‘We want to bridge gap be­tween angels and $100 mn funds’

Business Standard - - PRIVATE EQUITY - PATANJALI PAHWA

Artha Ven­ture Fund has in­vested $500,000 in a Gu­ru­gram-based food tech start-up called Daal­chini. It is a smart vend­ing ma­chine com­pany in Gu­ru­gram. The com­pany, like many in China, plans to set up vend­ing ma­chines in tech­nol­ogy com­pa­nies and en­cour­ages cus­tomers to make pay­ments via their mo­bile wal­lets, se­lect a food item and it falls off its rack into the slot. The food is typ­i­cally frozen and stacked in the ma­chine.

If you can’t quite place ei­ther Artha Ven­ture Fund or Daal­chini. It is fine. Daal­chini is way too small right now but does have a few in­ter­est­ing founders — Pr­erna Karla for­merly of Paytm Bank and Vidya Bhushan of Jio. The ma­chines oc­cupy valu­able real es­tate in start-ups like Paytm and OYO cur­rently.

Artha Ven­ture Fund was orig­i­nally known as Artha India Ven­tures, the fam­ily of­fice of Artha Group of Com­pa­nies, which is run by two for­mer di­rec­tors of the BSE. The fam­ily fund was fa­mous for in­vest­ing in OYO and then ex­it­ing al­most com­pletely in the big bang SoftBank round.

The fam­ily of­fice since then has evolved to a ven­ture fund. The fund has raised capital from its own fam­ily of­fice and a few oth­ers, which took the fund size to ~100 crore and so far in­vested in five com­pa­nies, in­clud­ing Daal­chini.

But doesn’t the name on the door bother the new LPs and en­trepreneur­s? “Our exit in OYO helps and so does our in­vest­ment in Pur­plle and Ex­o­tel,” says Anirudh Da­mani, man­ag­ing part­ner, Artha Ven­ture Fund. But the OYO exit, which came in within seven years of the first round, is the hall­mark. The cor­po­rate con­nec­tions that a fam­ily fund can bring when it comes to mak­ing an exit is also an added bonus.

The evo­lu­tion has been in­ter­est­ing. As a lead an­gel in­vestor, he found be­ing at­tached to a fam­ily fund dif­fi­cult. “Some­times it would take me 45 days to get back to a founder with a yes or a no,” he says. Now, the turn­around is faster. “I had to deal with a lot of an­gel in­vestors who I didn’t know or who didn’t know me,” he says. A lot of them couldn’t fol­low on ei­ther.

All of this changes now. Da­mani ex­plains that his in­vest­ments are in the ~1-5 crore. “Typ­i­cally, to raise ~3 crore, en­trepreneur­s need to get al­most a dozen angels on board to reach that mark,” he says. This makes growth dif­fi­cult be­cause all of these have dif­fer­ent points of view and giv­ing ex­its to all of them later is dif­fi­cult.

“Most of these angels don’t have the abil­ity to do fol­low on rounds,” he adds. He wants to bridge this gap. “Ear­lier, Kae Capital and Blume would write $300,000 and $500,000 cheques. But they have moved on to big­ger fund sizes and for them these are too small and that’s where we fit in,” he ex­plains. Artha ac­quires any­where from 10-25 per cent of the firm and then works with them to raise big­ger rounds. “Through a com­pany’s life­cy­cle, we may end up in­vest­ing close to $3 mil­lion-$5 mil­lion,” he says. Artha also has an exit plan, which it be­lieves works. It plans to exit in about seven years when the com­pany reaches Se­ries C or D.

Talk­ing about ex­its, what about Daal­chini? Swiggy or a FMCG ma­jor maybe? “Or a wal­let com­pany who want to in­crease use cases,” he says.

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