Operational and prudential norms for Angel Funds
Chapter 8 - Operational and prudential norms for Angel Funds
The AIF Regulations were amended and notified on 9 September 2025.
The amendment introduced a revised regulatory framework for Angel Funds.
The revised framework is provided under Chapter III-A of the AIF Regulations.
The framework sets out specific:
Conditions applicable to Angel Funds;.
Operational modalities for implementing various provisions relating to Angel Funds.
Therefore, this chapter should be read along with the Angel Fund provisions under the AIF Regulations.
8.1 Fund raising by Angel Fund
8.1
Regulation 19D(1) of the AIF Regulations provides that an Angel Fund can raise funds only from Accredited Investors.
The funds must be raised through the issue of units of the Angel Fund.
Therefore, an Angel Fund cannot raise funds from investors who do not qualify as Accredited Investors.
The issue of units and the manner of raising funds must comply with the requirements specified by SEBI from time to time.
Example
An Angel Fund proposes to raise ₹50 crore.
It identifies:
Investor A: Accredited Investor
Investor B: Accredited Investor
Investor C: Not an Accredited Investor
The Angel Fund can issue units and raise funds from Investor A and Investor B.
It cannot raise funds from Investor C, because the fund is permitted to raise funds only from Accredited Investors.
8.1.1.
Accredited Investor Requirement for New Angel Funds
This requirement applies to Angel Funds that receive registration from SEBI after 10 September 2025.
Such Angel Funds must on-board only Accredited Investors.
They must also offer investment opportunities only to Accredited Investors.
Therefore, a newly registered Angel Fund cannot accept or offer investment opportunities to investors who do not qualify as Accredited Investors.
Example
Angel Fund A receives SEBI registration on 15 September 2025.
Since its registration is after 10 September 2025, it can:
On-board Accredited Investors; and
Offer investment opportunities only to Accredited Investors.
If Investor X does not qualify as an Accredited Investor, Angel Fund A cannot on-board Investor X or offer an investment opportunity to Investor X.
8.1.2.
Existing Angel Funds: Transition to Accredited Investors
The following applies to Angel Funds registered with SEBI on or before 10 September 2025.
(a). Implementation by 8 September 2026
Existing Angel Funds must implement the requirement of raising funds only from Accredited Investors on or before 8 September 2026.
Until this transition deadline, they may continue to offer investment opportunities to non-Accredited Investors.
However, during this transition period, they cannot offer investment opportunities to more than 200 non-Accredited Investors.
Example:
Angel Fund A was registered with SEBI on 1 August 2025.
It gets a transition period until 8 September 2026.
During this period, it may offer investment opportunities to non-Accredited Investors.
However, the number of such non-Accredited Investors cannot exceed 200.
(b). No Contribution from Non-Accredited Investors After 8 September 2026
From 9 September 2026 onwards, the Angel Fund cannot accept any contribution from non-Accredited Investors for investment in an investee company.
Therefore, after the transition deadline, only Accredited Investors can contribute funds for new investments.
Example:
Angel Fund A wants to invest in XYZ Ltd. on 10 September 2026.
A non-Accredited Investor cannot contribute money to Angel Fund A for making this investment.
The contribution must come from an Accredited Investor.
(c). Existing Investments of Investors Continue
Existing investors of such Angel Funds are not required to exit their existing investments merely because of the new Accredited Investor requirement.
They may continue to hold investments that they have already made in the Angel Fund.
Their existing investments will continue in accordance with:
The PPM.
The fund documents of the Angel Fund.
Example:
Investor A invested in an Angel Fund in 2025 when Investor A was permitted to invest as a non-Accredited Investor.
Investor A can continue to hold that existing investment after 8 September 2026.
The new requirement does not automatically require Investor A to redeem or exit the existing investment.
8.1.3.
Verification of Accredited Investor Status
The Manager of an Angel Fund must ensure that an investor qualifies as an Accredited Investor when the investor's contribution is accepted for investment in an investee company.
The Manager must verify the investor's Accredited Investor status through either of two methods:
(i). Valid Accreditation Certificate
The investor may qualify by holding a valid accreditation certificate.
The Manager must ensure that the certificate is valid at the time the contribution is accepted.
Example:
Investor A wants to contribute ₹50 lakh to an Angel Fund for investment in XYZ Ltd.
Investor A provides a valid accreditation certificate.
The Manager verifies the certificate.
Investor A can be treated as an Accredited Investor for this purpose.
(ii). Deemed Accredited Investor
An investor may also qualify as a deemed Accredited Investor.
In this case, the investor must satisfy the criteria specified under Regulation 2(1)(ab) of the AIF Regulations.
Therefore, a separate accreditation certificate may not be necessary where the investor falls within the specified deemed Accredited Investor category.
Example:
Investor B does not hold an accreditation certificate.
However, Investor B satisfies the conditions prescribed under Regulation 2(1)(ab) for being treated as a deemed Accredited Investor.
The Manager can treat Investor B as an Accredited Investor after verifying that the applicable criteria are satisfied.
8.2
Under Regulation 19D(6) of the AIF Regulations, an Angel Fund must onboard at least 5 Accredited Investors before declaring its first close.
The investors must qualify as Accredited Investors in accordance with the applicable requirements.
Therefore, the Angel Fund cannot declare its first close with fewer than 5 Accredited Investors.
Example:
Angel Fund A has onboarded:
Investor A: Accredited Investor
Investor B: Accredited Investor
Investor C: Accredited Investor
Investor D: Accredited Investor
Total = 4 Accredited Investors.
The Angel Fund cannot declare its first close yet.
It must onboard at least one more Accredited Investor.
Once it has 5 Accredited Investors, it can proceed to declare its first close, subject to the other applicable requirements.
8.2.1.
An Angel Fund must declare its first close within 12 months from the date on which the AIF becomes eligible to launch its scheme.
The eligibility to launch the scheme is determined in accordance with Para 2.5.2.2.24 of the SEBI Master Circular.
Therefore, the 12-month period starts from the date on which the Angel Fund becomes eligible to launch its scheme, and not from the date of registration itself.
Example
Angel Fund becomes eligible to launch its scheme on 1 October 2026.
The Fund must declare its first close on or before 30 September 2027.
If the Fund does not declare its first close within this 12-month period, it would not comply with the prescribed requirement.
8.2.2.
First Close Deadline for Existing Angel Funds
This requirement applies to Angel Funds that were already existing as on 10 September 2025.
It applies specifically to Angel Funds that had not yet declared their first close as of that date.
Such Angel Funds must declare their first close on or before 8 September 2026.
Example
Angel Fund A was registered before 10 September 2025.
As on 10 September 2025, it had not declared its first close.
Angel Fund A must declare its first close on or before 8 September 2026.
8.2.3.
If an Angel Fund fails to declare its first close within the prescribed timeline, it cannot simply continue under the existing PPM.
The Angel Fund must refile its Private Placement Memorandum (PPM) with SEBI.
The refiling must be done in accordance with the applicable provisions of the AIF Regulations.
The Angel Fund must also pay the requisite fee to SEBI for the refiling.
Example:
Angel Fund A is required to declare its first close by 8 September 2026.
Suppose it fails to declare the first close within this prescribed timeline.
Angel Fund A must then:
Refile its PPM with SEBI.
Comply with the applicable provisions of the AIF Regulations; and
Pay the requisite fee to SEBI.
8.3. Investment by Angel Funds
Under Regulation 19E of the AIF Regulations, an Angel Fund cannot launch any scheme for:
Soliciting funds from Angel Investors.
Making investments.
Therefore, an Angel Fund cannot create or launch separate schemes for the purpose of raising funds from angel investors or making investments.
Example:
Angel Fund A wants to raise funds from Angel Investors.
It cannot launch Scheme 1 specifically for raising these funds.
Similarly, it cannot create Scheme 2 specifically for making investments in a particular set of investee companies.
The Angel Fund must operate in accordance with the specific structure and requirements prescribed for Angel Funds under the AIF Regulations.
8.3.1
Direct Investment by Angel Funds
An Angel Fund must make investments directly in investee companies.
The Angel Fund does not need to launch a separate scheme for making such investments.
Therefore, unlike other AIF structures where investments may be made through individual schemes, the Angel Fund itself acts as the investment vehicle.
Application of Scheme-Level Provisions
Since an Angel Fund does not launch separate schemes for making investments:
Provisions of the AIF Regulations that normally apply to an AIF scheme will generally apply to the Angel Fund at the fund level.
This applies unless the regulations or applicable provisions specifically provide otherwise.
Example
Angel Fund A wants to invest:
₹5 crore in Startup X.
₹3 crore in Startup Y.
₹2 crore in Startup Z
Angel Fund A does not need to create separate schemes for these investments.
The investments are made directly by Angel Fund A into Startup X, Startup Y and Startup Z.
Any provision that would ordinarily apply at the scheme level will generally be considered at the Angel Fund level, unless a different treatment is specifically prescribed.
8.3.2
Term Sheet Filing Requirement
The requirement for an Angel Fund to file the term sheet with SEBI for:
Launching a scheme.
Making an investment
has been discontinued.
Record-Keeping Requirement
Although the term sheet no longer needs to be filed with SEBI, the Angel Fund must maintain records of the term sheet for each investment.
The records must include:
(i). Term Sheet of Each Investment
A copy or record of the term sheet relating to the investment must be maintained.
(ii). List of Participating Investors
The Angel Fund must maintain a list of investors who participate in that particular investment.
(iii). Contribution of Each Investor
The records must specify the contribution made by each participating investor towards that investment.
Example:
Angel Fund invests ₹10 crore in Startup X.
Investors participating in this investment are:
Investor A: ₹4 crore
Investor B: ₹3 crore
Investor C: ₹3 crore
The Angel Fund must maintain records containing:
The term sheet for the investment in Startup X;
List of Investor A, B and C; and
Their respective contributions of ₹4 crore, ₹3 crore and ₹3 crore.
The Angel Fund does not need to file the term sheet with SEBI, but it must maintain these records.
8.4
Under the proviso to Regulation 19F(1) of the AIF Regulations, an Angel Fund may make additional investments in its existing investee companies.
This is permitted even if the existing investee company is no longer a start-up.
Such additional investments are known as “follow-on investments.”
Therefore, the Angel Fund can continue supporting an existing portfolio company even after that company ceases to qualify as a start-up.
However, follow-on investments are subject to the conditions specified by SEBI from time to time.
Example
Angel Fund A initially invests ₹5 crore in Startup X when Startup X qualifies as a start-up.
Over time, Startup X grows and ceases to qualify as a start-up.
Angel Fund A may still make an additional investment of ₹3 crore in Startup X.
This additional ₹3 crore investment is called a follow-on investment.
8.4.1
Limit on Follow-on Investment
An Angel Fund is permitted to make follow-on investments in its existing investee companies.
However, the Angel Fund cannot use the follow-on investment to increase its shareholding percentage in the investee company beyond its existing level.
The relevant comparison is between:
Pre-issue shareholding percentage of the Angel Fund &
Post-issue shareholding percentage of the Angel Fund.
The post-issue shareholding percentage must not exceed the pre-issue shareholding percentage.
Example
Before the new investment: Angel Fund holds 20% of Startup X.
Startup X issues additional shares.
After the issue, the Angel Fund's shareholding must be 20% or less.
Therefore:
Post-issue holding = 20% - This is permitted.
Post-issue holding = 18% - This is permitted.
Post-issue holding = 22% - This is not permitted.
The rule allows the Angel Fund to provide additional funding to an existing investee company.
However, it prevents the follow-on investment from being used to increase the Angel Fund's ownership percentage in that company.
8.4.2
Maximum Investment Limit in an Investee Company
The total investment made by an Angel Fund in an investee company cannot exceed ₹25 crore.
This ₹25 crore limit includes all investments, including:
Initial investment.
Follow-on investments.
Therefore, the Angel Fund cannot treat follow-on investments separately from the initial investment for the purpose of this limit.
Example
Angel Fund initially invests ₹15 crore in Startup X.
Later, it makes a follow-on investment of ₹7 crore.
Total investment = ₹15 crore + ₹7 crore = ₹22 crore.
Since the total is within ₹25 crore, the investment is permitted, subject to other applicable conditions.
8.4.3
An Angel Fund can accept contributions for a follow-on investment only from investors who had already contributed to the original investment in that investee company.
The contribution for the follow-on investment must generally be made pro-rata, based on each investor's contribution to the existing investment.
(i). Existing Investors Only
New investors who did not participate in the original investment cannot contribute to the follow-on investment.
Example:
Angel Fund invested ₹10 crore in Startup X.
Investors contributed:
Investor A: ₹5 crore
Investor B: ₹3 crore
Investor C: ₹2 crore
The Angel Fund proposes a follow-on investment of ₹5 crore.
The investors' pro-rata entitlement would be:
Investor A: ₹2.5 crore
Investor B: ₹1.5 crore
Investor C: ₹1 crore
(ii). Investor Does Not Exercise Pro-rata Right
An existing investor may choose not to participate, or may choose not to contribute the full amount corresponding to its pro-rata entitlement.
The portion not taken up by that investor may then be offered to the remaining investors who had contributed to the original investment.
Example:
Investor C is entitled to contribute ₹1 crore to the follow-on investment.
Investor C chooses not to participate.
The ₹1 crore may be offered to Investor A and Investor B, because they were also contributors to the original investment.
The amount can therefore be taken up by the remaining existing investors, subject to the applicable requirements.
8.5
Under Regulation 19F(3) of the AIF Regulations, an investment made by an Angel Fund in an investee company is subject to a lock-in period.
The duration and conditions of the lock-in period are to be specified by SEBI.
During the lock-in period, the Angel Fund is generally restricted from transferring or exiting the investment, subject to the applicable regulatory provisions.
Purpose of the Lock-in
The lock-in requirement ensures that Angel Funds maintain their investment in the investee company for the prescribed period.
It prevents the Angel Fund from making an investment and immediately exiting, which would be inconsistent with the long-term nature of angel investing.
Example:
Angel Fund invests in Startup X.
The investment becomes subject to the SEBI-prescribed lock-in period.
During the applicable lock-in period, the Angel Fund cannot freely transfer or exit the investment, except where specifically permitted under the applicable regulations.
8.5.1
Lock-in Period of Angel Fund Investment
An investment made by an Angel Fund in an investee company shall be subject to a lock-in period of 1 year.
During this one-year period, the Angel Fund cannot freely exit or transfer the investment, except where otherwise permitted under the applicable regulatory framework.
Example
Angel Fund invests ₹5 crore in Startup X on 1 January 2026.
The investment will remain locked in for one year.
The lock-in period will run until 31 December 2026.
The Angel Fund can generally exit or transfer the investment after completion of the one-year lock-in period, subject to other applicable requirements.
8.5.2
Reduced Lock-in for Sale to a Third Party
The normal lock-in period for an Angel Fund's investment is 1 year.
However, the lock-in period is reduced to 6 months if the Angel Fund exits by selling its investment to a third party.
(i). Sale to a Third Party
The 6-month lock-in applies where the Angel Fund sells its investment to a third-party purchaser.
The purchaser must be someone other than:
The investee company itself through a buy-back.
The promoters of the investee company.
The associates of the promoters.
Example:
Angel Fund invests in Startup X on 1 January 2026.
It may exit after 6 months if it sells its shares to an independent third-party investor, subject to the applicable conditions.
(ii). Exclusions from Third-Party Sale
The 6-month reduced lock-in does not apply where the exit is through:
Buy-back of shares by the investee company.
Purchase of shares by the promoters.
Purchase by associates of the promoters.
In such cases, the normal 1-year lock-in requirement would apply.
Example:
Angel Fund invests in Startup X on 1 January 2026.
Startup X itself offers to buy back the Angel Fund's shares after 6 months.
This is not treated as a third-party sale.
Therefore, the Angel Fund cannot rely on the 6-month reduced lock-in on this basis.
(iii). Articles of Association
Any sale to a third party must also comply with the Articles of Association (AoA) of the investee company.
Therefore, even after completing the applicable lock-in period, the Angel Fund must comply with any applicable transfer restrictions or requirements contained in the AoA.
8..6
Under Regulation 19F(7) of the AIF Regulations, an Angel Fund may invest in securities of companies incorporated outside India.
Such overseas investments are not unrestricted.
The investment must comply with the conditions and guidelines specified or issued by RBI, and SEBI.
Therefore, before making an overseas investment, the Angel Fund must ensure compliance with the applicable RBI and SEBI requirements.
Example:
An Angel Fund wants to invest in a US-incorporated technology company.
The Angel Fund may make such an investment, provided the investment complies with the applicable:
RBI conditions/guidelines relating to overseas investment.
SEBI conditions/guidelines applicable to Angel Funds.
8.6.1
25% Limit for Overseas Investments
For overseas investments by an Angel Fund, the applicable 25% limit must be calculated based on the total investments held by the Angel Fund at cost.
The relevant value is the cost of the investments, and not their current market value.
The calculation is made as on the date on which the Angel Fund applies to SEBI for permission to make the overseas investment.
Example:
Suppose an Angel Fund has the following investments on the date of applying to SEBI:
Investment in Company A: ₹10 crore.
Investment in Company B: ₹15 crore.
Investment in Company C: ₹5 crore
Total investments at cost = ₹30 crore.
25% of ₹30 crore = ₹7.5 crore.
Therefore, for the purpose of this calculation, the applicable overseas investment limit would be ₹7.5 crore, subject to the other applicable conditions.
8.6.2
All other conditions and modalities prescribed under Chapter 5 of the SEBI Master Circular will continue to apply to Angel Funds.
This means that the specific provisions discussed for Angel Funds do not replace the general requirements under Chapter 5.
Angel Funds must therefore comply with:
The specific provisions applicable to Angel Funds; and
The other applicable conditions and modalities under Chapter 5.
Offering and allocation of investment opportunities by Angel Funds
8.7
Under Regulation 19G(4) of the AIF Regulations, the Manager of an Angel Fund must disclose a defined methodology in the PPM.
This methodology is used for allocating an investment among the Angel Investors who have approved the investment.
So, when multiple Angel Investors approve an investment opportunity:
The Manager must have a pre-defined and transparent method for deciding how much each investor will contribute to that investment.
The methodology must be disclosed in the PPM before investors participate, so that they understand how investment opportunities will be allocated.
Example:
An Angel Fund identifies an investment opportunity requiring ₹10 crore.
Five Angel Investors approve the investment.
The Manager must allocate the ₹10 crore among those investors according to the defined methodology disclosed in the PPM.
For example, if the methodology is based on pro-rata allocation according to the investors' approved contribution limits, the Manager must follow that methodology consistently.
8.7.1
Adherence to Investment Allocation Methodology
The Manager of the Angel Fund must strictly follow the investment allocation methodology disclosed in the PPM.
The methodology determines how an investment opportunity is to be allocated among the Angel Investors who have consented to participate.
The Manager cannot arbitrarily change the allocation method or allocate investments differently from the disclosed methodology.
Example:
An investment opportunity requires ₹10 crore.
Four Angel Investors consent to participate.
The PPM contains a defined methodology for allocating the investment among consenting investors.
The Manager must allocate the ₹10 crore strictly according to that methodology.
8.7.2
No Case-by-Case Discretion in Allocation
The investment allocation methodology disclosed in the PPM must be objective and predetermined.
The methodology must not give the Manager discretion to decide, on a case-by-case basis, how an investment will be allocated among consenting Angel Investors.
Therefore, once investors have consented to an investment, the Manager must apply the pre-defined allocation methodology consistently.
Example:
An investment opportunity of ₹10 crore is approved by four Angel Investors.
The PPM provides a specific formula for allocating investments among consenting investors.
The Manager must apply that formula.
The Manager cannot decide:
To allocate more to Investor A because Investor A is a preferred investor.
To allocate less to Investor B based on the Manager's individual assessment in that particular case.
Any allocation must be determined according to the methodology already disclosed in the PPM.
8.8
Pro-rata Rights of Angel Fund Investors
Under Regulation 19G(6) of the AIF Regulations, investors in an Angel Fund are entitled to rights in the investment made by the Angel Fund.
Investors are also entitled to a corresponding share in the distribution of proceeds generated from that investment.
These rights are generally determined pro-rata to each investor's contribution to that particular investment.
Therefore, an investor who contributes a larger amount to an investment will generally have a larger proportionate right in:
The investment.
The proceeds arising from that investment.
However, this pro-rata principle is subject to exceptions that may be specified by SEBI.
Example:
Angel Fund invests ₹10 crore in Startup X.
Contributions towards this investment are:
Investor A: ₹5 crore
Investor B: ₹3 crore
Investor C: ₹2 crore
Their respective contribution percentages are:
Investor A: 50%
Investor B: 30%
Investor C: 20%
If the investment is later sold and generates ₹20 crore in proceeds, the distribution would generally be:
Investor A: ₹10 crore
Investor B: ₹6 crore
Investor C: ₹4 crore
This is because the investors' rights and distribution are proportionate to their contributions to that investment.
Distribution of Returns and Carried Interest
Normally, Angel Fund investors are entitled to distribution of investment proceeds on a pro-rata basis, according to their contribution.
However, this pro-rata requirement does not apply to the extent that an investor has agreed to share part of the return or profit with:
The Manager of the AIF.
The Sponsor of the AIF.
The employees, directors or partners of the Manager.
Such additional return may be referred to by different names, including:
Carried interest;
Additional return; or
Any other similar arrangement.
The sharing of such return must be provided for in the contribution agreement executed between the relevant parties.
Example
Angel Fund makes an investment of ₹10 crore.
Investor A contributes ₹5 crore, giving Investor A a 50% pro-rata entitlement.
The investment generates ₹20 crore in proceeds.
Normally, Investor A would be entitled to 50% of the proceeds, i.e. ₹10 crore.
However, suppose the contribution agreement provides that a portion of Investor A's investment return is payable as carried interest to the Manager.
To that extent, the Manager may receive the agreed carried interest, and Investor A's distribution will be adjusted accordingly.
Other obligations
8.9
All existing Angel Funds will be treated as Category I AIF – Angel Funds.
They will no longer be treated as a sub-category of Category I AIF – Venture Capital Funds (VCF).
This effectively gives Angel Funds a separate classification within Category I AIFs.
8.10.
Annual Audit of PPM Compliance for Angel Funds
Angel Funds are required to undergo an annual audit of compliance with the terms of their PPM only when their total investments exceed ₹100 crore.
The calculation is based on the cost of total investments, not their current market value.
The audit must be conducted in accordance with the norms prescribed under Para 21.3 of the Master Circular.
Example
Angel Fund A has total investments, at cost, of ₹90 crore.
Since the total investments do not exceed ₹100 crore, the specific annual PPM compliance audit requirement does not apply on this basis.
Angel Fund B has total investments, at cost, of ₹120 crore.
Since the total investments exceed ₹100 crore, Angel Fund B must undertake the annual audit of compliance with the PPM terms as prescribed under Para 21.3.
₹100 crore threshold is based on investment cost, not the market value of the portfolio.
8.11
Performance Benchmarking and Disclosure by Angel Funds
Angel Funds must provide necessary information to benchmarking agencies for the purpose of performance benchmarking.
The information must include:
Investment-wise valuation data.
Cash flow data.
The information must be provided in accordance with the norms prescribed under Chapter 22 of the Master Circular.
Disclosure of Past Performance
If an Angel Fund mentions its past performance in any material, it must also provide the relevant performance versus benchmark report.
This requirement applies when past performance is mentioned in:
PPM.
Marketing material.
Promotional material.
Any other material.
Example
Angel Fund A states in its marketing material: “The Angel Fund generated a 25% return in the previous period.”
If the Fund mentions this past performance, it must also provide the performance versus benchmark report supplied by the relevant benchmarking agency.
Investors can therefore compare the Angel Fund's performance with the applicable benchmark rather than viewing the Fund's return in isolation.
8.12
Applicability of PPM Audit and Benchmarking Requirements
The requirements mentioned in Para 8.10 and Para 8.11 will apply to Angel Funds from Financial Year 2025-26 onwards.
(i). PPM Audit - The requirement to conduct an annual audit of compliance with the terms of the PPM, as specified in Para 8.10, will apply from FY 2025-26 onwards.
(ii) . Reporting to Benchmarking Agencies - The requirement to provide information to benchmarking agencies for performance benchmarking, as specified in Para 8.11, will also apply from FY 2025-26 .
(iii). Meaning of FY 2025-26 - The requirement starts from the financial year 1 April 2025 to 31 March 2026.
8.13
Calculation of Limits Based on Total Investments
Unless a specific provision states otherwise, any limit or condition applicable to an Angel Fund under:
The AIF Regulations.
Circulars issued under the AIF Regulations.
which is normally calculated based on corpus or investable funds, shall instead be calculated based on the total investments made by the Angel Fund at cost.
For Angel Funds, where a regulatory limit refers to corpus/investable funds, the relevant base for calculation will be: Total investments made by the Angel Fund (at cost).
At cost means the original amount paid by the Angel Fund for its investments.
The calculation is therefore not based on the current market value of those investments.
Example:
Angel Fund has made the following investments:
Investment A: ₹10 crore
Investment B: ₹15 crore
Investment C: ₹5 crore
Total investments at cost = ₹30 crore.
If a regulatory provision imposes a 20% limit based on corpus/investable funds, the calculation would be: 20% of ₹30 crore = ₹6 crore
The relevant limit would therefore be ₹6 crore.
8.14
Calculation of Due-Diligence Thresholds for Angel Funds
Chapter 20 of the Master Circular deals with specific due diligence of investors and investments of AIFs.
For Angel Funds, certain thresholds under Chapter 20 are calculated differently.
The thresholds specified in:
Para 20.3.2(a)
Para 20.4.2(a)
Para 20.5.1(a)
Para 20.7.2(a)
must be calculated at each investment level.
Calculation of Threshold
The calculation is based on the contribution made by investors to a particular investment.
It is not calculated based on the total corpus of the Angel Fund.
Therefore, the focus is on investor contributions to the specific investment being considered.
Example
Suppose an Angel Fund has a total corpus of ₹100 crore.
It makes two separate investments:
Investment A: ₹10 crore
Investor 1 contributes ₹6 crore.
Investor 2 contributes ₹4 crore.
Investment B: ₹20 crore
Investor 1 contributes ₹5 crore.
Investor 3 contributes ₹15 crore.
For calculating the relevant Chapter 20 threshold:
The Manager considers the contributions for Investment A separately.
The Manager considers the contributions for Investment B separately.
The Manager does not simply use the Angel Fund's total corpus of ₹100 crore as the basis.
