AngelList, a platform known for connecting startups with investors, is recalibrating its strategy in India in response to evolving regulatory changes impacting the investment landscape. These adjustments come as India solidifies its position as a compelling destination for global investors, driven by strong domestic demand, infrastructure growth, and strategic neutrality amid global trade tensions.
Despite the operational complexities, India remains a vital market for AngelList. The company acknowledges the exceptional talent pipeline emerging from India, particularly in technical and product leadership, with many founders now dividing their time between India and the U.S. to tap into both customer bases and capital sources.
However, recent regulatory shifts in India are prompting AngelList to rethink its approach. The Securities and Exchange Board of India (SEBI) has introduced a stricter regulatory framework for angel funds, mandating that they can only raise capital from accredited investors. This is a significant change from previous guidelines, which allowed angel funds to accept investments from a broader range of investors. SEBI's move aims to enhance transparency, improve operational clarity and encourage investor participation in the country's startup ecosystem.
Under the new regulations, individuals, HUFs, family trusts, or sole proprietorships must meet specific financial criteria to qualify as accredited investors. These criteria include having an annual income of at least ₹2 crore, a net worth of at least ₹7.5 crore (with at least ₹3.75 crore in financial assets), or an annual income of at least ₹1 crore and a minimum net worth of ₹5 crore (with at least ₹2.5 crore in financial assets).
Existing angel funds have been given a transition period until September 8, 2026, to comply with the new requirement. During this period, they can still accept investments from non-accredited investors, but the number of such investors is limited to 200. After the deadline, no new contributions from non-accredited investors will be accepted.
These regulatory changes have several implications for angel funds and investors. Angel funds must now onboard at least five accredited investors before declaring their first close, which must occur within 12 months of receiving SEBI approval. The new rules also eliminate the requirement for angel funds to launch separate schemes, enabling them to invest directly in startups.
Furthermore, SEBI has clarified that angel funds can invest in companies outside India, with a limit of 25% of the total investments made by the fund at the time of application. The amended regulations also mandate clear investment allocation methods, pro-rata rights for investors, and reclassify angel funds under Category I AIF.
In addition to these changes, SEBI has removed the minimum cheque size requirement for investors in angel funds, providing more flexibility for accredited investors to participate at varying ticket sizes. Sponsors must now co-invest in each deal at the higher of 0.5% of the cheque size or ₹50,000, replacing the earlier rule of 2.5% of the total fund corpus.
AngelList's response to these regulatory changes remains to be seen, but it is likely that the platform will adapt its services to meet the new requirements and continue to facilitate early-stage funding in India. This could involve focusing on attracting and onboarding accredited investors, providing tailored solutions that adhere to Indian regulations, and leveraging its technology platform to streamline the investment process.
