DEADLINE 8 SEPTEMBER 2026 SEBI has rebuilt the angel fund rulebook – and the transition window closes in weeks. The SEBI (AIF) Second Amendment Regulations 2025 (in force 8 September 2025, operationalised by the circular of 10 September 2025 and consolidated in the AIF Master Circular of 3 June 2026) made angel funds a distinct Category I AIF class that may raise money only from accredited investors. Existing funds have until 8 September 2026 to complete the shift. Alongside: per-startup tickets moved to ₹10 lakh–₹25 crore, follow-on rights were rationalised, and the operational load was cut. Here is the whole framework – for fund managers, for angels, and for founders raising from angel funds.
What changed, at a glance
| Parameter | Old regime | From 8 Sep 2025 |
|---|---|---|
| Who can invest in the fund | “Angel investors” by self-declared net-worth criteria; max 200 investors per scheme | Accredited investors only (third-party verified); no 200 cap for AI-only funds |
| Per-startup ticket | ₹25 lakh – ₹10 crore | ₹10 lakh – ₹25 crore |
| First close | Scheme-wise mechanics | ≥5 accredited investors before first close; declare within 12 months of PPM on record |
| Follow-on investments | Restricted once investee ceased to be a “startup” | Allowed post-startup-status if stake % not increased, total ≤₹25 crore, original investors pro-rata |
| Lock-in | 1 year | 1 year; 6 months if exit via third-party sale |
| Concentration cap | 25% of corpus per company | Removed |
| Manager commitment | 2.5% of corpus or ₹50 lakh | Higher of 0.5% of each investment or ₹50,000, per deal |
| Term-sheet filing with SEBI | Required | Discontinued |
| Category | Sub-class of VCF rules | Distinct sub-category under Category I AIF (Chapter III-A) |
The transition clock (for existing funds)
Funds registered before 10 September 2025 may continue onboarding up to 200 non-accredited investors only until 8 September 2026. After that date every new contributor must hold a live accreditation certificate from CVL or NDML, and funds without a completed first close must make their declaration to SEBI. What managers should be doing this month: (1) push every active contributor through accreditation – the process takes days but certificate queues lengthen near deadlines; (2) use the January 2026 relaxation – contribution agreements may be signed before the certificate issues, with capital calls held until it does; (3) update PPM disclosures and onboarding workflows; (4) diarise the new quarterly activity report (first one was due 15 July 2026) and the compliance-officer NISM certification deadline (1 January 2027).
What it means for each player
For angels: the ₹10 lakh minimum ticket makes fund-route angel investing accessible with smaller cheques – but the entry ticket is now accreditation, a verified test of financial capacity (₹2 crore income, or ₹7.5 crore net worth, or the combination route). If you invest through any angel platform structured as an angel fund, you need the certificate by 8 September 2026 to keep participating. For fund managers: lighter ops (no term-sheet filings, PPM audit only above ₹100 crore of investments, scheme-wise launches gone) in exchange for a harder onboarding gate and per-deal skin-in-the-game. The co-investment framework (September 2025) also lets Category I/II AIFs run co-invest vehicles for accredited investors alongside the main fund – capped at 3x the investor’s main-scheme contribution. For founders: angel funds can now anchor much larger rounds (₹25 crore cap) and follow on cleanly through your seed and Series A; expect their diligence to look more institutional, and factor the 1-year lock-in into any early secondary planning.
The wider 2025-26 AIF context
Three adjacent changes complete the picture. The AIF Master Circular of 3 June 2026 consolidated the full rulebook (with a winding-up chapter added 16 June). The November 2025 Third Amendment created a dedicated “Accredited Investors Only” AIF category and cut the Large Value Fund minimum from ₹70 crore to ₹25 crore – widening the premium lane accreditation unlocks. And demat onboarding is mandatory for new AIF investments since July 2025. For foreign and NRI angels, the routes into Indian startup exposure – direct FDI, fund units, or the Schedule IV non-repatriation route – are compared in our foreign investor hub, with PN3 screening applying to land-border-linked LPs.
Fund manager or angel racing the deadline?
My Cloud Accountant prepares accreditation files (net-worth certificates, ITR packs), advises funds on transition compliance, and structures angel investments end to end.
Talk to an expertFrequently Asked Questions
What happens to my existing angel-fund investments if I am not accredited by 8 September 2026?
Existing investments stand – the deadline governs onboarding and fresh contributions, not unwinding. But you cannot participate in new deals or capital calls through the fund until accredited. Given the process takes days, getting the certificate is far easier than sitting out a cycle.
Can an angel fund now write a ₹25 crore cheque into one startup?
Yes – the per-startup cap moved from ₹10 crore to ₹25 crore, and the 25% corpus-concentration cap is gone. In practice large tickets still face the fund’s own portfolio construction; the change mainly lets angel funds lead proper seed rounds and follow on without restructuring.
Do syndicates and SPV platforms fall under these rules?
Only if structured as SEBI angel funds/AIFs – many operate as private SPV structures outside the AIF perimeter. Ask the platform which wrapper your money enters; the accreditation requirement and the ₹10 lakh minimum apply to the AIF route. The wrapper comparison is in the angel round guide.
Does the 1-year lock-in bind the startup or the fund?
The fund – angel funds must hold each investment at least 1 year (6 months where the exit is a sale to a third party). Founders planning early secondary liquidity for angel-fund investors should time it against this lock-in.
Last reviewed: July 2026. SEBI (AIF) Second Amendment Regulations 2025 (8 September 2025); SEBI circular of 10 September 2025; AIF Master Circular, 3 June 2026 (addendum 16 June 2026); SEBI (AIF) Third Amendment Regulations 2025 (November 2025); accreditation relaxations circular, 9 January 2026.