Team Startupcity

• The Damani family office raises INR 250 Cr of its INR 500 Cr Artha Venture Fund II, with an additional INR 100 Cr green-shoe option.
• AVF II plans to invest in 36 seed-stage startups across premium consumption, fintech infrastructure, applied AI, and deeptech, using its 1-2-4 follow-on investment model.
• 90% of first-close commitments came from Indian LPs, reflecting strong local support amid a capital-starved early-stage startup ecosystem.

Artha India Ventures (AIV), the Damani family office, has declared the first close of its INR 500 Crore ($56 Mn) Artha Venture FundArtha Venture Fund Datalabs (AVF II) at INR 250 Crore ($30 Mn). The fund also has an additional INR 100 Cr green-shoe option.

Via the new fund, Artha wants to invest in 36 seed-stage companies in premium consumption, fintech infrastructure, applied AI and deeptech, applying its 1-2-4 follow-on investment model.

For background, AIV has a '1-2-4' follow-on investment model meant to give increasing support to its most prospective portfolio companies over multiple funding rounds.

With this strategy, AIV invests an initial seed-stage capital of INR 1 Crore, then INR 2 Crore during Series A and INR 4 Crore in Series B rounds. This enables the company to retain significant ownership stakes in high-growth startups while committing extended capital.

Based on this investment hypothesis, the fund seeks to achieve 15-20% ownership in its leading portfolio companies and will operate on a four-year deployment schedule.

For AVF II, it is looking to raise 80% capital domestically from local investors and 20% from international investors. Worth mentioning here is that 90% of the first-close commitments were from Indian LPs, such as family offices, and startup entrepreneurs. The other 10% commitments were from international investors.

"AVF II is coming in an era when the startup ecosystem is resetting. In the past 8 months, except one, India has seen less than 100 seed investments a month, lowest in almost a decade. That speaks for itself as to how capital-starved the early-stage investing ecosystem has become", said the VC firm's managing partner Anirudh A. Damani.

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Established in 2012 by Ashok Kumar Damani, Artha is a SEBI-registered micro VC company that has made 140 startup investments since its launch. Its portfolio has investments in firms like OYO, Rapido, Purplle, Everest Fleet, Agnikul Cosmos and InstaAstro.

Earlier this year, AIV also announced the final close of its follow-up fund, Artha Select Fund, at INR 432 Crore, which is 31% above its initial goal of INR 330 Crore.

The investment vehicle will back the top 15% of Artha’s existing portfolio companies across funds. Over the next four years, AIV plans to invest INR 20 Crore each in 12–14 portfolio startups at the Series B and C funding stages via the follow-on fund.

The company's capital raise for its most recent fund is at a time when there are more investors in search of the right startup bets. Investors have raised funds totaling over $9 Billion, which has exceeded the $8.7 Billion mark of 2024, according to Inc42's Indian Tech Startup Funding Report Q3 2025.

Here, a majority of investor attention is shifting to early stage startups, while late stage primary investments have been fairly muted, pointing towards an emphasis on younger companies with high long-term growth prospects.

Riding this trend, 58% of the 80 investors polled by Inc42 for 'Indian Startup Investor Survey, Q3 2025' reported they are more positive about early stage companies. A majority of respondents stated they anticipate early stage startups to perform better than other segments in 2026.