Artha Venture Fund, which recently completed raising Rs 40 crore for its maiden fund, is looking to mop up Rs 200 crore in a year’s time. Anirudh Damani, managing partner at Artha Venture Fund, tells Bhavik Nair the fund will top up the investment in LenDenClub. He adds that too many passive investors are not necessarily good for a start-up. Edited Excerpts:
How much are you looking to raise for your first fund?
We are pretty confident that we will raise Rs 200 crore by next year. We are formulating a strategy on how we will raise the remaining `100 crore, which is the greenshoe option. We have road shows starting in the next month or so.
How much have you invested in LenDenClub?
We have invested Rs 1.7 crore and we are comfortable putting in another $1.5 million. This month the company will probably cross 700 loans from one loan per month. We believe the company, co-founded by Bhavin Patel is barely scratching the surface. We believe the company should be able to give 700 loans a day.
Tell us about your upcoming investments…
One investment has been approved by the investment committee. This is essentially going to be a low-cost restaurant-kiosk located inside corporate parks. The idea is to provide tea which would be a little bit more expensive than the chai available on the street but at 30% of the cost of the closest incumbent. We believe tea that costs `50 is still out of the reach for someone who wants to drink two cups a day since that becomes almost `2,000-3,000 per month. Moreover, there are hygiene issues on the streets.
What is your take on capping salaries for start-up founders?
While we are not against the basic necessities being taken care of, the seed investment should not be used to lift lifestyles. Salaries of `3 lakh a month can’t be supported by seed start-ups. The business should be able to pay you just enough to take care of your rent in an affordable neighbourhood, your food, and possibly cover your communication and conveyance. I think in a place like Mumbai, most likely `50,000 a month should be able to cover that.
What is the issue with passive angel investing?
Not everybody is an angel investor and not everybody should be an angel investor. A company should also not accept money from everyone, especially at the early stages. You have people who are putting `2 lakh into a start-up and have no idea whether they can help the start-up. They seem to be only interested in growing their investment to `2 crore. That becomes a problem for the start-ups because they are giving up their equity for only liquid cash. What about the other help that they need but are not getting? If a company is giving up 25% of its stake to me for `1.5 crore, I am not only giving them cash, but am providing them mentoring, network, etc. When a start-up invites too many passive angel investors, they are essentially selling their company short.