Sebi Considers Raising Angel Fund Investment Cap In Startups To Rs 25 Cr

Markets regulator Sebi is reportedly considering a proposal to increase the maximum investment limit by angel funds in startups to Rs 25 crore, a move aimed at boosting India's technology-driven startups, according to media reports. The proposal, if implemented, could provide much-needed capital for emerging companies, expanding their access to growth funding.

According to media reports, Sebi’s consultation paper suggests lowering the minimum investment threshold from the current Rs 25 lakh to Rs 10 lakh and raising the maximum limit to Rs 25 crore from the existing Rs 10 crore. These changes aim to attract larger investments while making it easier for angel funds to support early-stage companies.

As per media reports, Sebi has also proposed that only ‘accredited investors’ be allowed to invest in angel funds. The proposed rules seek to streamline the fundraising process while enhancing disclosure, governance requirements, and investment flexibility. By focusing on investors with a strong risk appetite and the ability to evaluate early-stage ventures, Sebi aims to make angel funding more efficient and secure.

Reports further indicate that Sebi has proposed removing the current diversification limit, which restricts angel funds from investing more than 25 per cent of total funds in any single venture. Additionally, the regulator has recommended maintaining the 200-investor limit per angel fund annually, while Qualified Institutional Buyers (QIBs) would remain excluded from this cap.

According to media sources, Sebi has also suggested allowing employees and directors of angel funds and their managers to invest with a minimum amount of Rs 5 lakh. The consultation paper proposes replacing the Rs 5 crore minimum corpus requirement for angel funds with a condition to start investing only after at least five accredited investors are onboarded.

Media reports highlight that Sebi’s new framework includes third-party verification of investors’ eligibility, with a focus on limiting angel fund investors to a maximum of 200 per specific investment. The recommendations also suggest expanding the category of eligible angel investors to include HUFs, family trusts, sole proprietorships, and trusts. Sebi also proposed lowering the net worth requirement for corporate bodies from Rs 5 crore and considering experienced professionals with relevant qualifications as eligible angel investors.

The Securities and Exchange Board of India has reportedly invited public feedback on these proposals, with comments open until November 28.