MUMBAI: In an attempt to boost early-stage funding in startups, Sebi on Wednesday relaxed norms for angel investors. The regulator has raised the total number of angel investors in a startup to 200 from 49. Sebi has also reduced the minimum investment amount in startups by angel investors to Rs 25 lakh from Rs 50 lakh. Angel investors are financiers who put money in new companies at their formative stages.
Sebi, in its board meeting, has allowed angel funds to invest in startups incorporated within five years before the day of investment, up from three years. Sebi also said that an investment by an angel fund would be locked-in for one year, down from three years. It allowed angel funds to invest in overseas venture capital undertakings up to 25% of their investible corpus.
The regulator also decided to bar promoters and the top management of companies from entering into agreements with private equity players for an additional compensation without a nod from the company’s board and shareholders. It said that all such agreements “entered during the past three years from the date of the Sebi notification should be informed to the bourses for public dissemination including those which may not be currently valid.”
Sebi said that by amending some of the rules, soon it would allow foreign portfolio investors to invest in unlisted debt securities and securitised debt instruments. This decision was taken to attract inflows into India’s debt market and it was in line with a recent announcement by the RBI. In the last couple of years, easy accessibility of funds for entrepreneurs to start new businesses has been one of the focus areas for the Modi government. Sebi chairman U K Sinha too has been pushing this initiative. One of Sebi’s key decisions has been to start a new listing platform for startups.
Credits ET Realty