It's interesting but no longer incongruous to see tie-clad businessmen in the oddball world of art. Just as it's interesting to see that the word "art" is no longer associated with "creativity" but with "investment". And as the economy booms, more art funds are readying to launch in what many already see as a crowded market.

Unlike the realty market, for instance, the supply of art is, after all, finite, but galloping prices (up a thousand times in five years) have lured in a new legion of entrepreneurs attracted if not by the first-mover advantage then at least by the early mover advantage.

Already, the Rs 10-crore (Rs 100 million) Yatra fund and the humungous Rs 102-crore (Rs 1.2 billion) Osian's fund have become talking points. And though neither has reached a point of liquidity yet, Delhi-based Crayon Capital that closes on December 15 on an anticipated Rs 40-crore (Rs 400 million), is hoping that the buzz around the art market could swell its kitty substantially over its anticipated size.

Promoters Gaurav Karan and Amit Vadehra look terrifying young for the task they've laid out for themselves, but what they lack in years, they more than make up in confidence.

And an exposure to art that they take for granted. They've certainly been meticulous, working with Ernst & Young on background managerial checks on how to incorporate the fund (Sebi does not regulate art funds) and raise money in the market.

"When Edelweiss first launched Yatra last year," says Vadehra "they raised Rs 11 crore (Rs 110 million) against a target of Rs 20 crore (Rs 200 million)." Yatra itself has remained tight-lipped about the fund, but Osian's has managed a coup, pulling in a huge Rs 102-crore (Rs 1.2 billion) corpus for its three-year close-ended fund, perhaps because its high profile has a huge collateral.

Crayons too is close-ended, but spread over three years, and is aiming for disclosure transparency every time its buys or sells works of art.

"We're looking at buying 100-150 works," shares Karan, "on works that are in the Rs 30-40 lakh range, and we hope to turn them around in a year's time, so perhaps our works would have been turned over thrice in a three-year life-cycle."

Calling it "conservative", the two say their strategy is research and numbers driven, and that though they are looking at a diverse portfolio, their acquisitions would only include those artists "who have at least a 10-year history of doing well independently".

Like Osian's. Crayons' minimum investment is Rs 10 lakh (Rs 1 million) with a three-year lock-in period: "no transfers," Vadehra is unequivocal, "no withdrawals, no way you can get out".

Crayons is also planning to exhibit all its works every six months "to create value" and though it doesn't � cannot - make any promise, is looking at 30-40 per cent returns on an annualised basis. Expectations, though, are riding at twice that percentage.

No wonder art funds with somewhat different models have started doing the round, not least the way Ajay Seth of Copal Art manages it. Copal's agenda is to take art to the masses, but its "fund" does not follow any known premise, since he deals in the secondary market. "We buy the art first," he says, "then ask people to invest in it, so they know what they're getting into."

In actual fact, you buy a work of art, as in any other gallery, and are allowed to take it home, again as in any other gallery.

"But the acquisition cost is lower," says Seth, "and we evaluate your portfolio every six months in terms of escalation." Buyers are free to sell their works at any time, and through any agency. If that doesn't quite quality as a "fund", Seth is unperturbed: "An investor with us is not buying into an anonymous art fund but into an artist whose work he will physically possess."

Seth has bought two tranches of works for his funds, and floated two series of Rs 10 crore (Rs 100 million) each so far (which he says "closed in 48 hours"), and now wants to launch a Rs 150 crore (Rs 1.5 billion) fund in January 2007. Crayons, though, is taking it one step at a time. "Once the fund settles down," says Karan, "we'd like to look at another one perhaps for the NRI market, and after that, even a high-risk fund."