How VC firm Hearth Ventures is reigniting enterprise in Indian arts and handicrafts

India’s tryst with art began back when not many civilizations even existed. Some of the oldest craftwork in history can be traced back to India and its adjoining areas — and much of that has been passed down through generations and exists today.

Sadly though, more and more Indian craftspeople and artisans — whose forefathers once enjoyed patronage from royal families across the country and saw their handicrafts adorn palaces and durbars — are trading in their skills and practice for want of a better life, thanks largely to the emergence of mass production.

Add to that a growing internet culture and digital lifestyle, most of India’s artisans — who are far removed from the technological advancements of today — have been left behind.

The Indian traditional art is dying a slow death.

COVID-19, especially, has left thousands of artisans without work and unable to meet ends. Exports of Indian handicrafts have plateaued since the pandemic began, while local production has taken a hit as more people took to shopping online. Government efforts to revive the handicrafts economy has borne fruit, but, given the Indian handicrafts sector is the second-largest source of livelihood in the country, there is a need for more intervention.

Enter Hearth Ventures — an impact, venture capital firm that specifically looks at investing in businesses that support Indian handicrafts and arts, as well as circular economy companies.

The VC firm was founded in 2021 by Shefali Chhachhi, who has worked with and scaled early-stage businesses across Pepsico, Nokia, Max BUPA, and McCormick Kohinoor; Vinayak Kamath, a BITS Pilani alumni who has been a partner in Private Equity Funds and worked at MNCs such as Arvind Mills and GE; and Vipul Jain, alum at IIM-Ahmedabad and IIT-Kanpur, and Chairman and Co-founder at Kale Consultants that now trades on the NSE as Accelya, and Kale Logistics, a software firm focused on the global logistics industry.

The trio aims to “reimagine Indian craftsmanship”, take Indian artisanal, handmade products to the global market and therefore support artisans and handicrafts people in rural India.

“After agriculture, handicrafts is the second-largest employer in rural India. When we were evaluating our thesis in the early days, we realised that there is a serious lack of growth capital, as well as business mentoring, in this sector, and we decided to solve that problem,” Shefali tells YourStory.

“We want to play the role of a “mentor fund” in the Indian handicrafts and arts sector, and we truly believe that there’s immense opportunity for success in this space,” she adds.

Investing in Bharat

Hearth Ventures primarily invests in businesses that ultimately impact and support the artisanal and handicrafts community.

It breaks down the types of businesses it evaluates for investments as follows:

1. Product-based: Enterprises dealing in products such as furniture, lighting, pottery, wall art, kitchenware, gift items, accessories, etc.
2. Enablers: Companies that enable the sale of Indian crafts, such as ecommerce wholesalers, logistics companies, project companies, tech companies, etc.
3. Sellers: Ecommerce retails, retain chains, marketplaces, international distributors and sellers, among others.

Companies that fit into any of these categories are ones that Hearth Ventures is most interested in working with, although its North Star is always the impact these ventures have on artisans and craftspeople.

“One of our biggest criteria, when we evaluate any business for investment, is the impact it has on the artisan and crafts community. We work backwards from the UNSDG indicators (UN Sustainable Development Goals) to see how many of those boxes the company ticks, and what the extent of the impact is,” Shefali says.

Other key criteria for the VC firm are unit entrepreneurial talent, economics, scalability (which includes addressable market size), how it fits within the firm’s portfolio, and proof of potential success, among others.

The firm does not limit itself to just providing capital — it also offers business mentorship and hopes to help its portfolio companies explore connections with each other.

Hearth Ventures currently has one startup in its portfolio — US-based ShobitamInc — in which it has invested $1.27 million. Founded by Aparna and Ambika Thyagrajan, Shobitam works very closely with weavers in India. 

During the pandemic, when its weaver community was badly hit, the startup undertook the responsibility of providing rations such as rice and lentils, as well as pledged half of its earnings of April to weavers and their families.

The Mumbai-based VC firm is in the process of closing two more transactions in March 2022, and is looking to make three more investments in the next two quarters. Its average ticket size for funding is $200,000 to $1 million, and, while its funding in Shobitam came from proprietary capital, it is putting together a larger fund to explore more investment opportunities in the space.