FPJ News Service mumbai

In a move to enable more wealthy investors to participate, and boost funding for startups, SEBI is considering to expand the definition of qualified institutional buyers and remove the 200-investor cap. This step will allow angel funds to access a broader pool of accredited investors. The plan, if materialises,  will ensure that only financially strong investors take on high-risk investments, helping angel funds raise more capital and support start-ups.

Angel funds, a type of venture capital fund, mobilize money from investors to support startups. However, concerns have been raised about inadequate verification of investors’ risk appetite, the onboarding of numerous investors without strong financial backing, and potential conflicts with private placement regulations under the Companies Act, 2013.

To address these concerns, SEBI previously proposed that only accredited investors should be allowed to invest in angel funds. Now, the regulator is seeking feedback on amending the definition of qualified institutional buyers to include accredited investors, specifically for offering investment opportunities and allocating investments through angel funds. SEBI has sought public comments on the proposals till March 14.