Sebi Bats for Easing Angel Fund Norms to Aid Funding of Startups
The Securities and Exchange Board of India (Sebi) has proposed to ease the norms for angel funds in a bid to boost funding for startups.
Key changes proposed by Sebi include raising the investment limit for angel funds, allowing them to invest in unlisted companies, and permitting them to take up management roles in investee companies.
The move is expected to make it easier for startups to raise capital, especially in the early stages of their development. Angel funds typically invest in startups that have high growth potential but may not have a proven track record or significant revenue.
The proposed changes are part of Sebi's broader efforts to promote the growth of the startup ecosystem in India. The regulator has been taking several steps in recent years to make it easier for startups to raise capital and operate in the country.
Here are some of the key benefits of the proposed changes:
- Increased investment limit: The proposed increase in the investment limit for angel funds will allow them to invest more money in startups, which will help to meet the funding needs of these companies.
- Investment in unlisted companies: The proposed change that will allow angel funds to invest in unlisted companies will give them more flexibility to invest in startups that are still in the early stages of development.
- Management roles: The proposed change will allow angel funds to take up management roles in investee companies, which will provide them with more control over the direction of these companies and help them to achieve their full potential.
The proposed changes are still in the consultation stage, and Sebi is seeking feedback from stakeholders before finalizing them.
However, the move is a positive step towards creating a more conducive environment for startups to grow and succeed in India.
In addition to the proposed changes to angel fund norms, Sebi has also been taking other steps to promote the growth of the startup ecosystem in India. These include:
- Establishing a dedicated fund of funds for startups
- Relaxing the listing norms for startups
- Creating a regulatory sandbox for startups
These measures are expected to help boost the growth of the startup ecosystem in India and make it easier for startups to raise capital and operate in the country.
