Bon wants to invest in Angel Funds. Explain how an investment can be made in an Angel Fund and in which type of undertakings an Angel Fund can invest. Can units of Angel Funds be listed on a stock exchange ?

As per SEBI (Alternative Investment Fund) Regulations, 2012 (AIF Regulations), Angel Fund means a sub-category of Venture Capital Fund under Category I Alternative Investment Fund that raises funds from angel investors and invests in accordance with the provisions of Chapter III A of the AIF Regulations. 'Angel Investor' means any person who proposes to invest in an angel fund and satisfies one of the following conditions, namely, an individual investor who has net tangible assets of at least ₹ 2 crore rupees excluding value of his principal residence, and who: has early stage investment experience, or has experience as a serial entrepreneur, or is a senior management professional with at least ten years of experience. a body corporate with a net worth of at least ₹ 10 crore rupees, or an Alternative Investment Fund registered under SEBI AIF Regulations or a Venture Capital Fund registered under the SEBI (Venture Capital Funds) Regulations, 1996. As per AIF Regulations, the angel fund may launch schemes subject to filing of a term sheet with SEBI, containing material information regarding the scheme, in the format and time period as may be specified by SEBI. Angel funds shall only raise funds by way of issue of units to angel investors. An angel fund shall have a corpus of at least ₹ 5 crore. Angel funds shall accept, up to a maximum period of five years, an investment of not less than ₹ 25 lakh from an angel investor and such funds shall be raised through private placement by issue of information memorandum or placement memorandum, by whatever name called. No scheme of the angel fund shall have more than two hundred angel investors. However, the provisions of the Companies Act, 2013 shall apply to the Angel Fund, if it is formed as a company. Therefore, Bon may invest in Angel Fund if qualifies for investment as stated above. Regulation 19F of the AIF Regulations states that the Angel funds shall invest in startups which are not promoted or sponsored by or related to an industrial group whose group turnover exceeds ₹ 300 crore. Investment by an angel fund in any venture capital undertaking shall not be less than ₹ 25 lakh and shall not exceed ₹ 10 crores. Investment by an angel fund in the venture capital undertaking shall be locked in for a period of one year. Angel Funds shall not invest in associates. Angel funds shall not invest more than 25% of the total investments under all its schemes in one venture capital undertaking, the compliance of which shall be ensured by the Angel Fund at the end of its tenure. An angel fund may also invest in the securities of companies incorporated outside India subject to such conditions or guidelines that may be stipulated or issued by the Reserve Bank of India and SEBI from time to time. Regulation 19H of the AIF Regulations prohibits units of Angel Funds from listing. It states that units of Angel Funds shall not be listed on any recognized stock exchange.