Angel Funds bridge the gap between start-ups and angel investors, who are instrumental in providing mentoring, and resources to the start-ups. In recognition of the same, IFSCA has now issued a framework for Angel funds under the IFSCA (Fund Management) Regulations, 2022.
About the Angel Investor –
Angel investor is an investor who provides financial backing to entrepreneurs for ‘starting their business’. Other than investible capital, these investors provide technical advices and also help the ‘start- up’ business with their lucrative contacts.
Features of the framework –
- A Fund Management Entity (FME) in IFSC will be able to launch Angel Fund by filing a placement memorandum with the Authority under a Green Channel, i.e. the schemes can open for subscription by investors immediately upon filing the placement memorandum with the Authority.
- Angel Funds shall accept investments from accredited investors or investors who are willing to commit at least USD 40,000 over 5 years.
- Angel Funds are permitted to invest in start-ups as well as other regulated angel schemes in IFSC, India, foreign jurisdictions upon receiving consent from the desirous investors.
- While investment(s) by an Angel Fund in a start-up is capped at USD 1,500,000, the Angel fund is permitted to invest in subsequent rounds of fund raising by the start-up in order to protect its shareholding from dilution, subject to certain conditions.