Sebi eases norms for angel funds to boost investment in start-ups

While investments from VCs and angel investors start-ups has reduced considerably during the past year, the Securities and Exchange Board of India (SEBI) on Wednesday has loosened the norms for angel investors in start-ups.

Some of the amendments to the SEBI (Alternative Investment Fund) Regulations, 2012 include increasing the amount of angel investors that can fund a start-up, reducing the minimum investment and lock in period and overseas investment.

One of the approved recommendations includes that the upper limit for number of angel investors in a scheme is increased from forty nine to two hundred.

Angel Funds will be allowed to invest in start-ups incorporated within five years, which was earlier 3 years.

It also said that the definition of start-up for Angel Funds investments be similar to definition of DIPP as given in their start-up policy.

Now the minimum investment amount required by an angel fund in any venture capital undertaking is reduced from Rs 50 lakh to Rs 25 lakh.

The lock in period for an angel fund in a start-up has been reduced to one year from 3 years.

Apart from this, angel funds from India are allowed to invest in overseas venture capital undertaking upto 25% of their investible corpus in line with other alternative investment funds.