When I sit down with an emerging manager to plan their fundraise, one of the first questions I ask is: who are your target investors, and can they meet the minimum commitment? For most AIFs in India, the standard minimum investment per investor is INR 1 crore [1][2]. That is a large check to write into an illiquid fund, especially for individual investors making their first alternative investment allocation. It narrows your addressable pool considerably.
But there is an alternative. SEBI's accredited investor framework, introduced in 2021 and refined through 2025, allows accredited investors to commit as little as INR 25 lakhs to an AIF [2][3]. For an emerging manager trying to close a first fund, that difference (from INR 1 crore to INR 25 lakhs) can be the difference between hitting your target corpus and falling short. I will walk through how the framework works in practice and how to build it into your fundraising strategy.
What an accredited investor is under SEBI's framework
SEBI defines accredited investors through specific financial thresholds. An individual qualifies if they meet any one of three criteria [2][3][4]:
- Income threshold: Annual income of at least INR 2 crore.
- Net worth threshold: Net worth of at least INR 7.5 crore, of which at least INR 3.75 crore must be in financial assets.
- Combined threshold: Annual income of at least INR 1 crore plus net worth of at least INR 5 crore, with at least INR 2.5 crore in financial assets.
For trusts and corporates, different thresholds apply, generally higher in absolute terms but following similar logic. Family trusts, HUFs, and corporate entities each have their own qualification criteria as specified in the SEBI framework [2][3].
The key point: accredited investor status is not self-declared. It must be verified and certified by a SEBI-recognised accreditation agency [2][3]. This is an additional step in your investor onboarding process that you need to plan for.
How accreditation works on the ground
The accreditation process involves a third-party agency (currently authorised entities include subsidiaries of exchanges and depositories such as CVL and BASL) [2][3]. The investor submits financial documentation (income tax returns, net worth certificates, demat statements) to the accreditation agency, which verifies the information and issues an accreditation certificate.
The certificate is valid for a defined period, after which the investor must renew it. The process typically takes 1-3 weeks, depending on the agency and the complexity of the investor's financial situation.
For the fund manager, two things follow. First, you need to factor accreditation lead time into your fundraising timeline. If an investor wants to commit at the INR 25 lakh level but does not yet have accreditation, they cannot invest until the certification is in hand. Second, you need to guide your prospective investors through the accreditation process, since many HNIs who qualify have never heard of it and will need help with the documentation requirements.
The reduced minimum commitment: what it means for your fund
Under the standard SEBI framework, the minimum investment in an AIF is INR 1 crore per investor (INR 25 lakhs for angel funds under Category I) [1][2]. When an investor holds accredited status, this minimum drops to INR 25 lakhs for investments in most AIF categories [2][3].
For an emerging manager targeting a corpus of INR 50-100 crore, the effect is concrete. Instead of needing 50-100 investors who can each write INR 1 crore checks, you could potentially fill part of your fund with accredited investors at INR 25-50 lakh commitments. This is especially relevant if your investor base includes:
- Startup founders and operators who have liquidity from exits but may not want to concentrate INR 1 crore into a single fund.
- Early-career professionals in finance or tech who meet the income thresholds but have not accumulated the wealth for INR 1 crore commitments.
- Angel investors who are comfortable with alternative investments but prefer smaller, diversified allocations.
The trade-off is operational. More investors at smaller ticket sizes means more KYC, more capital call processing, more investor communications, and more administrative overhead. Your fund administrator needs to handle this volume efficiently, or the cost of servicing many small LPs will eat into your economics.
Large Value Accredited Investors: a separate tier
SEBI also introduced a Large Value Accredited Investor (LVAI) category for commitments of INR 70 crore or more [2][3]. LVAIs get additional flexibility: they may receive reduced regulatory disclosures and can participate in structures with more customised terms. For most emerging managers raising first funds, LVAI is less relevant because few individual investors will write checks of that size into a debut vehicle. But if you are raising from large family offices or institutional allocators, the LVAI category offers real flexibility in structuring terms.
What accredited investor status does NOT change
A few things that accreditation does not affect:
The fund's investment restrictions remain the same. A Category I VCF with accredited investors must still invest at least 75% in unlisted equity [1]. The investor base does not change the fund's regulatory mandate.
Reporting and compliance obligations are unchanged. You still file Compliance Test Reports, annual reports, and investor disclosures regardless of whether your LPs are accredited [5]. In some ways, having more investors increases your administrative burden.
The minimum corpus requirement still applies. Your AIF still needs a minimum corpus of INR 20 crore (INR 5 crore for angel funds) [1]. Accreditation lets you take smaller individual commitments, but you still need enough total commitments to meet the threshold.
Suitability obligations remain. Even though accredited investors are deemed to have greater financial sophistication, you still need to conduct KYC, collect appropriate documentation, and ensure the investment is suitable given the investor's stated objectives. SEBI has not waived suitability obligations for accredited investors.
Building accredited investors into your fundraising strategy
From the fundraises I have been involved with, this is how I think about working the accredited investor framework into a first fund:
Identify your likely investor mix early. Map out your warm network (founders, operators, HNIs, family offices) and estimate how many could meet the accreditation thresholds. If a good share of your prospective LPs would invest at INR 25-50 lakhs but not at INR 1 crore, the accredited investor route could widen your addressable capital base.
Start the accreditation conversation during initial outreach. Do not wait until a soft commitment is in hand. If an investor is interested but the INR 1 crore minimum is a barrier, introduce the accredited investor option immediately. Guide them toward the accreditation agency. The earlier they start, the less likely it is that accreditation timing delays your close.
Set your PPM terms to accommodate both tiers. Your Private Placement Memorandum should explicitly state that accredited investors may commit at the reduced minimum [2]. This is a disclosure requirement, not optional. Work with your merchant banker to include the appropriate language.
Budget for the additional operational load. If you end up with 40 investors instead of 15, your fund administration costs will be higher. Capital call processing, distribution waterfalls, tax reporting, and investor communications all scale with headcount. Make sure your fund economics (management fees, fund size) can support the administrative cost of a larger LP base.
The accreditation process: investor-side friction
One thing worth flagging: the accreditation process adds friction to your fundraise. Investors need to gather documentation, submit it to an agency, wait for verification, and receive a certificate before they can invest at the reduced minimum. Some investors will not bother, especially those who could simply write the INR 1 crore check if they wanted to.
The investors most likely to go through accreditation are those who genuinely want exposure to your fund but have a strong preference for smaller initial commitments. These tend to be individually engaged investors who will also be more demanding in terms of communication and updates. Plan accordingly.
How Allocator One Bharat supports your fundraise
At Allocator One Bharat, we help emerging managers structure their fundraising approach around the realities of the Indian AIF market, including the accredited investor framework. We assist with PPM drafting that properly accommodates both standard and accredited investors, guide prospective LPs through the accreditation process, and handle the investor onboarding and KYC workflows that come with a mixed investor base.
Our fund administration platform is built to handle the operational load of managing many investors efficiently (capital calls, distributions, reporting, and compliance), so the cost of serving a larger LP base does not overwhelm a small GP team. If you are planning a fundraise and want to understand how the accredited investor framework could work for your fund, let's talk.
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