Update, September 2026: SEBI’s board approved wider accredited-investor rules — NRIs deemed accredited and a ₹5 crore market-exposure route. See what changes.
What an angel fund is
An angel fund is a Category I AIF that pools angel investors’ money into early-stage startups deal by deal. Since 9 September 2025 it has been its own sub-category of Category I, with rules designed for syndicate-style investing.
Who can invest
- Accredited investors only (plus key managerial personnel of the fund or manager).
- Individuals qualify as accredited with, for example, annual income of at least ₹2 crore, or net worth of at least ₹7.5 crore (with ₹3.75 crore in financial assets), or ₹1 crore income plus ₹5 crore net worth. Accreditation certificates are issued by agencies set up by exchanges and depositories.
- The old ₹25 lakh minimum per investor and ₹5 crore minimum corpus no longer apply.
Deal rules
- Investee companies must be DPIIT-recognised startups not linked to a group with turnover above ₹300 crore.
- ₹10 lakh to ₹25 crore per startup, including follow-on rounds.
- At least two accredited investors in each deal; related parties of the startup can’t participate in that deal.
- Lock-in of one year (six months if the exit is a sale to a third party).
- The manager or sponsor invests the higher of 0.5% or ₹50,000 in each investment.
- Deals are offered to investors using a methodology fixed in the placement memorandum, with pro-rata rights.
- No need to file term sheets with SEBI any more, but records must be kept.
Registration and launch
- Registration fee: ₹2 lakh (plus the ₹1 lakh application fee).
- Since 14 July 2026, no merchant banker is needed — the placement memorandum can be circulated from registration.
- First close: at least five accredited investors within 12 months of registration.
- A placement memorandum audit applies only once total investments cross ₹100 crore.
Existing angel funds
Angel funds registered on or before 10 September 2025 must move to the accredited-investor-only model by 31 March 2027 (extended in September 2026). Until then, they can offer deals to up to 200 non-accredited investors.
Setting up or converting? See VC and AIF fund setup and SEBI AIF registration.
Frequently asked questions
Who can invest in a SEBI angel fund?
Only accredited investors, plus key managerial personnel of the fund or its manager, under the framework in force since September 2025.
How much can an angel fund invest in one startup?
Between ₹10 lakh and ₹25 crore per investee company, including follow-on investments, in DPIIT-recognised startups not linked to a group with turnover above ₹300 crore.
Does an angel fund need a merchant banker?
No. Since 14 July 2026, angel funds don't need a merchant banker and can circulate their placement memorandum from the date of registration.
What is the deadline for existing angel funds to become accredited-only?
31 March 2027, for angel funds registered on or before 10 September 2025. Until then they may offer deals to up to 200 non-accredited investors.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.