Invest in startup equity capital via a SEBI registered Angel Fund
Our newest beta investment opportunity available exclusively to select subscribers
What is an Angel Fund?
An Angel Fund is a Category I registered Alternative Investment Fund (AIF). AIFs are regulated by SEBI via the SEBI (Alternative Investment Funds) Regulations, 2012.
AIFs were introduced as an investment vehicle incorporated in India for the purpose of pooling funds from sophisiticated private investors and investing the funds in privately held companies in accordance with a defined investment policy. The investor is allocated units of the AIF in exchange for the investment.
Why do companies raise funds via AIF?
The same instruments that can be used to raise funds by the company directly - Equity, CCD and CCPS - can be used to raise funds using an AIF. However, the major advantage for the company is that the funds pooled via an AIF will come on the cap table only as one single entry as opposed to giving up multiple spaces on the cap table if funds are raised directly.
A private limited company can have a maximum of 200 members as shareholders. Beyond this, the company has to obtain registration and comply with the requirements of a public limited company as per the provisions of the Companies Act’2013.
Thus, startups raising subsequent rounds (Series A and later) prefer to raise funds using an AIF to protect the number of slots available on the cap table.
Other relevant regulations for an Angel Fund
Some other relevant regulations pertaining to Angel Funds are as provided below:
The maximum number of investors in any one scheme of an Angel Fund is 200
Angel Funds can invest only in startups incorporated in the previous 5 years (similar to the definition as laid down by the DPIIT)
Lock-in period for investment in Angel Fund is 1 year. Post the expiry of one year, the units of the AIF allotted can be transferred
Some more useful links
Key stakeholders and definitions
Investor
Investor is a person or an entity that wants to invest funds in a startup via the AIF. The investor must satisfy the eligibility criteria as provided in the SEBI (AIF) Regulations, 2012 as amended from time to time
Startup
Startup is a private limited company that wants to raise funds using an AIF. The startup must have been incorporated in the last 5 years only as provided under DPIIT guidelines
Sponsor is a person who set up the AIF, including the promoter in case of a company and designated partner in case of an LLP. The sponsor may or may not be the investment manager.
Sponsor
How does the process work
Read through the terms of the AIF including details of the instrument, the valuation, the rights associated with the instrument and the associated fees.
Understand deal terms
Provide a self-declaration of compliance with the eligibility and other conditions laid down by SEBI and confirm details of KYC documents
Confirm declaration and KYC
Confirm the amount you would like to invest subject to the minimum amount prescribed for the deal. We will verify details and share details of the bank account and the link to transfer funds
Confirm investment amount
Transfer funds and sign contribution agreement
Transfer funds to the bank account. You will receive a confirmation of your contribution to the AIF. After the round has been closed, you will receive a mail to sign the contribution agreement for allotment of units
Explore our live deals
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Blue Tokai
Blue Tokai is an operator of coffee breweries intended to roast and brew India’s single-origin Arabica coffee.
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Meet7
Meet7 is a paradigm changing dating singles app, to bring the ‘Date’ back into dating. We aim to change dating for the better by focusing on bettering the interactions amongst users, and not just getting them to swipe more and more.
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Jade Forest
Jade Forest was born out of a desire to redefine the drinking experience in our country. With no artificial sweeteners, flavours & colouring, all our beverages are low in calories & sugar, and naturally delicious!
Note: Private Deal means the startup is raising funds from its own identified set of investors. In case a private deal interests you, please write to us at support@tykeinvest.com. We will confirm with the founders or the promoters if they would like to accept your contribution to the round.
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As per SEBI (AIF) Regulations, 2012, persons satisfying any of the following conditions can invest in an Angel Fund:
An individual investor having net tangible assets of at least Rs. 2 crores excluding the value of principal residence AND who i) has previous early stage investment experience OR ii) has experience as a serial entreprenuer OR iii) is a senior management professional with at least 10 years of work experience
A body corporate with a minimum net worth of Rs. 10 crores
A registered AIF or a VCF registered under the SEBI (Venture Capital Funds) Regulations, 1996
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SEBI has not defined minimum investment per transaction. This limit is defined by the partner AIF. However, SEBI has mandated that the minimum amount to be invested via the AIF by a single investor should be Rs. 25 Lakhs over a period of 5 years
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SEBI has accorded Category I AIFs pass-through status as far as taxation is concerned. Hence, gains from the sale of units of AIF will be taxed as capital gains in the hands of investors. Period of holding of units will determine short term capital gains (15%) or long term capital gains (10%)
Frequently Asked Questions
Still have questions?
Reach out to us at support@tykeinvest.com