Sebi Mulls Further Liberalising Angel Fund Norms
Market Regulator’s Proposal
In a move to boost the startup ecosystem in India, the Securities and Exchange Board of India (Sebi) is considering a proposal to raise the investment limit for angel funds in startups. Currently, angel funds are allowed to invest up to Rs 25 lakh in a startup. Sebi's proposal suggests raising this limit to Rs 50 lakh.
The main objective behind this move is to encourage more individuals to invest in startups. Angel investors typically provide seed funding to startups, which is crucial for their early-stage development. By raising the investment limit, Sebi aims to attract a broader pool of investors and provide startups with greater access to capital.
Key Points of the Proposal:
- Increase the investment limit for angel funds in startups from Rs 25 lakh to Rs 50 lakh.
- Allow angel funds to invest in startups that have been in operation for up to 10 years (currently, the limit is 7 years).
- Permit angel funds to invest in startups that have raised up to Rs 10 crore in funding from other sources (currently, the limit is Rs 5 crore).
In addition to these changes, Sebi is also considering allowing angel funds to invest in special purpose vehicles (SPVs) that are set up to invest in startups. This would provide angel investors with greater flexibility and diversification options.
The proposal is still in the consultation stage, and Sebi is seeking feedback from various stakeholders. If approved, the changes could be implemented later this year.
