Evaluating and Supporting Early Champions: Insights and Strategies

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Anirudh A Damani, director at Artha India Ventures

Venture capital in India is evolving, characterized by a greater emphasis on disciplined funding, sector expertise, and long-term value creation. Anirudh A Damani, director at Artha India Ventures, shared insights into the firm’s investment approach, highlighting their strategy of supporting founders in the early stages while maintaining the capacity to invest further as successful businesses grow. In an interview with Businessline, he elaborated on the firm’s investment philosophy, sector preferences, and exit strategies.

Edited excerpts:

How has Artha evolved as an investment platform over the years?

Currently, we manage over ₹2,400 crore in assets under management (AUM), reflecting a gradual compounding journey rather than sudden leaps. Each fund has built on the insights and discipline gained from previous iterations. Our inaugural fund, sized at ₹225 crore, established our underwriting standards and achieved over 5x total value to paid-in capital (TVPI), complemented by a strong internal rate of return (IRR) and tangible distributions. We have introduced additional funds, like the ‘Select Fund’ for top-performing companies and ‘Continuum’ to engage family offices, while ‘Venture Fund II’ serves as our main early-stage investment vehicle.

What defines your investment thesis today?

We believe that the most successful companies emerge from challenging environments. We prioritize founders who show early revenue traction and possess a clear plan for scaling. At the portfolio level, our strategy starts broad but intensifies over time. We allocate about 30% of our capital initially and reserve approximately 70% for follow-on investments. This approach enables us to gain significant ownership in promising companies, avoiding dilution of efforts across too many ventures.

Which sectors are you currently optimistic about?

Applied AI remains a focal point, particularly when it leads to tangible outcomes rather than superficial enhancements. The deep-tech sector is also notable, as India transitions from conceptualizations to practical executions, especially within space technology and semiconductors. Additionally, the fintech landscape is evolving, marked by enhanced underwriting and compliance mechanisms. On the consumer front, a trend towards premiumization is becoming increasingly evident.

How do you balance early-stage investing with follow-on capital?

While our primary emphasis is on early-stage investing—where we can have more substantial engagement with founders—maintaining continuity is equally crucial. Via our ‘Select Fund,’ we continue supporting companies as they progress to Series B and C rounds. This strategy ensures we do not lose our investment exposure in our most successful assets as they scale. Early-stage investing is not just about access; it requires sound judgment and commitment throughout the investment lifecycle.

What has been your experience with exits and investment horizon?

We have successfully executed over 35 exits, and we value liquidity more than the exit method itself. Typically, we recognize three exit scenarios: early exits if the investment thesis falters; high-IRR exits around the Series C stage; and long-term public offerings for those companies that achieve sufficient institutional scale. We are increasingly witnessing portfolio companies reach a 9 to 12-year duration, positioning public markets as a viable exit option.