SEBI Gives Legacy Angel Funds Until March 2027 To Meet Investor Rule
SEBI extended the compliance deadline for older Indian angel funds, allowing legacy vehicles to offer deals to up to 200 non-accredited investors until March 31, 2027 while keeping the accredited-investor mandate intact.
March 31, 2027 is now the compliance date for India’s legacy angel funds under SEBI’s accredited-investor mandate, giving older funds almost seven extra months to adjust how they offer startup deals, Inc42 reported.
The extension is limited to funds that were already registered with the Securities and Exchange Board of India by September 10, 2025.
Their previous deadline was September 8, 2026, and the regulator shifted the timetable after the alternative investment fund industry sought more time.
During the transition, older angel funds can continue presenting startup opportunities to up to 200 investors who have not obtained accredited status.
The relief changes the calendar, not the destination: deal participation is still being steered toward investors that meet SEBI’s formal accreditation standard.
The standard sets a high financial threshold.
Individuals need annual income above ₹2 crore and net worth above ₹7.5 crore, including at least ₹3.75 crore in financial assets.
Trusts and corporate entities qualify only when net worth reaches at least ₹50 crore.
The stricter rule takes effect after the new deadline.
Once the window closes, legacy funds cannot take new money from non-accredited investors for additional portfolio-company investments.
Prior commitments are carved out, allowing those investors to keep existing stakes under each fund’s private placement memorandum and other governing documents.
SEBI’s current framework dates to September 2025, when the agency amended alternative investment fund regulations for angel funds within Category I AIF.
The changes were intended to tighten deal governance while preserving a route for early-stage startup capital.
Several operating rules were reset in that package.
Each angel fund needs at least five accredited investors, and the first close has to be declared within 12 months.
Direct startup investments no longer require a separate scheme for each deal, and the term-sheet filing step was removed, although funds still have to keep records.
Follow-on investment became easier but not open-ended.
A fund can put more money into an existing portfolio company if it preserves its pre-investment ownership percentage and stays within a ₹25 crore total cap for that company.
The split among participating investors has to be determined through a methodology disclosed in advance and applied without manager discretion.
The line between legacy and newer funds remains important.
Vehicles registered after September 10, 2025 are outside the latest relaxation and may deal only with accredited investors.
Older funds now have the extended runway, with the rest of the framework left in place.
The timing matters because angel networks continue to supply a visible layer of India’s startup finance.
We Founder Circle participated in 36 deals in the first half of 2026, spanning companies such as 1buy.ai, Sarva Foam, Ctruh, Thermoflyde and Foodsquare.
IAN Group, formerly India Angel Network, appeared in 17 deals during the same period, including Astranova Mobility, Spector.ai, Hyugalife, Zuvees and TIEA Connectors.
New funds are still entering the market.
Hyderabad Angel Fund launched a ₹100 crore early-stage vehicle in 2025, targeting cheques of ₹2 crore to ₹4 crore for 15 to 20 startups across AI, spacetech, healthtech, fintech and SaaS.
That activity gives the extension practical significance for founders and angel groups, but it does not dilute the policy direction.
SEBI is using the transition to move fresh deal-wise contributions toward investors it considers financially able to understand and absorb the risks of complex investment products.
