The International Financial Services Centres Authority (IFSCA), in furtherance of its mandate to
develop and regulate financial products, financial services and financial institutions
in the International Financial Services Centres (IFSC),
had notified the IFSCA (Fund Management) Regulations, 2022 in April 2022 enabling
the regulatory framework for various activities related to fund management including
schemes for investing in early-stage venture capital undertaking (start-ups).
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. The salient features
of the said framework are as under:
1.
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.
2.
Angel Funds shall accept investments
from accredited investors or investors who are willing to commit at least USD 40,000
over 5 years.
3.
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.
4.
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.
The detailed framework for Angel Funds may be accessed
at https://ifsca.gov.in/Circular