Here is complete information about the LRS (Liberalised Remittance Scheme) in the

context of investment products, with detailed conditions, limits, eligible investments, and
important considerations:

🇮🇳 Liberalised Remittance Scheme (LRS) – Overview

Launched by: Reserve Bank of India (RBI)
Purpose: Allows Indian residents to remit funds abroad for permitted capital and current
account transactions.

Key Features of LRS (As of FY 2024-25)

Feature Description
Limit USD 250,000 per financial year (April to March) per individual
Who Can Use Resident individuals (incl. minors, with guardian)
- Purchase of foreign equity shares (listed/unlisted) - Debt instruments
Purpose abroad - Units of mutual funds, ETFs, or venture capital funds abroad -
(Investment- Setting up wholly owned subsidiaries or joint ventures (JVs) outside
related) India - Acquisition of immovable property abroad - Crypto-assets are
not permitted (as of now)
Permitted
Foreign bank and brokerage accounts (must be declared to Indian
Accounts
authorities)
Abroad
Mode of
Only through authorized dealers (usually banks)
Remittance

Conditions & Compliance Requirements

1. PAN Mandatory

• PAN is compulsory for all LRS transactions.

2. Tax Collected at Source (TCS)

• 20% TCS applies for foreign remittances for investment purposes above ₹7
lakh/year unless:
o TCS is reduced to 0.5% if the remitter is an education loan borrower under
Section 80E.
o Refundable at the time of ITR filing (you can claim credit).

3. Source of Funds
 • Must come from own funds (not loans or business entities).

4. Prohibited under LRS

• Trading in foreign exchange (e.g., forex trading)

• Lottery or banned schemes
• Investment in countries identified as “non-cooperative jurisdictions” by FATF

Investment Options Under LRS

Investment Type Permitted? Notes
US stocks (e.g., via Vested,
Popular and legal under LRS
INDMoney, Groww)
Global Mutual Funds/ETFs Through offshore platforms
Including sovereign and corporate
Foreign Bonds or Debt
debt
Real Estate Abroad Permitted for purchase/rental income
Derivatives/Options/Futures Speculative trading not allowed
Cryptocurrency Currently restricted by RBI
Subject to limits and approvals if
Foreign Startups/VC Funds
strategic interest involved

How to Invest Abroad Using LRS (Steps)

1. Choose Broker/Platform – e.g., Vested, INDMoney, Groww, Interactive Brokers
2. Complete KYC & LRS Declaration with the platform/bank
3. Provide Form A2 and LRS Declaration to your bank
4. Remit Funds via authorized dealer (bank)
5. Invest Abroad
6. File ITR & Report Holdings, if required

Reporting & Taxation in India

• Income (dividends, capital gains, etc.) from foreign investments must be reported
in ITR.
• Foreign Asset Reporting (Schedule FA) is mandatory if you hold foreign assets at
any time during the year.
• Double Taxation Avoidance Agreement (DTAA) benefits can be availed where
applicable.
• TDS may be deducted by the foreign institution, which can be claimed under DTAA.
 Required Documents
• PAN Card
• Aadhaar (in most cases)
• Form A2 (for remittance)
• Declaration of understanding and compliance with LRS norms
• Bank statements/funding source proof

RBI Monitoring
• All LRS remittances are reported to the RBI via Authorized Dealers (banks).
• RBI can inquire into the purpose or ask for documentation.

Things to Remember
• Cumulative limit is per individual – no joint account benefits
• No carry-forward – unused quota lapses at end of FY
• If using multiple platforms/banks – track total remitted carefully to stay within limit
• NRIs cannot use LRS – only resident individuals can

Here's a comprehensive guide to Mutual Funds, including types, structure, benefits,

taxation, and other important information that every investor should know:

🧾 Mutual Funds – Complete Guide

What is a Mutual Fund?

A mutual fund is a professionally managed investment vehicle that pools money from
multiple investors to invest in a diversified portfolio of assets like stocks, bonds, money
market instruments, or a mix of these.

Managed by: Professional fund managers of Asset Management Companies (AMCs)

Regulated by: SEBI (Securities and Exchange Board of India)
 Types of Mutual Funds (Based on Different
Classifications)

1. Based on Asset Class

Type Description Risk Ideal For

Long-term wealth
Equity Funds Invest mainly in stocks/equity shares High
creation

Invest in fixed-income instruments like Low to Stable income, low

Debt Funds
bonds, debentures Medium risk

Hybrid Funds Mix of equity & debt Moderate Balanced growth

Invest in treasury bills, certificates of Parking surplus

Money Market Funds Very Low
deposit money

Hedge against
Gold Funds Invest in gold or gold ETFs Medium
inflation

Global
International Funds Invest in global equities High
diversification

REIT/Infrastructure Alternate asset

Invest in real estate/infrastructure trusts Medium
Funds exposure

2. Based on Structure

Type Description

Open-Ended Funds Investors can buy/sell units anytime

Closed-Ended Units can be bought only during NFO (New Fund Offer); traded on stock
Funds exchange

Interval Funds Open for purchase/redemption at specific intervals

3. Based on Investment Objective

 Type Objective

Growth Funds Capital appreciation over the long term

Income Funds Regular income via interest/dividends

Liquid Funds Preserve capital, high liquidity (ideal for short-term)

Tax Saving Funds (ELSS) Tax deduction under Section 80C, 3-year lock-in

Index Funds Mimic a market index like Nifty or Sensex

Examples of Mutual Fund Categories (As per SEBI

classification)
Category Subcategories

Equity Large Cap, Mid Cap, Small Cap, Multi Cap, Flexi Cap, ELSS, Sectoral, Thematic

Debt Liquid, Ultra-Short, Short Duration, Corporate Bond, Gilt, Credit Risk, Dynamic Bond

Hybrid Conservative Hybrid, Balanced Hybrid, Aggressive Hybrid, Dynamic Asset Allocation

How Mutual Funds Work

1. Investor invests money →
2. AMC pools the funds →
3. Fund manager invests in portfolio →
4. NAV (Net Asset Value) calculated daily →
5. Profits/losses are reflected in NAV →
6. Investor redeems or switches based on goals

What is NAV?
Net Asset Value (NAV) = (Total Assets - Total Liabilities) / Number of Outstanding Units

NAV is the price at which you buy/sell a mutual fund unit (updated daily).

Benefits of Mutual Funds

 • Diversification (spreads risk across assets)
• Professional Management
• Liquidity (can withdraw anytime in open-ended funds)
• Regulated & Transparent
• Tax Benefits (in ELSS funds)
• Low Entry Barrier (start with ₹100–₹500 via SIP)
• Suitable for all risk profiles – conservative to aggressive

Investment Modes
Mode Description

Lump Sum One-time investment

SIP (Systematic Investment Plan) Regular investment (monthly/quarterly)

STP (Systematic Transfer Plan) Transfer from one fund to another

SWP (Systematic Withdrawal Plan) Regular withdrawal from fund

Taxation on Mutual Funds (As of FY 2024-25)

Equity Funds

Holding Period Type Tax

< 12 months STCG 15%

> 12 months LTCG 10% (if gains > ₹1 lakh/year)

Debt Funds

Holding Period Type Tax

Any duration (after 2023 amendment) Capital Gains Taxed as per slab rate of the investor

ELSS (Equity Linked Saving Scheme)

• Lock-in: 3 years
• Section 80C deduction: Up to ₹1.5 lakh
• LTCG taxation same as equity funds
 Risks in Mutual Funds
Risk Description

Market Risk Loss due to market fluctuations

Interest Rate Risk For debt funds – bond prices fall when interest rates rise

Credit Risk Default risk by bond issuer

Liquidity Risk Difficulty in redeeming due to market conditions

Concentration Risk Overexposure to a single sector/stock

How to Select a Mutual Fund

1. Define your financial goals
2. Check risk appetite
3. Compare past performance (3–5 year record)
4. Evaluate Expense Ratio, AUM, Fund Manager experience
5. Use platforms like:
o AMFI ([Link])
o Direct Mutual Fund platforms: Zerodha Coin, Groww, Paytm Money, Kuvera

Popular Mutual Fund Houses in India

• SBI Mutual Fund
• HDFC Mutual Fund
• ICICI Prudential Mutual Fund
• Axis Mutual Fund
• Nippon India Mutual Fund
• UTI AMC
• Mirae Asset Mutual Fund
• Kotak Mahindra Mutual Fund

Safety and Regulation

• Regulated by SEBI under the SEBI (Mutual Funds) Regulations, 1996
• Daily disclosure of NAV
• Periodic portfolio disclosures
• Investor grievance redressal via SEBI SCORES
Here is a comprehensive guide to Non-Convertible Debentures (NCDs), including types,
features, taxation, risks, and other essential information:

💼 Non-Convertible Debentures (NCDs) – Complete Guide

What are NCDs?

Non-Convertible Debentures (NCDs) are fixed-income financial instruments issued by
companies to raise capital. They offer a fixed interest rate and do not provide any option
to convert them into equity shares (hence non-convertible).

Issued by: Corporates, NBFCs, Housing Finance Companies, etc.

Regulated by: SEBI and RBI (if issued by NBFCs)
Rating: Must be rated by credit rating agencies (CRISIL, ICRA, CARE, etc.)

Types of NCDs
A. Based on Security

Type Description Risk Return

Secured NCDs Backed by assets of the issuer Low Lower

Unsecured NCDs No backing from assets High Higher

Investors prefer secured NCDs for safety of principal.

B. Based on Tenure

Type Description

Short-Term NCDs Less than 3 years

Medium-Term NCDs 3 to 5 years

Long-Term NCDs 5 to 10+ years

C. Based on Interest Payment Frequency

Type Description

Cumulative NCDs Interest paid at maturity along with principal

Non-Cumulative NCDs Interest paid regularly (monthly, quarterly, annually)

D. Based on Listing

Type Description

Listed NCDs Traded on stock exchanges (NSE/BSE)

Unlisted NCDs Not traded publicly

Listed NCDs provide liquidity, while unlisted NCDs may offer slightly higher
returns but lower liquidity.

Features of NCDs
Feature Description

Fixed Interest (Coupon Rate) Typically 7% to 12% per annum

Tenure 1 to 10 years (can vary)

Face Value Usually ₹1,000 per NCD

Minimum Investment ₹10,000 (10 NCDs) or as per issue terms

Tradability Listed NCDs can be sold before maturity on stock exchanges

Credit Rating Provided by SEBI-registered agencies (e.g., AAA, AA+, etc.)

TDS Not deducted if held in Demat form

Nomination Allowed for individual investors

Why Companies Issue NCDs

• To raise funds for working capital, infrastructure, business expansion
• As an alternative to bank loans
 Taxation of NCDs
1. Interest Income

• Taxable under 'Income from Other Sources'

• Taxed as per investor’s income slab

2. Capital Gains (on sale before maturity)

• Listed NCDs:
o STCG (held < 12 months) → Taxed as per slab
o LTCG (held > 12 months) → Taxed at 10% without indexation
• Unlisted NCDs:
o STCG (held < 36 months) → Taxed as per slab
o LTCG (held > 36 months) → Taxed at 20% with indexation

No TDS if NCDs are held in Demat form and listed.

Benefits of NCDs
• Fixed and predictable returns
• Higher interest rates than bank FDs
• Regular income via interest payout options
• Listed NCDs provide liquidity
• Secured NCDs offer capital protection
• Diversification in fixed-income portfolio

Risks in NCDs
Risk Description

Credit Risk Issuer may default on payments

Liquidity Risk Hard to exit unlisted or low-volume listed NCDs

Interest Rate Risk Market price falls if interest rates rise

Reinvestment Risk Reinvesting at lower rates after maturity

 How to Invest in NCDs
1. Check New Issues (via NSE/BSE, broker platforms, or company websites)
2. Use Demat account and ASBA-enabled bank to apply
3. Read Offer Document (credit rating, tenure, coupon rate, issuer history)
4. Invest during NCD issue window or buy from the secondary market (if listed)

Points to Consider Before Investing

• Always prefer Secured, AAA-rated NCDs
• Understand the issuer's financial health
• Compare with other fixed-income options (FDs, Bonds, Debt MFs)
• Don’t over-concentrate – part of your debt allocation, not whole portfolio
• Match maturity with financial goals

Top Issuers of NCDs in India

• Tata Capital Financial Services
• Muthoot Finance
• Manappuram Finance
• L&T Finance
• IIFL Finance
• Indiabulls Housing Finance
• Edelweiss Financial Services

Summary Table
Feature NCD

Return 7–12% (fixed)

Risk Moderate to high (depends on issuer)

Lock-in Typically till maturity

Liquidity Only if listed

Taxation Interest as per slab; capital gains apply on early sale

Safety Higher in AAA-rated, secured NCDs

Feature NCD

Ideal For Investors seeking fixed income & portfolio diversification

Here’s a complete and detailed guide on Portfolio Management Services (PMS) —

including its types, features, structure, taxation, risks, and the top 5 PMS providers in India.

📈 Portfolio Management Services (PMS) – Complete Guide

What is PMS?
Portfolio Management Services (PMS) is a customized investment solution where
professional portfolio managers manage your investments in equity, debt, or structured
products based on your specific financial goals and risk appetite.

Ideal for: HNIs (High Net-Worth Individuals)

Minimum Investment: ₹50 Lakhs (as per SEBI guidelines)
Regulated by: SEBI under PMS Regulations, 2020

Types of PMS

1. Discretionary PMS

• Most common type

• Portfolio manager takes full control over asset allocation, stock selection, and timing.
• Investor has no say in day-to-day decisions.
• Ideal for those who trust the fund manager's expertise.

2. Non-Discretionary PMS

• The manager advises on the portfolio, but execution needs client approval.
• Investor is actively involved.
• Suited for investors who want control with professional inputs.

3. Advisory PMS

• Portfolio manager only gives advice, does not execute.

• All execution and final decision rests with the investor.
 • Typically opted by experienced investors.

Features of PMS
Feature Details

Personalized Strategy Tailored to investor goals and risk profile

Active Management Fund manager actively monitors and reshuffles the portfolio

Transparency Regular performance and transaction reports

Ownership of Securities Stocks are held in the investor's own Demat account (in most cases)

Higher Returns Potential Focused portfolios can outperform mutual funds

Minimum Investment ₹50 Lakhs (SEBI-mandated since Jan 2020)

PMS vs Mutual Funds

Parameter PMS Mutual Funds

Minimum Investment ₹50 lakhs ₹500 (SIP) / ₹5,000 (lump sum)

Customization High None

Portfolio Ownership Direct (in investor's name) Pooled

Fees Higher Lower (regulated expense ratio)

Regulation SEBI (PMS Regulations) SEBI (Mutual Fund Regulations)

Risk High (concentrated bets) Moderate (diversified)

Taxation Direct (investor files taxes) AMC deducts tax for investors in some cases

Fee Structure in PMS

Fees vary by provider but commonly include:

1. Fixed Fee Model

o Typically 1%–2.5% annually on AUM
2. Profit-Sharing Model
o E.g., 1% fixed + 20% of profits above a hurdle rate (say 10% return)
 3. Hybrid Model
o Combination of both fixed + performance-linked fees

Tip: Always check the Total Expense Ratio (TER), exit load, and performance fee.

Taxation in PMS
• Capital Gains are taxed in the hands of the investor:
o Equity Gains:
▪ STCG (≤12 months) – 15%
▪ LTCG (>12 months) – 10% (if gains > ₹1 lakh)
o Debt Gains:
▪ Taxed as per slab (since 2023 reforms)

PMS provides audited tax statements for your CA at year-end.

Risks in PMS
Risk Type Description

Market Risk Losses due to market fluctuations

Concentration Risk PMS portfolios are often concentrated (20–30 stocks)

Manager Risk Over-dependence on manager’s judgment

Liquidity Risk Higher than mutual funds in some cases

Fee Drag Higher costs can impact returns over time

Documents Required to Invest in PMS

• PAN Card
• Aadhaar (or Passport)
• Proof of Address
• Canceled Cheque
• Income Proof (for HNI eligibility)
• KYC documents
• Demat Account (in investor’s name)
 Top 5 PMS Providers in India (As of 2025)
These are based on Assets Under Management (AUM), performance, and client trust:

Rank PMS Provider Specialization / Strategy

Value investing, QGLP strategy (Quality, Growth, Longevity,

1⃣ Motilal Oswal PMS
Price)

2⃣ ASK Investment Managers Large-cap and multi-cap portfolios, strong research

Marcellus Investment
3⃣ Coffee Can Portfolio (low churn, high-quality stocks)
Managers

4️⃣ ICICI Prudential PMS Strong institutional backing, diversified strategies

5⃣ White Oak Capital PMS High-conviction growth stocks, fundamental investing

Honorable Mentions:

• NJ Asset Management PMS

• Abakkus Asset Manager (by Neelesh Surana)
• Girik Capital
• Renaissance Investment Managers

When Should You Choose PMS?

You have investable surplus > ₹50 Lakhs
You want personalized portfolio management
You seek long-term alpha over mutual funds
You trust a fund manager’s research and conviction

Summary Table
Feature PMS

Minimum Investment ₹50 Lakhs

Types Discretionary, Non-Discretionary, Advisory

Ownership Direct (held in investor name)

 Feature PMS

Customization Yes

Regulation SEBI

Taxation In investor's hands

Ideal For HNIs seeking customized, long-term strategies

Here is a complete guide on Alternative Investment Funds (AIFs) in India, including

types, structure, regulations, taxation, eligibility, risks, and leading AIF managers.

💼 Alternative Investment Funds (AIFs) – Complete Guide

What is an AIF?
An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that
collects funds from sophisticated investors (mostly HNIs) and invests in alternative asset
classes such as private equity, venture capital, hedge funds, structured credit, real estate, and
more.

Regulated by: SEBI (AIF Regulations, 2012)

Minimum Investment: ₹1 crore per investor (₹25 lakhs for employees/directors of the
AIF)
Structure: Trust, Company, LLP, or Body Corporate
Target Investors: HNIs, Institutions, Family Offices, UHNIs

Types of AIFs in India (as per SEBI classification)

SEBI has classified AIFs into three categories:

Category I AIFs – Development-Focused

These invest in early-stage or socially/economically beneficial sectors.

Includes:
 • Venture Capital Funds (VCFs)
• Angel Funds
• SME Funds
• Social Venture Funds
• Infrastructure Funds

SEBI Benefits:

• Incentives and tax benefits (in some cases)

• Government support for priority sectors

Example Investments:

• Startups, Agri-tech, Renewable energy, Education

Lower risk but longer gestation period.

Category II AIFs – Growth & Debt Focused

These are the most common AIFs, with no leverage but broader mandates.

Includes:

• Private Equity (PE) Funds

• Debt Funds
• Fund of Funds (that invest in other AIFs)

Key Features:

• No incentives from the government

• Allowed to invest in unlisted equities, real estate, credit opportunities, etc.

Example Investments:

• Unlisted companies, high-yield debt instruments, pre-IPO deals

Ideal for HNIs seeking exposure to private markets or debt with higher returns.

Category III AIFs – High-Risk, High-Return Strategies

These are hedge-fund-like structures that use leverage and complex trading strategies.

Includes:

• Long-short funds
 • Derivative-based strategies
• Arbitrage funds
• Quant/Algo funds

Key Features:

• High turnover & leverage allowed

• Shorter horizon
• Mostly used by seasoned investors or institutional clients

Higher risk, suited for sophisticated investors.

SEBI Regulations Governing AIFs

Regulation Area Details

Registration Mandatory with SEBI under SEBI (AIF) Regulations, 2012

Fund Structure Trust/LLP/Company/Body Corporate

Sponsor Commitment Minimum 2.5% of corpus or ₹5 crore, whichever is lower

Minimum Investment ₹1 crore (₹25 lakh for employees/directors)

Lock-in Typically 3–5 years; depends on the fund strategy

Leverage Not allowed in Cat I & II; allowed in Cat III (with limits)

Tenure Closed-ended for Cat I & II (min 3 years); Cat III can be open-ended

Taxation of AIFs in India

➤ Category I & II AIFs

• Pass-through status under Section 115UB

• Tax is paid by the investor, not the fund
• Capital gains taxed based on holding period and asset class:
o Equity: LTCG – 10%, STCG – 15%
o Debt: Taxed as per slab or 20% with indexation
• Business income (if any) is taxed at the investor’s slab

➤ Category III AIFs

• No pass-through status
• Entire income is taxed at fund level as business income
 • Tax rate: Maximum Marginal Rate (~42.7%)

AIF vs PMS vs Mutual Funds

Parameter AIF PMS Mutual Fund

Regulation SEBI (AIF Reg) SEBI (PMS Reg) SEBI (MF Reg)

Min Investment ₹1 crore ₹50 lakhs ₹500–₹5,000

Customization No Yes No

Risk High Moderate–High Low–Moderate

Liquidity Low (locked-in) Medium (depends on strategy) High

Taxation Varies by category In investor hands Pass-through for debt/equity

Risks in AIFs
Risk Type Explanation

Liquidity Risk Funds are usually locked in for years

Concentration Risk May invest in a few companies or instruments

Market Risk Subject to equity, debt, or derivative market movements

Credit Risk Especially in Category II debt AIFs

Regulatory Risk SEBI norms can change, affecting fund operations

High Tax in Cat III Fund pays tax, reducing post-tax returns

Who Should Invest in AIFs?

HNIs/UHNIs with ₹1 crore+ investable surplus
Investors seeking access to private markets, unlisted equity, or hedge fund strategies
Long-term horizon (3–7 years or more)
Risk-tolerant and sophisticated investors
 Top 5 AIF Managers in India (as of 2025)
Rank AIF Manager Category Specialization

1⃣ ChrysCapital Cat II Private Equity (Growth capital)

2⃣ Marcellus Investment Managers Cat III Long-only, quality-focused portfolios

3⃣ Multiples Alternate Asset Management Cat II Mid-market PE, led by Renuka Ramnath

4️⃣ True North (formerly India Value Fund) Cat II Consumer and Financial services PE

5⃣ Avendus Capital Cat III Hedge fund strategies, long-short funds

Other Prominent Names:

• ICICI Venture
• Kotak Alternate Assets
• Edelweiss Alternatives
• ASK Investment Managers
• IIFL AMC (Private Wealth focus)

Summary Table
Feature AIF

Categories Cat I (development), Cat II (PE/debt), Cat III (hedge/long-short)

Minimum Investment ₹1 crore

Lock-in 3–7 years typically

Regulation SEBI (AIF Regulations, 2012)

Taxation Pass-through (Cat I & II), Fund-level tax (Cat III)

Ideal For HNIs, Institutions, Family Offices

Risks Illiquidity, taxation, market volatility

Final Notes
• Always review fund strategy, past performance, manager experience, and fee
structure before investing.
 • Read the PPM (Private Placement Memorandum) in detail.
• AIFs can boost returns and diversify risk but require long-term capital and patience.

Here is a complete and detailed guide on Venture Capital (VC), including its types, stages,
structure, working mechanism, regulations, taxation, key players, and how it operates in the
Indian startup ecosystem.

🚀 Venture Capital (VC) – Complete Guide for India

What is Venture Capital?

Venture Capital (VC) is a type of private equity financing provided to early-stage, high-
potential, high-risk startups and businesses in exchange for equity (ownership stake).

VC funding supports:

• Product development
• Market expansion
• Team building
• Scaling operations

VC is critical for innovation, especially in sectors like tech, biotech, fintech, healthtech,
and SaaS.

Characteristics of Venture Capital

Feature Description

High Risk, High Reward Most startups fail, but a few deliver exponential returns

Equity Ownership VCs take part ownership in exchange for capital

Long-Term Investment 5–10 years holding period

Active Involvement VCs often provide strategic advice, mentoring, and network access

Multiple Rounds Startups raise capital in stages (Seed, Series A, B, C, etc.)

 Types of Venture Capital (by Stage of Funding)
Type Description Funding Stage

Small initial funding for idea validation, MVP, early Pre-revenue

Seed Capital
product stage

Capital from individual wealthy investors or angel

Angel Investment Early-stage
networks

First significant institutional funding to scale product-

Series A Post-MVP
market fit

Expansion capital for market reach, team, and

Series B Growth-stage
monetization

Late-stage funding for profitability, acquisitions, or IPO

Series C and beyond Mature startups
prep

Bridge/Mezzanine
Interim capital before IPO or major round Pre-exit phase
Financing

Types of VC Firms (by Investment Focus)

Type Focus

Early-Stage VC Invest in startups at seed to Series A

Late-Stage VC Fund growth-stage firms scaling to IPO

Sector-Focused VC Specialize in sectors like Fintech, Healthtech, EdTech, DeepTech

Corporate Venture Capital Investment arms of large corporations (e.g., Google Ventures,
(CVC) Reliance Ventures)

Impact VC Invest in social or sustainability-driven startups

Micro VCs Smaller funds focused on early-stage deals with faster exits

Structure of a VC Fund
 Entity Role

General Partner The fund manager (VC firm) responsible for sourcing deals and managing
(GP) investments

Limited Partners
Investors in the fund (e.g., pension funds, HNIs, institutions)
(LPs)

Portfolio Companies Startups that receive funding from the VC fund

VCs operate typically under the Alternative Investment Fund (AIF) Category I or
Category II in India.

🇮🇳 Venture Capital in India – Overview

Why VC is Booming in India:

• 100K+ startups and 100+ unicorns

• Government initiatives like Startup India
• Growing internet/mobile penetration
• Rising middle class and digital consumption

Key Sectors for VC in India:

• SaaS
• Fintech
• HealthTech
• E-commerce
• EdTech
• Agritech
• DeepTech & AI

Regulations Governing VC in India

Regulation Authority

SEBI (AIF) Regulations, 2012 Regulates VC funds as AIF Category I or II

FEMA & RBI Guidelines Foreign VC investments

Startup India/ DPIIT Recognition Helps startups avail tax and compliance benefits
 Regulation Authority

Companies Act, 2013 Governs private limited companies receiving VC funds

Taxation of VC in India
Level Tax Treatment

VC Fund (AIF Cat I) Pass-through taxation for all income

Investor (LPs) Taxed on capital gains in their hands

LTCG 10% above ₹1 lakh

STCG 15% (listed), slab rate (unlisted)

Dividend Income Taxed in the hands of investor as per slab

DPIIT-recognized startups can get tax exemption on capital gains under Section
54EE/54GB/80-IAC.

Leading VC Firms in India (2025)

VC Firm Focus Area Notable Investments

Sequoia Capital India (now Peak XV) SaaS, Fintech, HealthTech BYJU’S, Zomato, Razorpay

Accel India Early-stage, SaaS Flipkart, Swiggy, Freshworks

Nexus Venture Partners Cross-border SaaS, Fintech Delhivery, Postman, Unacademy

Matrix Partners India Consumer Tech, B2B Ola, Practo

Blume Ventures Seed to Pre-Series A Dunzo, GreyOrange, Koo

Elevation Capital Fintech, D2C, Health Meesho, ShareChat

Lightspeed India Tech, B2B, EdTech Udaan, OYO, Teachmint

Tiger Global, SoftBank, Temasek, DST Late-stage unicorn funding

VC vs PE vs Angel – Quick Comparison

 Feature Angel Investor Venture Capital Private Equity

Stage Idea/Seed Early to Growth Mature

Investment Size ₹5 lakh–₹2 crore ₹1–100 crore+ ₹100 crore+

Risk Very High High Moderate

Involvement Limited High (active) High (control-oriented)

Exit Horizon 3–7 years 5–10 years 4️–8 years

VC Funding Process
1. Pitch Deck + Intro
2. Initial Meeting & Screening
3. Due Diligence (business, financial, legal)
4. Term Sheet Issuance
5. Negotiation & Final Agreement
6. Capital Infusion
7. Board Seat / Active Monitoring

Who Should Raise VC?

Scalable, tech-driven business models
High growth potential
Large addressable market
Strong founding team
Clear exit options (IPO or acquisition)

Risks in VC Investment (For Startups and Investors)

Risk Description

High Failure Rate 80–90% of startups don’t succeed

Dilution Risk Founders lose control after multiple rounds

Exit Uncertainty Market conditions may delay IPO/sale

Operational Pressure Constant performance scrutiny

 Risk Description

Valuation Risk Overvaluation in early rounds can hurt later funding

Summary Table
Aspect Details

Regulation SEBI (AIF), Companies Act, FEMA

Fund Type AIF Category I / II

Ticket Size ₹50 lakh to ₹100 crore+

Investment Horizon 5–10 years

Minimum Investment (LP) ₹1 crore (₹25 lakh for employees)

Exit Options IPO, M&A, Secondary Sale

Investor Profile HNIs, institutions, corporates

Taxation Pass-through (capital gains taxed at investor level)

Final Thoughts
Venture Capital fuels India’s startup ecosystem by providing risk capital and strategic
mentorship. It is:

• High-risk, high-reward
• Ideal for tech and innovation-driven founders
• Attractive for investors with long-term vision and capital

Would you like:

• A VC pitch deck template or checklist?

• Step-by-step guide to raise VC as a founder?
• Or a list of active seed funds and accelerators in India?

Let me know—I can create one based on your goal.

Here is a complete and detailed guide on Venture Capital (VC), including its types, stages,
structure, working mechanism, regulations, taxation, key players, and how it operates in the
Indian startup ecosystem.
🚀 Venture Capital (VC) – Complete Guide for India

What is Venture Capital?

Venture Capital (VC) is a type of private equity financing provided to early-stage, high-
potential, high-risk startups and businesses in exchange for equity (ownership stake).

VC funding supports:

• Product development
• Market expansion
• Team building
• Scaling operations

VC is critical for innovation, especially in sectors like tech, biotech, fintech, healthtech,
and SaaS.

Characteristics of Venture Capital

Feature Description

High Risk, High Reward Most startups fail, but a few deliver exponential returns

Equity Ownership VCs take part ownership in exchange for capital

Long-Term Investment 5–10 years holding period

Active Involvement VCs often provide strategic advice, mentoring, and network access

Multiple Rounds Startups raise capital in stages (Seed, Series A, B, C, etc.)

Types of Venture Capital (by Stage of Funding)

Type Description Funding Stage

Small initial funding for idea validation, MVP, early Pre-revenue

Seed Capital
product stage
 Type Description Funding Stage

Capital from individual wealthy investors or angel

Angel Investment Early-stage
networks

First significant institutional funding to scale product-

Series A Post-MVP
market fit

Expansion capital for market reach, team, and

Series B Growth-stage
monetization

Late-stage funding for profitability, acquisitions, or IPO

Series C and beyond Mature startups
prep

Bridge/Mezzanine
Interim capital before IPO or major round Pre-exit phase
Financing

Types of VC Firms (by Investment Focus)

Type Focus

Early-Stage VC Invest in startups at seed to Series A

Late-Stage VC Fund growth-stage firms scaling to IPO

Sector-Focused VC Specialize in sectors like Fintech, Healthtech, EdTech, DeepTech

Corporate Venture Capital Investment arms of large corporations (e.g., Google Ventures,
(CVC) Reliance Ventures)

Impact VC Invest in social or sustainability-driven startups

Micro VCs Smaller funds focused on early-stage deals with faster exits

Structure of a VC Fund
Entity Role

General Partner The fund manager (VC firm) responsible for sourcing deals and managing
(GP) investments

Limited Partners
Investors in the fund (e.g., pension funds, HNIs, institutions)
(LPs)

Portfolio Companies Startups that receive funding from the VC fund

VCs operate typically under the Alternative Investment Fund (AIF) Category I or
Category II in India.

🇮🇳 Venture Capital in India – Overview

Why VC is Booming in India:

• 100K+ startups and 100+ unicorns

• Government initiatives like Startup India
• Growing internet/mobile penetration
• Rising middle class and digital consumption

Key Sectors for VC in India:

• SaaS
• Fintech
• HealthTech
• E-commerce
• EdTech
• Agritech
• DeepTech & AI

Regulations Governing VC in India

Regulation Authority

SEBI (AIF) Regulations, 2012 Regulates VC funds as AIF Category I or II

FEMA & RBI Guidelines Foreign VC investments

Startup India/ DPIIT Recognition Helps startups avail tax and compliance benefits

Companies Act, 2013 Governs private limited companies receiving VC funds

Taxation of VC in India
Level Tax Treatment

VC Fund (AIF Cat I) Pass-through taxation for all income

 Level Tax Treatment

Investor (LPs) Taxed on capital gains in their hands

LTCG 10% above ₹1 lakh

STCG 15% (listed), slab rate (unlisted)

Dividend Income Taxed in the hands of investor as per slab

DPIIT-recognized startups can get tax exemption on capital gains under Section
54EE/54GB/80-IAC.

Leading VC Firms in India (2025)

VC Firm Focus Area Notable Investments

Sequoia Capital India (now Peak XV) SaaS, Fintech, HealthTech BYJU’S, Zomato, Razorpay

Accel India Early-stage, SaaS Flipkart, Swiggy, Freshworks

Nexus Venture Partners Cross-border SaaS, Fintech Delhivery, Postman, Unacademy

Matrix Partners India Consumer Tech, B2B Ola, Practo

Blume Ventures Seed to Pre-Series A Dunzo, GreyOrange, Koo

Elevation Capital Fintech, D2C, Health Meesho, ShareChat

Lightspeed India Tech, B2B, EdTech Udaan, OYO, Teachmint

Tiger Global, SoftBank, Temasek, DST Late-stage unicorn funding

VC vs PE vs Angel – Quick Comparison

Feature Angel Investor Venture Capital Private Equity

Stage Idea/Seed Early to Growth Mature

Investment Size ₹5 lakh–₹2 crore ₹1–100 crore+ ₹100 crore+

Risk Very High High Moderate

Involvement Limited High (active) High (control-oriented)

 Feature Angel Investor Venture Capital Private Equity

Exit Horizon 3–7 years 5–10 years 4️–8 years

VC Funding Process
1. Pitch Deck + Intro
2. Initial Meeting & Screening
3. Due Diligence (business, financial, legal)
4. Term Sheet Issuance
5. Negotiation & Final Agreement
6. Capital Infusion
7. Board Seat / Active Monitoring

Who Should Raise VC?

Scalable, tech-driven business models
High growth potential
Large addressable market
Strong founding team
Clear exit options (IPO or acquisition)

Risks in VC Investment (For Startups and Investors)

Risk Description

High Failure Rate 80–90% of startups don’t succeed

Dilution Risk Founders lose control after multiple rounds

Exit Uncertainty Market conditions may delay IPO/sale

Operational Pressure Constant performance scrutiny

Valuation Risk Overvaluation in early rounds can hurt later funding

Summary Table
 Aspect Details

Regulation SEBI (AIF), Companies Act, FEMA

Fund Type AIF Category I / II

Ticket Size ₹50 lakh to ₹100 crore+

Investment Horizon 5–10 years

Minimum Investment (LP) ₹1 crore (₹25 lakh for employees)

Exit Options IPO, M&A, Secondary Sale

Investor Profile HNIs, institutions, corporates

Taxation Pass-through (capital gains taxed at investor level)

Final Thoughts
Venture Capital fuels India’s startup ecosystem by providing risk capital and strategic
mentorship. It is:

• High-risk, high-reward
• Ideal for tech and innovation-driven founders
• Attractive for investors with long-term vision and capital

Would you like:

• A VC pitch deck template or checklist?

• Step-by-step guide to raise VC as a founder?
• Or a list of active seed funds and accelerators in India?

Let me know—I can create one based on your goal.