Artha India Ventures (AIV) plans to scale up its direct investment covering over 100 start-ups by the end of 2022.

The move comes at a time of rising interest among domestic family offices and high net worth individuals in making a direct private investment in Indian as well as global start-ups.

A study by Trica Capital estimates 40 per cent of the family offices have doubled their allocation to private markets in the past five years.

Around 75 per cent of the investors covered in the study see direct start-up investment as the highest conviction opportunity in the next three to five years.

AIV, the alternate investment arm from the family office of Ashok Kumar Damani, was founded in 2012 and is currently invested in a portfolio of 85 start-up companies spread across India, the US, and Israel.

Artha India Ventures has already scored successful exits from its investments in Oyo Rooms (150x), Purplle (120x), Tala (65x), and Coutloot (40x) and plans to scale up its investments further both in India and overseas.

Anirudh A. Damani, director, Artha India Ventures, said the assets under management of the family office (excluding structured funds) have the potential to reach $70 million in the next couple of years.

A combination of better control and lower volatility compared to equity is pushing several family offices to consider direct investment in start-ups as an alternative to investing in publicly listed companies.

“Private equity is better in tidying over short term shocks because of its relatively longer investment cycle. Moreover, family offices in India are mostly entrepreneurial and private equity offers better control and lower volatility compared to stocks. Combining all of that, there is a compelling argument that family offices should have allocation in private equity as well as stock markets,” said Damani.

Damani said fintech, retail and consumer tech, e-commerce and logistics are among the start-up sectors where family offices are looking to scale up their exposure.

He added that the 85 odd companies where AIV has investment have generated almost a 51 per cent IRR (internal rate of return).

However, a key challenge from an investor perspective is the time-consuming process in organising a funding round of a start-up that could take several months during which the valuation of a firm may fluctuate. Damani said there is a need to streamline the process and make it easier for start-ups to raise capital.