SEBI gives angel funds 7-month extension to comply with accredited investor mandate
The Securities and Exchange Board of India (SEBI) has given angel funds nearly seven more months to comply with the mandatory accredited investor requirement, extending the deadline to 31 March 2027.
Earlier, angel funds registered with the markets regulator on or before 10 September 2025, were required to implement the accredited investor mandate by 8 September 2026.
The move comes after representations from the Alternative Investment Fund (AIF) industry sought additional time for existing angel funds to transition to the revised regulatory framework, according to the circular issued on Monday.
What changes for angel funds?
The revised framework applies only to angel funds that were registered with SEBI on or before 10 September 2025. These funds can continue to offer investment opportunities to up to 200 non-accredited investors during the transition period.
However, from 31 March 2027, the above-mentioned category of angel funds will not be permitted to accept contributions from non-accredited investors for investment in an investee company, the markets regulator said.
Existing investors can continue to hold the investments they have already made in the angel fund, in accordance with the terms of the private placement memorandum (PPM) and other fund documents.
Angel Funds registered with SEBI after 10 September 2025 are already required to onboard and offer investment opportunities only to accredited investors. So, this rule does not apply to them.
The circular, issued on Monday, 8 September, comes into force with immediate effect.
What are angel funds?
Angel funds are pools of capital created by high-net-worth individuals or companies for investing in start-ups and early-stage companies, where the risk of loss can be high.
The minimum investment amount in angel funds is ₹25 lakh, down from ₹50 lakh earlier. The maximum investment amount cannot exceed ₹5 crore.
Earlier, an angel fund could not invest less than ₹25 lakh or more than ₹10 crore in any investee company. Now, the minimum investment limit has been lowered to ₹10 lakh, while the maximum has been increased to ₹25 crore per investee company, according to a report by Economic Laws Practice.
The lock-in period for each investment by an angel fund has also been reduced to six months if the fund exits by selling its stake to a third party, the report added. However, if the exit is due to a company buyback or the angel fund is selling its stake to the investee company's promoters, the lock-in period shall be one year.
The accredited-investor framework is designed to ensure that investors participating in such higher-risk investment opportunities have the requisite financial sophistication and capacity.
“This circular is issued…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market,” the markets regulator said yesterday.
About the Author
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
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