SEBI relaxes investment rules for Angel Funds

SEBI relaxes investment rules for Angel Funds

Posted by P. Charitha on November 24th 2016

Market regulator Securities and Exchange Board of India (SEBI) has relaxed its rules for investment by angel funds in order to boost start-up funding in the country. The SEBI board accepted recommendations made by the Alternative Investment Policy Advisory Committee which was set up in 2015 under the chairmanship of Mr. Narayana Murthy.The amendments made with respect to angel investors include:
1. Increasing the upper limit of angel investors in a start-up scheme to 200 from 49 currently.
2. Angel funds are now allowed to invest in older start-ups with the cap being raised from 3 to 5-year-old entities.
3. The minimum investment that can be made by angel funds in venture capital undertakings has been reduced to Rs 25 lakh from Rs 50 lakh.
4. Lock-in period of investment made by angel funds has also been reduced to one year from 3 years.
5. Angel funds are now also allowed to invest up to 25 % of their total investible amount in overseas venture capital undertakings.
6. The definition of start-up for angel funds investment will be aligned similarly to the definition set by the Department of Industrial Policy and Promotion.
Angel fund, a sub-category of AIF, encourages entrepreneurship in the country by financing small start-ups at a stage where such firms find it difficult to obtain capital from traditional sources of finance such as banks and financial institutions. Currently, 266 AIFs are registered with SEBI out of which, 84 are registered under Category I, including four angel funds.(Source PTI)


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