SEBI has issued a Consultation paper on expanding definition of Qualified Institutional Buyers under SEBI (ICDR) Regulations, 2018, to include Accredited Investors for the limited purpose of investments in Angel Funds. Angel Funds, a type of Category I AIFs Venture Capital Funds, raise capital from Angel Investors through private placement to invest in start ups. A review of the current regulatory framework for Angel Funds indicated gaps in operational clarity and concerns about offering investment opportunities to a large number of investors without necessarily ensuring commensurate risk appetite.
Considering these issues, a consultation paper on review of regulatory framework for Angel Funds in AIF Regulations (herein after referred as ‘first consultation paper’) was published on SEBI website to seek views/comments of stakeholders on proposals to streamline regulatory framework for Angel Funds. The key proposal in the consultation paper was to mandate that Angel Funds shall on board and offer investment opportunities only to Accredited Investors, so as to ensure that only investors with commensurate risk appetite, invest in Angel Funds. Other flexibilities proposed in the first consultation paper were envisaged based on strength and regulatory comfort of allowing only AIs to invest in Angel Funds. The comments / suggestions shall be submitted on or before March 14, 2025, via online web based form.
