# SEBI Regulations for Angel Fund Investments in India Published: 26 Sep 2024 | Last updated: 07 Feb 2025 Author: Treelife Practice area: Startups Tags: Angel fund, angel fund investment, sebi Source: https://treelife.in/startups/sebi-regulations-for-angel-fund-investments-in-india/ ## Summary - SEBI regulations govern angel fund investments in Indian startups to ensure transparency and investor protection. - An eligible startup must not be promoted or sponsored by an industrial group with a turnover exceeding INR 300 crore. - Angel funds cannot invest in a startup if there is a family connection between the investors and the founders. - The minimum investment by an angel fund in a venture capital undertaking is INR 25 lakhs. - The maximum investment by an angel fund in a single startup is capped at INR 10 crore to encourage diversification. - Investments made by angel funds are subject to a mandatory lock-in period of one year. - Angel funds are barred from investing in their own associates and cannot allocate more than 25 percent of their total corpus to a single venture. - SEBI permits angel funds to invest in companies incorporated outside India, subject to conditions set by the RBI and SEBI. - Units of angel funds cannot be listed on any recognized stock exchange, reflecting the illiquid nature of angel investments. --- Blog Content Overview - [1 Eligibility for Angel Fund Investments](#Eligibility_for_Angel_Fund_Investments) - [2 Investment Thresholds, Lock-in Period, Restrictions and Global Investment ](#Investment_Thresholds_Lock-in_Period_Restrictions_and_Global_Investmentnbsp) The Indian startup ecosystem is a vibrant space brimming with innovation and potential. Fueling this growth engine are angel investors and angel funds, who provide crucial seed capital to early-stage startups. This article dives into the key regulations laid out by the Securities and Exchange Board of India (SEBI) for angel fund investments in India.  ## **Eligibility for Angel Fund Investments** SEBI guidelines specify the kind of startups that are eligible for angel fund investments. Here are some key points: - **Independent Startups:** The company must not be promoted or sponsored by, or related to, an industrial group with a group turnover exceeding INR 300 crore. - **Avoiding Familial Conflicts:** Angel funds cannot invest in companies where there’s a family connection between any of the investors and the startup founders.  ## **Investment Thresholds, Lock-in Period, Restrictions and Global Investment ** SEBI regulations further outline the minimum and maximum investment amounts, along with a lock-in period: - **Minimum Investment:** Angel funds must invest a minimum of INR 25 lakhs (INR 2.5 million) in any [venture capital](https://treelife.in/finance/private-equity-pe-vs-venture-capital-vc/) undertaking.  - **Maximum Investment:** The investment in any single startup cannot exceed INR 10 crore (INR 100 million). This encourages diversification across various promising ventures. - **Lock-in Period:** Investments made by angel funds in a startup are locked-in for a period of one year. - **Restrictions on Investments: **To ensure responsible investment practices, SEBI imposes specific restrictions: - **Investing in Associates:** Angel funds are not permitted to invest in their associates.  - **Concentration Risk:** Angel funds cannot invest more than 25% of their total corpus in a single venture. - **Global Investment Opportunities:**While the focus remains on nurturing Indian startups, SEBI allows angel funds to invest in the securities of companies incorporated outside India. However, such investments are subject to conditions and guidelines stipulated by RBI (Reserve Bank of India) and SEBI. This flexibility allows angel funds to explore promising global opportunities while adhering to regulatory frameworks. - **Unlisted Units: **It’s important to note that units of angel funds are not permitted to be listed on any recognized stock exchanges. This is because angel investments are typically illiquid, meaning they are not easily tradable like publicly traded stocks. SEBI regulations play a critical role in fostering a healthy and transparent environment for angel fund investments in India. These regulations attract investors, protect startups, and ultimately contribute to the growth of the Indian startup ecosystem.  Powered By EmbedPress ### Related posts: - [10 things Startups should Include in their Investment Pitch Deck](https://treelife.in/startups/10-things-startups-should-to-include-in-their-investment-pitch-deck/) - [B2B SaaS – How Sales can be driven efficiently?](https://treelife.in/startups/b2b-saas-how-sales-can-be-driven-efficiently/) - [Startup India Registration: How to Register on Startup India portal?](https://treelife.in/startups/startup-india-registration/) - [Data Privacy for Telemedicine Platforms](https://treelife.in/startups/data-privacy-for-telemedicine-platforms/) --- This is informational content from Treelife. For advice specific to your situation, contact support@treelife.in