SEBI does not regulate every Alternative Investment Fund (AIF) scheme with the same intensity. Where every investor is a sophisticated, accredited investor committing a large amount, SEBI relies more on disclosure and negotiation between the parties and less on prescriptive rules. Angel Funds, which pool accredited investors to back start-ups, have their own lighter framework.
The rules in this area changed substantially in 2025: the Large Value Fund (LVF) threshold fell from ₹70 crore to ₹25 crore per investor, a new class of Accredited Investors-only schemes was introduced, and the Angel Fund regime was overhauled. This article summarises the current relaxations and the obligations that continue to apply, for sponsors, managers and investors structuring such schemes.
Key points at a glance
- A Large Value Fund for Accredited Investors is a scheme where each investor is an accredited investor committing at least ₹25 crore (reduced from ₹70 crore by the SEBI (AIF) (Third Amendment) Regulations, 2025, notified on 18 November 2025).
- LVFs are not required to carry out the annual PPM audit, need not follow the standard PPM template, and can file the PPM without a merchant banker.
- LVFs may invest up to 50% of investable funds in one investee company (Category I and II) and 20% (Category III), against 25% and 10% for other schemes.
- Angel Funds may, after September 2025, raise money only from accredited investors; existing Angel Funds registered on or before 10 September 2025 have until 31 March 2027 to comply.
- Relaxations reduce procedure; they do not remove fiduciary duties, fair disclosure, KYC or reporting obligations.
What is a Large Value Fund for Accredited Investors?
Under the SEBI (AIF) (Third Amendment) Regulations, 2025, a Large Value Fund is a scheme of a Category I, II or III AIF in which each investor, other than the manager, sponsor and their employees or directors, is an accredited investor with a minimum commitment of ₹25 crore. Before November 2025 the threshold was ₹70 crore, which is the figure many older PPMs and articles still refer to.
The same amendment introduced Accredited Investors-only schemes (AI-only schemes), where all investors are accredited but the ₹25 crore threshold need not be met. AI-only schemes receive some of the relaxations available to LVFs.
Why SEBI relaxes rules for large accredited investors
- Accredited investors meet income or net worth tests and are expected to carry out their own due diligence.
- Large commitments come with negotiating power over fees, governance and information rights.
- Prescriptive rules designed for a wider investor base can add cost without adding protection for such investors.
The approach is risk-based: compliance intensity follows the profile of the investors and the size of their commitments.
Relaxations available to Large Value Funds
| Requirement | Standard AIF scheme | Large Value Fund |
|---|---|---|
| Minimum commitment per investor | ₹1 crore (₹25 lakh for employees or directors of the AIF or manager) | ₹25 crore, accredited investors only |
| Annual audit of compliance with PPM | Required | Not mandatory |
| Standard PPM template | Required | Not required |
| PPM filing through merchant banker | Required | Not required |
| Launch after filing (GARUDA, from 31 July 2026) | 10 working days after filing | On filing (first scheme not before registration) |
| Investment in one investee company | 25% (Cat I and II), 10% (Cat III) | 50% (Cat I and II), 20% (Cat III) |
| Cap of 1,000 investors per scheme | Applies | Does not apply |
Practical point: Many existing documents still refer to the earlier ₹70 crore threshold. Existing schemes set up on the old threshold should review their documents; SEBI has also provided a route for eligible existing schemes to move into the new framework, subject to conditions.
Relaxations and changes for Angel Funds
Angel Funds are a sub-category of Category I AIFs. The framework was revised by amendments to the AIF Regulations and a SEBI circular dated 10 September 2025, now consolidated in Chapter 8 of the SEBI Master Circular for AIFs dated 3 June 2026. The main features are:
- Investors: only accredited investors (and certain key personnel) may invest. Angel Funds registered on or before 10 September 2025 originally had until 8 September 2026 to comply; SEBI extended this to 31 March 2027.
- First close: at least five accredited investors must be on-boarded, and first close must be declared within 12 months of eligibility to launch.
- Investment size: ₹10 lakh to ₹25 crore per investee company (earlier ₹25 lakh to ₹10 crore).
- Lock-in: one year, reduced to six months where the investment is sold to a third party.
- PPM audit: required only if total investments at cost exceed ₹100 crore, from FY 2025-26.
- Term sheets: no longer filed with SEBI, but must be maintained.
- Manager's interest: the higher of 0.5% of each investment or ₹50,000.
What does not change: core obligations that still apply
A lighter regime is not a compliance holiday. LVFs, AI-only schemes and Angel Funds remain AIFs registered with SEBI and must continue to:
- verify accredited investor status and complete KYC and specific due diligence of investors and investments;
- make fair and complete disclosures in the PPM and to investors, with the manager responsible for their accuracy;
- follow the valuation, reporting and dematerialisation requirements applicable to them;
- provide exit rights or seek consent for material changes as required by the regulations and the PPM;
- maintain proper records to demonstrate eligibility for each relaxation claimed.
Illustrative example
Consider a Category II AIF scheme with twelve investors: nine institutional investors and three family offices, all accredited, each committing ₹30 crore.
- Each investor is accredited and commits at least ₹25 crore, so the scheme qualifies as an LVF.
- The manager can file the PPM directly, without a merchant banker and without the standard template, and launch on filing.
- The scheme can invest up to 50% of investable funds in a single portfolio company, if the PPM provides for it.
- No annual PPM audit is mandatory, but investors will usually negotiate their own reporting and audit rights in the contribution agreement.
- If a thirteenth investor wishes to commit ₹10 crore, the scheme would no longer meet the LVF conditions; the manager must consider the consequences before admitting that investor.
Practical checklist when structuring an LVF or Angel Fund
- Confirm that every investor holds a valid accreditation certificate before on-boarding.
- For LVFs, check each commitment against the ₹25 crore minimum and keep evidence on file.
- Draft the PPM to state clearly which relaxations the scheme relies on.
- For Angel Funds, track total investments at cost against the ₹100 crore PPM audit threshold each year.
- For existing Angel Funds, plan the transition to an accredited-only investor base before 31 March 2027.
- Review the scheme's status whenever the investor base changes.
Frequently Asked Questions on Large Value Funds and Angel Funds
What is the minimum investment in a Large Value Fund AIF?
₹25 crore per accredited investor, following the SEBI (AIF) (Third Amendment) Regulations, 2025 notified on 18 November 2025. The earlier threshold was ₹70 crore.
Is a PPM audit required for a Large Value Fund?
No. The annual audit of compliance with the terms of the PPM is not mandatory for Large Value Funds for accredited investors.
Can a Large Value Fund file its PPM without a merchant banker?
Yes. LVFs are exempt from filing the PPM through a merchant banker and need not follow the standard PPM template.
Who can invest in an Angel Fund after the 2025 changes?
Only accredited investors, apart from specified key personnel. Angel Funds registered on or before 10 September 2025 have until 31 March 2027 to comply.
When does an Angel Fund need a PPM audit?
Only when its total investments at cost exceed ₹100 crore, from FY 2025-26 onwards.
Do LVFs and Angel Funds have no compliance obligations?
No. They remain SEBI-registered AIFs and must meet requirements on KYC, accreditation, disclosure, valuation, reporting and investor rights applicable to them.
Conclusion
SEBI's approach to LVFs, AI-only schemes and Angel Funds reflects a simple principle: the more sophisticated the investors and the larger their commitments, the fewer the prescriptive safeguards. The 2025 amendments extended that principle by lowering the LVF threshold to ₹25 crore and restricting Angel Funds to accredited investors.
For managers, the key is to confirm eligibility for each relaxation at the outset, draft the PPM accordingly and keep evidence that the conditions continue to be met throughout the life of the scheme.
This article is intended for general information and knowledge sharing only and does not constitute professional advice or solicitation of any kind. Provisions are summarised as of September 2026. Readers should refer to the relevant provisions, regulations and judicial pronouncements for their specific facts.