SEBI Shakes Up Angel Fund Rules: New Accredited Investor Framework Unleashed

India's market regulator just rewrote the rulebook for angel investing—and the startup ecosystem will never be the same.

Lowering the Gates

SEBI slashes barriers for accredited investors, opening floodgates for fresh capital into early-stage ventures. No more waiting for regulatory permission to breathe life into innovative ideas.

Smart Money Moves

The revised framework prioritizes investor sophistication over pure wealth metrics—finally acknowledging that real expertise beats blind capital any day. Because nothing says 'qualified investor' like someone who actually understands risk instead of just having a fat bank account.

Ecosystem Impact

Startups gain access to deeper funding pools while investors get streamlined access to high-potential deals. The changes effectively bypass traditional funding bottlenecks that have stifled innovation for years.

Regulators finally recognize that protecting investors doesn't mean keeping them locked out of the best opportunities—though traditional finance will probably still find ways to complicate things with paperwork and meetings that could've been emails.

Operational ease

Investment processes have also been streamlined. Angel funds will no longer need to launch separate schemes or file term sheets with SEBI for each deal. Instead, investments must be made directly at the fund level, though detailed records must be maintained. 

Follow-on investments in existing portfolio companies are permitted, but capped at ₹25 crore per company. A minimum lock-in of one year applies, reduced to six months if shares are sold to third parties.

For the first time, angel funds have been reclassified as a standalone Category I AIF, rather than a sub-category under venture capital funds. They must also adhere to performance benchmarking and disclosure norms, with annual compliance audits mandatory for funds investing over ₹100 crore.

Published on September 10, 2025