SEBI’s move to define investment guidelines for angel funds is very welcome move. After some ill-conceived moves like tax on startup investments in the earlier budget, attempts to change policy with retrospective effect, etc. which dismayed the investor community, angel investors and entrepreneurs, this shows clear thinking and some thought out attempt to clarify and address some key issues. The fact that angel investors are being recognized as a distinct category is good. This will mean that going forward, angel investors can in an organized manner represent themselves, be involved in policy making and give feedback on proposed measures in future. Positives Enabling startups and SMEs to list on the institutional trading platform (ITP) will mean more exit opportunities. This has been one of the biggest dampeners to early stage investment and proliferation of the startup eco system in India when compared with Silicon Valley in the US. While we need to wait and see how this works and whether the ITP succeeds, the initiative is very welcome. Worldwide success of such platforms have been muted. By laying boundary conditions, the government has tried to address the abuse of the angel investment route for questionable money transfer transactions (for instance between an industrial group and politicians where the industrial group invests huge amounts as angel investment for a negligible stake in a company promoted by politicians). So some of the qualifying criteria mentioned are welcome. By classifying angel funds as alternate investment funds (AIF), angel funds can enjoy pass through…
