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Fund In Focus: Artha Venture Fund on Finding Purpose, Sustainability, and Scalability in Startups

Anirudh A Damani, Managing Partner,Artha Venture Fund

Welcome to our ‘Fund in Focus’ series where we profile our member funds, underscore their investment philosophy, and highlight some of their interesting work. Today we speak to Anirudh A Damani of Artha Venture Fund who offers insights into their investment philosophy, which centres on six principles, including solving real human problems, founder potential, and market scalability. Emphasizing adaptability, Artha has evolved its approach to meet India’s growing startup ecosystem, with recent investments in companies like Agnikul Cosmos and Futwork reflecting this commitment. Artha shares optimism for sectors such as FinTech infrastructure, the affluent Indian market, deep tech, and B2B SaaS. Embracing India’s unique market dynamics, Artha remains committed to nurturing sustainable, high-impact ventures tailored for long-term success.

Anirudh A Damani

Spokesperson: Anirudh A Damani, Partner,Artha Venture Fund

1. Can you share Artha Venture Fund’s core investment philosophy? What key values guide your decision-making process when selecting startups to back?

At Artha Venture Fund, our core investment philosophy is anchored in six fundamental principles that guide our decision-making process when selecting startups to back:

  • Solving Real Human Problems:We invest in startups that address genuine human needs. We believe meaningful ventures provide tangible solutions to real-world challenges, creating lasting value for society.
  • Founder’s Right to Win:We look for founders who are uniquely positioned to solve the problems they’re tackling. This means they possess the right mix of experience, expertise, and passion, giving them a competitive edge and a higher likelihood of success.
  • Positive Unit Economics:Financial sustainability is crucial. We seek ventures demonstrating positive unit economics because no financial model transforms a gross loss into a net profit. Sound economics are essential for long-term viability.
  • Massive Market Potential:Startups must address large markets with significant growth potential. Scalability is key, so we look for ventures that can expand rapidly and capture substantial market share.
  • Pathway to Market Leadership with a Strong Moat:We prefer companies with a clear strategy to become the number one or two players in their category. Additionally, they should have a strong moat—unique advantages that protect them from competitors and sustain their market position over time.
  • Tech-Enabled, Not Tech-First:In the Indian context, businesses thrive when they are tech-enabled rather than tech-first. A robust business model enhanced by technology often outperforms models prioritising technology before establishing a solid business foundation.

These six principles guide us in evaluating ventures and forming partnerships with founders. When presenting to us, we expect entrepreneurs to articulate clearly how their startups align with these principles. This approach ensures we back companies that are innovative and built on sustainable business models poised for long-term success.

2. How has your investment strategy evolved over the years, particularly with respect to India's growing startup ecosystem?

When we launched our first fund, our investment philosophy was built around four core principles: solving a real human problem, ensuring positive unit economics, targeting massive scale potential, and investing in tech-enabled companies with a strong moat. These foundations served us well initially, but as we gained more experience and the Indian startup ecosystem evolved, we recognized the need to adapt our strategy.

We added two more crucial principles: the founder’s right to win and a clear pathway to market leadership. In India’s competitive and rapidly changing market, customer memory is short—they often remember only the top two players in any category. Therefore, it’s essential for the startups, we back, to aim for market leadership and establish a robust moat that sustains their position.

The concept of the founder’s right to win became vital as we observed that steering a venture to success in India requires an experienced and capable leader. It takes someone with a deep understanding of the market and the resilience to navigate its complexities, especially given the challenges and opportunities that emerged between 2020 and 2024 during the COVID-19 years.

This evolution in our investment strategy reflects our commitment to continuously learning and adapting. By incorporating these additional principles, we’ve strengthened our ability to identify and support startups that are not only innovative but also positioned for sustainable success in India’s dynamic startup landscape.

3. What are some of the recent investments made by Artha Venture Fund that you’re particularly excited about? What factors attracted you to these companies?

We’re incredibly excited about several investments that embody our vision for transformative impact. Although not a recent addition to our portfolio, Agnikul Cosmos has achieved remarkable milestones in the past six months. Their advancements have captured global attention and ignited a renewed passion for space exploration in India. Agnikul’s work opens up vast opportunities for Indian space tech companies aspiring to reach new heights, and being part of their journey is truly exhilarating.

More recently, our investment in Futwork has been a source of great enthusiasm. The team at Futwork is building something uniquely impactful, and we’re proud to have partnered with the Michael & Susan Dell Foundation (MSDF) in this venture. Their innovative approach to solving real-world problems aligns perfectly with our investment philosophy and commitment to backing founders with a solid right to win.

We’re also thrilled about our follow-on investments in companies like GetWork. They have implemented LLMs to revolutionize how entry-level candidates are evaluated in the recruiting process. By leveraging AI and LLMs, GetWork makes it easier for deserving candidates to be discovered, streamlining the recruitment process for employers. They also provide constructive feedback to candidates who aren’t selected, guiding them on how to upskill for future opportunities.

Another venture that excites us is InstaAstro, which organizes the highly fragmented astrologer space through innovative online solutions. They’re tapping into a massive market with significant potential, and their tech-enabled platform exemplifies how traditional industries can be transformed through technology.

What attracts us to these companies is their ability to address large markets with billions of dollars in potential while solving genuine human problems. They embody the principles that get me and my team out of bed every morning—ventures with strong business models, positive unit economics, and the potential to make us proud for years to come. Supporting founders who are passionate, capable, and uniquely positioned to lead their industries is at the heart of what we do at Artha Venture Fund.

4. Which sectors or industries do you see as the most promising in the near future for venture capital investment, particularly in the Indian context?

As we develop the thesis for our upcoming early-stage funds, we’re increasingly excited about thematic investing rather than focusing solely on specific sectors or industries. There are four key themes that we believe hold significant promise in India’s venture capital landscape:

  • FinTech Infrastructure: India is a credit-hungry market with immense untapped potential in financial services. Despite having over a billion debit cards in circulation, only about 100 million credit cards are active. We see a vast opportunity in building a fintech infrastructure that expands credit access and meets the financial needs of a large, underserved population.
  • The Affluent Indian Market (Urban Premium): We’re focusing on the top 6–8% of India’s consumer market. By 2030, this segment is expected to encompass over 125 million people with an annual income of 10 lakh rupees or more. Addressing the needs of this affluent segment presents an exciting opportunity due to substantial margins and scale potential.
  • Deep Tech with a Focus on Space Technology: The deep tech sector, particularly space tech, is another area that excites us. The push towards privatization in the space sector opens new avenues for innovation and investment.
  • B2B SaaS—‘Build in India, Sell to the World’: We continue to be enthusiastic about B2B SaaS companies that develop solutions in India for global markets. This theme has been part of our portfolio since 2012, with successful investments in companies like Exotel, Clientell, Lemnisk, and others showcasing massive-scale potential. Indian startups ability to create world-class SaaS products positions them well to capture global market share, leveraging cost advantages and a strong talent pool.
    These four themes represent areas where we see significant growth potential and opportunities to back innovative startups. By concentrating on these themes, we’re not only aligning with current market trends but also anticipating the future needs of both domestic and international markets. We’re excited to continue supporting ventures in these domains as we build our next 10-year fund, confident that they will drive substantial value and innovation in the years to come.

5. How do you identify and evaluate emerging trends that could lead to future investment opportunities?

Identifying and evaluating emerging trends is a multifaceted process at Artha Venture Fund, rooted in deep engagement with our portfolio and leveraging our extensive network. Being closely involved with our 125 investments allows us to observe common challenges and opportunities that arise across different sectors. By actively listening to our founders and engaging in open dialogues, we gain valuable insights into the issues they face, which often signal broader market trends.

Our unique position as a family office-backed fund grants us access to a wide array of family offices both in India and globally. This network enables us to interact with industry leaders, understand diverse perspectives, and stay attuned to global developments. Traveling internationally and engaging with stakeholders worldwide allows us to see how different markets evolve and how industry players perceive future opportunities.

Additionally, our family’s significant presence in the stock market broadens our worldview. This exposure complements our venture capital activities by providing insights into economic indicators and market sentiments that influence both public and private markets.

By combining these experiences—deep portfolio involvement, global networking, and a comprehensive market perspective—we can anticipate the undercurrents of emerging trends. This holistic approach helps us “crystal gaze” into the future, enabling us to develop investment theses and thematic focuses that align with upcoming opportunities. It’s about recognizing the signals today that will define tomorrow's markets and positioning ourselves to support ventures poised to lead in those spaces.

6. What role does India’s growing entrepreneurial landscape play in your portfolio strategy? How do you see India’s position as a global investment destination evolving?

India’s entrepreneurial landscape is central to our portfolio strategy at Artha Venture Fund. My father often said that India’s uniqueness lies in its vast size—a boon that offers unparalleled opportunities. This demographic dividend positions us advantageously on the global stage. I firmly believe that our entrepreneurial talent will propel India to reclaim its status as theSone Ki Chidiya(Golden Bird), symbolizing prosperity and abundance.

Addressing even a small problem can have a massive impact in a country like India. Solving an issue affecting just 1% of the population translates to reaching about 15 million people—exceeding the population of many nations. Achieving 10% market penetration means serving a market that is the size of several countries combined. This sheer scale provides startups with incredible opportunities for growth and scalability.

India is fundamentally a consumption-driven economy, relying more on internal demand than external influences. With initiatives like “Make in India” and a robust services sector, we’re evolving into not just one of the largest consumer markets but also a significant producer of goods and services. Unlike some of our neighbors who heavily rely on exports, India’s consumption and production occur within the same economy, yet we also have access to global markets. This unique dynamic enhances our attractiveness as an investment destination.

Looking ahead, I see the next two to three decades as belonging to India. Our vast market potential and growing entrepreneurial talent pool position us as a leading global economic force. However, it’s imperative that we, as Indians, seize this opportunity responsibly. The only obstacles to realizing this potential are those we might create ourselves. By fostering innovation, supporting startups, and maintaining a conducive business environment, we can ensure that India fulfills its promise and continues to evolve as a premier global investment destination.

7. With India’s startup ecosystem booming, how do you view the challenges and opportunities for venture capital firms like Artha Venture Fund?

One of the significant challenges we face is the pressure to expand our fund size due to India’s immense potential. There’s a strong push, both domestically and internationally, to adopt Western investment models that involve injecting large amounts of capital into startups at very early stages. However, in the Indian context, this approach doesn’t always yield the desired results.

India is a unique market with its own dynamics. Our economy remains relatively labor-intensive, with lower labor costs than many other countries. We believe that staying small and operating as a micro-VC allows us to better serve the needs of Indian startups and consumers. We are committed to focusing on early-stage ventures without intending to launch larger funds that would require prematurely writing bigger checks.

The challenge arises because many investors, especially LPs, often advocate for scaling up and applying investment strategies that have worked in the U.S. or other Western markets. However, we’ve observed through multiple market cycles that simply pumping large sums of money into startups early on doesn’t translate effectively in India. The Indian consumer is highly discerning and value-conscious, not easily swayed by free offerings or aggressive marketing tactics. They seek long-term value and are loyal to products and services that meet their needs.

When startups receive excessive funding too soon, they may engage in practices that undermine their long-term sustainability, such as overspending on customer acquisition without solidifying their core value proposition. This can be detrimental not only to the ventures themselves but also to the ecosystem's overall health.

On the other hand, companies likeEverest Fleet andLenDenClub exemplify how focusing on solving real problems and addressing genuine consumer needs can lead to substantial profit potential. These ventures, which might not fit the traditional mold of tech startups or typical VC investments, have demonstrated that it’s possible to scale revenues significantly—growing 100% year over year—while remaining profitable.

The opportunity for venture capital firms like Artha Venture Fund lies in embracing and defining the Indian way of entrepreneurship. By resisting the urge to conform to Western investment models and instead tailoring our approach to the unique characteristics of the Indian market, we can support startups that are built for long-term success.

8. How does Artha Venture Fund engage with Indian institutional and domestic investors to strengthen the capital base for startups?

At Artha Venture Fund, we emphasize building strong relationships with our investors, particularly Indian institutional and domestic investors. We are grateful to have hadSIDBI as one of our early institutional backers. Additionally, we have been fortunate to receive support from esteemed family offices such asDSP, Snow Leopard, Thermax, Glance Finance, Morde, Sat Group, Wallfort,and several other prominent families who share our vision of empowering Indian entrepreneurs.

As a family office-first fund, we prioritize open and transparent communication with our investors. We host at least two Artha Unplugged events every quarter, where we connect our portfolio founders with family offices. These gatherings have provided our founders with opportunities to expand their networks and sales funnels by engaging directly with enthusiastic family office investors. This direct interaction often leads to valuable collaborations and business development opportunities for our startups.

We also communicate regularly through our newsletter,FUNDamentals, and quarterly updates, ensuring our investors are well-informed about our activities and progress. Personally, I have standing meetings with many of our LPs, often over morning coffee once a month. These conversations are invaluable—they strengthen our relationships and lead to new investment ideas and insights into market trends. Moreover, several of our family office LPs actively co-evaluate potential ventures with us, bringing their expertise and perspectives into our investment process.

While our focus is on early-stage, though microVC funds may sometimes make us perceived as “not big enough” by certain institutional investors, our network of family offices has consistently supported us. These investors have written some of our largest checks and have been integral to our strategies and success.

9. What are Artha Venture Fund’s long-term goals and vision for the future? How do you see the VC landscape in India shaping up over the next 5-10 years?

At Artha Venture Fund, our long-term vision is to empower Indian founders throughout their entrepreneurial journey, providing them with the capital and support needed to scale from inception to significant growth stages. Through our three funds—Artha Venture Fund, Artha Select Fund, and Artha Continuum Fund—managedbyArtha Venture Partners, we aim to offer startups access to equity investments totaling up to INR 100 crores. In addition to equity financing, we leverage our LPs and family offices network to provide structured finance solutions, enabling ventures to progress from zero to one hundred—not just zero to one.

We are proud to be India’s first microVC fund house with a 0-100 approach. Our strategy involves launching nimble, focused microVC funds that can swiftly adapt to each stage of a venture’s growth. Over the next 10 years, we plan to expand our portfolio from 125 to at least 250 to 300 ventures, with an ambitious goal of backing over 1,000 Indian startups.

The content in this section is curated by Team IVCA. For any feedback, connect with paromita.sinha@ivca.in

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