To encourage start-up funding, SEBI, in its board meeting has allowed angel investors to invest up to Rs.10 crore in venture capital firms. This limit has increased from Rs.5 crore.
Earlier, SEBI had formed a working group comprising of various angel networks consultants and start-ups to simplify the regulations and provide ease of doing business for angel funds.
Here are other amendments pertaining to angel investments
- Angel fund can start with a minimum corpus of Rs.5 crore, down from Rs.10 crore.
- Angel fund or venture capital undertaking can receive funds from investors for five years instead of three years.
- Angel fund will fall under Companies Act 2013.
Angel funds fall under Category I AIF. These funds invest through venture capital firms in start-ups to encourage entrepreneurship by financing early stage start-ups. These investors also provide expertise and mentoring to start ups through their experience and network.
As on Dec 2017, venture capital fund raised commitments of Rs.16,380 crore. Raised commitment is equivalent to AUM in mutual fund parlance.