Artha India Ventures on Tuesday announced the first close of its second early-stage micro VC fund, Artha Venture Fund II (AVF II), at $28 million.
The fund is targeting a total corpus of Rs 500 crore, with an additional Rs 100 crore available through a green-shoe option, the firm said in a statement.
AVF II will invest in 36 seed-stage startups across four themes, i.e. premium consumption, fintech infrastructure, applied AI, and deep tech, deploying Rs 4 crore initial cheques and doubling down with Rs 8-16 crore follow-on investments under its proprietary 1-2-4 model.
The fund targets 15-20% ownership in its top portfolio companies and will operate on a four-year deployment cycle, the statement added.
“AVF II is launching at a time when the startup ecosystem is undergoing a reset. In the last eight months, barring one, India has recorded fewer than 100 seed investments per month, the lowest in nearly a decade. More tellingly, the graduation rate from seed to Series A, historically 1-9 startups or around 12-13% over 36 months, has dropped to as low as 5-6% in recent months. That tells you how capital-starved the early-stage investment ecosystem has become,” said Anirudh A Damani, Managing Partner, Artha Venture Fund.
The fund’s capital base will remain ~80% domestic and ~20% global, with 90% of first-close commitments coming from Indian LPs, including family offices, and exited founders, and the remaining 10% from international investors.
Early backers of AVF II include the Shahi Group, Narendra Karnawat (Glance Finance), DSP Family Office, and several founders from Artha’s earlier investments who have since achieved successful exits.
Artha launched its first fund in FY19 with a corpus of Rs 225 crore. AVF I’s portfolio of 32 companies include Agnikul Cosmos, Everest Fleet, LenDenClub, Daalchini, InstaAstro, and GetWork.
Since 2012, AIV has invested in 135+ startups with 34 exits across India, the US, Israel, Africa, and the UK — including market leaders such as OYO Rooms, Rapido, Purplle, Icon Build, and Karza Technologies. AIV also develops and operates renewable energy assets across India.
The firm’s recent standout exits include a 114x return on its early investment in Exotel; a 35x return from InterStellar (a fintech innovator leveraging Stellar blockchain for global payments); and Artha Continuum Fund’s investment in Biryani By Kilo (acquired by Devyani International).
