Artha India Ventures to enter syndicates business

• ByStartupStory     |    April 16, 2022

According to director Anirudh A. Damani, Artha India Ventures is looking to enter the angel syndicate market to back companies and venture funds.

According to Damani, many HNWIs and UHNIs invest through angel networks, but most of them are structured like giant brokerages, resulting in a system in which founders wind up diluting valuable ownership at an early stage, resulting in lower deal flow. A syndicate allows seasoned VCs and angel investors to back promising digital startups by forming a single fund that raises money from institutions and angel investors to invest in a firm.

In essence, a syndicate lead invests in a mini-fund, and the fund’s backers invest in the fund, which is used by a variety of businesses. He explained that with a syndicate, there is no fee for startups or founders, and the focus is solely on investors. Given the fact that few Indian family offices can write “significant checks,” a syndicate can be a useful structure for broader involvement, according to Damani, where one office can lead the syndicate with a group of other funds.

Artha used the Angellist syndicate platform to invest in Leverage Edu, an overseas-focused higher education counseling platform, Damani said, adding that a similar deal is in the pipeline. “For the Leverage Edu deal, we used Angellist. It was expected to be worth 7 crores, but it ended up being worth 16.3 crores thanks to 56 investors. We can certainly deploy $25-30 million per year utilizing this framework in the future,” he noted.

An investor can be more involved in a deal as part of a syndicate than as part of a blind pool in a fund, he said, adding that the markets are expected to slow down in the coming months. “Salaries for developers with 2-3 years of experience have risen by 2-3 times in recent years; this will be rationalized.” The terrible aspect is that when the economy slows, there will be layoffs, and the hypergrowth that many of these firms predict will be difficult to sustain. “After that, we’ll talk about unit economics,” he continued.

Artha India Ventures is Ashok Kumar Damani’s family office’s alternative investing arm. It was founded in 2012 and now has a portfolio of over 90 businesses across India, Israel, and the United States.

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