SEBI eases norms for investment in startups, increases upper limit for angel investors

Capital market regulator Securities and Exchange Board of India (SEBI) has eased regulations for greater investments in startups. In a bid to deepen capital markets, SEBI also allowed Foreign Portfolio Investors (FPIs) to invest in unlisted NCDs, debt instruments.

SEBI also reduced the minimum angel fund investment for venture capital firms to Rs 25 lakh from the current Rs 50 lakh to give fillip to the early-stage startup ecosystem.

“The definition of startups for angel fund investment to be similar to DIPP policy. Angel funds to be allowed to invest in startups incorporated within 5 years. Angel funds can invest in overseas venture cap undertakings up to 25%,” stated SEBI.

According to SEBI guidelines, angel funds can invest in startups that have been incorporated during the preceding three years from the date of such investments. This has been changed to five now.

The SEBI also increased upper limit for angel investors from 49 to 200 and the lock-in requirements of investments made by angel funds was reduced from three to one year.

The market regulator also barred listed firms, their top officials from signing compensation pacts with PE funds without public shareholders' approval.