Artha India Ventures has announced the first close of ₹250 crore of its second micro-VC fund, named Artha Venture Fund II (AVF II). The total target corpus of the fund is ₹500 crore, with an additional green-shoe option of ₹100 crore. AIV plans to support 36 seed-stage startups in four themes – premium consumption, fintech infrastructure, applied AI and deep tech.
Investment Focus and Deployment Strategy
The micro-VC fund is designed to invest in early-stage startups that show good traction and product-market fit. The first cheques will be between ₹4 crore, while follow-on investments will range from ₹8 crore to ₹16 crore for top performers. The fund aims for 15–20% ownership in its best companies and plans a four-year deployment cycle.
The early close commitments are reported to be largely domestic, with 80% domestic capital and 20% international capital. Of the first close commitments, 90% came from Indian limited partners (LPs) including family offices and exited founders, while the remaining 10% came from international investors.
AIV’s Track Record and Ecosystem Context
AIV is part of the Artha Group, which has been backing early-stage founders for over a decade. Its first fund, AVF I, had a corpus of ₹225 crore. The larger investment record of the firm includes supporting over 135 startups and achieving 34 exits. Agnikul Cosmos, LenDenClub and InstaAstro are some of the portfolio companies that show AIV’s spread across fintech, aerospace and consumer tech.
The overall Indian startup ecosystem has slowed down over the past year. For several months now, India has seen fewer than 100 seed investments in a month, the lowest in almost a decade. The graduation rate from seed to Series A has slipped from about 12–13% to 5–6%. This makes micro-VC funds in India more relevant than ever as they bridge the funding gap for early-stage founders.
Why This Fund Matters
The launch of AVF II is a sign of renewed confidence among investors in India’s seed-stage startup environment, especially in applied AI and deep tech. The fund structure, with its smaller cheque sizes and flexibility in follow-on rounds, suits the needs of startups in the pre-Series A or post-seed stage.
It invests institutional capital in a timely manner, reducing dependence on angel networks alone. The strong domestic LP base that AIV has also points to a shift in Indian capital coming to the aid of Indian startups. Instead of waiting for global funds to enter, local investors are now playing a bigger role in the early rounds.
Deployment Outlook
AIV has already warehoused five startups for AVF II and plans to build a portfolio of ten companies by the end of the year. The full fund close is expected around the middle of 2026. The firm is following a concentrated portfolio approach, focusing on startups with customer traction, revenue visibility and capital efficiency rather than those chasing valuations.
The fund will target founders who are solving long-term problems in scalable markets. These include companies working in fintech infrastructure, AI automation and deep tech, offering opportunities for global connection.
Implications for Founders and Ecosystem
For founders, the launch of this micro-VC fund in India means early institutional support and mentoring. Smaller cheque sizes mean lesser dilution, while follow-on rounds provide enough runway for product growth. AIV’s seed-level investments also bring operational guidance and access to later-stage investors.
For India’s funding ecosystem, the arrival of Artha Venture Fund II adds momentum at a time when many founders face long fundraising cycles. It strengthens the link between angel funding and Series A venture rounds, addressing one of the biggest bottlenecks in startup growth.
For limited partners, the fund offers exposure to early-stage venture capital in India without the large ticket sizes typical of bigger VC funds. The 90% domestic LP participation also reflects the growing local confidence in India’s startup economy.
Also read | Worktrace AI: Startup by Ex-OpenAI Product Manager Angela Jiang Backed by Mira Murati
Stay tuned with BharatLinkr for the latest updates from India’s startup ecosystem.
