses At Artha Venture Fund, its investment strategy has always been built on the following tenets: solving genuine human problems, having scalable positive unit economics, having strong moats, and employing technology as an enabler.

The investment outlook of Artha Venture Fund for the upcoming year is not just positive; it's assertively bullish. "The best investment opportunities appear during these times, when entrepreneurs' attention is directed towards sustainable growth and valuations are based on reality. I enjoy investing during these times because these periods yield the highest ROI," said Anirudh A Damani, Managing Partner of Artha Venture Fund.

"Regarding sectors, while we continue to be interested in D2C, D2C enablers, and B2B SaaS, we are also focusing on businesses that are creating strong, both hard and soft, lending infrastructure. This is with the clear objective of streamlining the process for lending companies to distribute and retrieve loans from borrowers," Damani added.

At Artha, its investment strategy has always been built on the following tenets: solving genuine human problems, having scalable positive unit economics, having strong moats, and employing technology as an enabler. "However, the broader focus on unit economics and profitability seems to have gained prominence due to the aftermath of the 'growth at all costs' mindset, which has led several startups down unsustainable paths," remarked Damani.

In the early phases of a startup, growth is critical, but according to Damani, it's also important to establish a strong foundation based on positive unit economics and a clear route to profitability. A startup can only guarantee its long-term existence and success after that.

Artha follows a disciplined investment strategy that is unaffected by funding booms. Instead, the VC firm concentrates on capital preservation in these situations. Additionally, its funds have specific allocations for initial investments and follow-on funding, ensuring active engagement throughout the portfolio's many stages. In order to continue leading their industry, it must constantly find and fund new, promising ventures as well as support its current, successful portfolio companies.

When a company's price or business model doesn't demonstrate sustainable, scalable, and profitable unit economics, Artha normally doesn't support bridge rounds for those businesses. However, it is exciting to invest in companies that, while needing a bridge round, exhibit great unit economics and significant growth. "The investing prospects offered by these companies are fascinating. They have lower execution risk and offer prices that will boost our portfolio's alpha returns," shared Damani.

Regardless of the state of the market, Artha is drawn to businesses that value 'customer capital,' or revenues, over venture money. "To us, 'customer capital' refers to the validation and long-term expansion fueled by actual sales and customer loyalty. This strategy provides a perpetual, non-dilutive cash source, lowering reliance on outside investment and promoting stronger, self-sufficient enterprises," Damani added.

Stats:

No of Startups Invested in: 29 (since inception)

Focus Sectors: D2C B2B SaaS, Lending Infrastructure

Fund Size: Artha Venture Fund – INR 225 crore (instated in 2018), Artha Select Fund – INR 450 crore (instated in 2023)

Average Ticket Size: INR 3-5 crore at Seed, INR 5-8 crore at pre-Series A, INR 10-16 crore at Series A