Markets regulator SEBI recently announced a change in the rules that governed angel funding in Indian startups. Where earlier investments in angel funds required the company to be less than three years old, recent changes in the policy will allow investments in entities which are up to five years old. At the same time, the lock-in period has also changed from three years to one year. Another change in the policy brought down the minimum investment threshold from 50 lakh to 25 lakh.
In the light of these changes, many startups can benefit from the new policies. SEBI has also approved angel funds to make abroad investments up to 25% of their investible corpus which is in line with the other Alternative Investment Funds. The notification which outlined these changes was published on January 4. It also includes a change in the upper limit for the number of angel investors in a scheme increasing it from 49 to 200.
These new regulations can be helpful for India’s startups who rely on angel funds at an early stage where the amount of investment may not be as high as 50 lakhs. At a point in time, when the Indian economy is going through a vast number of changes and startups are sprouting up across the country with innovative ideas, these changes in the investment of angel funds will be welcomes by many entrepreneurs who are hoping to procure funds in the future.