SEBI Tightens Angel Fund Regulations: Only Accredited Investors Allowed for Capital Raising ..
By TIN24 Editor AMIT ALHAT
NEW DELHI: (Sep 10, 2025) – In a significant overhaul aimed at enhancing investor protection and streamlining operations, the Securities and Exchange Board of India (SEBI) has revised the regulatory framework for angel funds under the Alternative Investment Funds (AIF) norms. The regulator announced on Wednesday that angel funds will henceforth raise capital exclusively from accredited investors, marking a shift towards more sophisticated and financially capable participants in the startup ecosystem.
The updated guidelines, detailed in a newly issued circular, seek to simplify fundraising, investment activities, and compliance requirements for these Category I AIFs. Angel funds, which play a crucial role in early-stage financing for startups, must now restrict onboarding to accredited investors only. This category typically includes high-net-worth individuals or entities meeting specific income or asset thresholds, ensuring that investments are made by those with the resources and knowledge to handle the inherent risks.
For existing angel funds already registered with SEBI, a transitional grace period has been provided until September 8, 2026, to fully comply with the new regime. During this interim phase, these funds are capped at offering investment opportunities to no more than 200 non-accredited investors. This measure is designed to phase out less qualified participants gradually while minimizing disruptions to ongoing operations.
Importantly, current investors in these funds will not be adversely affected. They can retain their holdings as per the original terms outlined in the Private Placement Memorandum (PPM), providing continuity and stability for stakeholders already invested in promising ventures.
The revisions come amid SEBI’s broader efforts to fortify the AIF ecosystem, which has grown exponentially in recent years with angel funds emerging as a vital bridge for innovative startups. Industry experts hail the move as a step towards greater transparency and risk mitigation, though some startup advocates express concerns over potential reduced access to funding for early-stage companies.
SEBI’s circular underscores the regulator’s commitment to balancing innovation with robust oversight, ensuring that India’s vibrant startup landscape remains attractive to qualified investors while safeguarding the market’s integrity. Further details on implementation and compliance can be found on SEBI’s official portal.
Author: The India News 24
TIN24 (The India News 24) The India News 24 (TIN24) is a Mumbai-based news Digital Media focusing on breaking news, local and regional issues in India, with content primarily in Marathi. It was established with an X (Twitter) presence since July 2022. Owner & News Editor: Amit Alhat Education: BA in Mass Communication Journalism (Graduate) Experience: 12 years in journalism Platforms: - Website: https://theindianews24.in - X (Twitter): https://x.com/the_indianews24 - YouTube: https://www.youtube.com/@theindianews247 - Instagram: https://www.instagram.com/theindianews_24
