Startup ecosystem set for growth post SEBI norm change
By Pramod Thomas | Express News Service | Published: 06th December 2016 01:34 AM |
KOCHI: India needs ‘Angels’ with deep pockets to nurture startups, especially when India hopes to host over 10,500 startups by 2020 employing over 2.1 lakh people.
And the Securities and Exchange Board of India’s (SEBI) move to broaden the base of initial angel investors by lowering the entry threshold to Rs 25 lakh from Rs 50 lakh and increasing the number of allowed investors to 200, is set to attract more angel investors into Indian startups. Experts point out that encouraging listing of startups — the number of listed startups is too low now — is the next big step.
“Startup India supports startups less than five years old, and SEBI, by permitting angel investors to fund startups less than five years have brought its definition of startups on par with that of the government’s policy. Similarly, enhancing limit of number of angel investors is in harmony with number of shareholders limit in a private company,” said Poyni Bhatt, COO, SINE, IIT Mumbai, pointing out that it will enable to bring more angel participation. Permission for Angel Funds to invest in entities incorporated outside India will also have the positive effect of geographic portfolio diversification, added Bharat Banka, Founding Advisor, Katabole Technology Venture.
“It would have been even more dynamic if the concept of Accredited Angel Investors was announced,” he added.
“The entrepreneurial and start up culture is the next growth driver but it cannot take off unless startups receive initial funding. However, investors would seek exits in due course. While norms for listing are in place for a while, so far there has not been any. SEBI should help to promote such an ecosystem,” said Rahul Agarwal, MD, AltFort Capital, investment bank and advisory.