Category I AIF
Alternative Investment Funds that invest in start-ups, early-stage ventures, social ventures, SMEs, and infrastructure sectors that the government and regulators consider socially or economically desirable — attracting specific regulatory incentives.
- check_circleSocially / economically desirable sectors
- check_circleStart-ups and early-stage ventures
- check_circleSME and angel investments
- check_circleInfrastructure projects
- check_circleNo leverage permitted
SEBI Definition
Under Regulation 3(4)(a) of the SEBI (Alternative Investment Funds) Regulations, 2012, Category I AIF means an alternative investment fund which invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or such other sectors or areas which the Government or regulators consider as socially or economically desirable and shall include venture capital funds, SME funds, social venture funds, infrastructure funds and such other alternative investment funds as may be specified.
SEBI AIF Regs, 2012 – Schedule I
Why Category I AIFs Exist
The Category I designation exists to channel institutional capital towards sectors that drive economic development but may not attract sufficient funding through conventional market mechanisms. By providing a regulated framework with potential government incentives, SEBI has encouraged the formation of specialised funds targeting India's innovation economy, rural infrastructure, and social enterprises.
For investors, Category I AIFs represent an opportunity to participate in early-stage wealth creation — venture capital, angel co-investment, and infrastructure development — within a regulated, transparent structure with defined governance obligations.
Fund Types
Venture Capital Funds
Invest in early-stage startups and growth-stage technology companies. Typically hold concentrated positions with long horizons of 7–10 years, targeting IRRs of 20–30%.
View Funds arrow_forward groupsAngel Funds
A special sub-category permitting pooled angel investments into startups. Minimum 20 investors each contributing ₹25 Lakhs; maximum ₹10 Crore per startup investment.
View Funds arrow_forward constructionInfrastructure Funds
Deploy capital into roads, airports, power generation, water treatment, and logistics. Offer inflation-linked, long-duration cash flows with government concession structures.
View Funds arrow_forward volunteer_activismSocial Venture Funds
Target enterprises with measurable social or environmental impact alongside financial returns. Aligned with ESG mandates, SDG goals, and impact investing frameworks.
View Funds arrow_forward storeSME Funds
Provide growth capital to small and medium enterprises. Typically invest via structured equity or quasi-equity in businesses with ₹10–500 Cr revenue.
View Funds arrow_forwardRegulatory Requirements
gavelSEBI Registration
- check_circleMust register with SEBI before commencing operations
- check_circleSubmit Form A along with due diligence and track record
- check_circleRegistration fee: ₹5 Lakh application + ₹15 Lakh registration
- check_circleAnnual compliance report to SEBI
gavelStructural Requirements
- check_circleMinimum corpus: ₹20 Crore per scheme
- check_circleMaximum 1,000 investors per scheme
- check_circleEach investor minimum: ₹1 Crore (₹25L for employees)
- check_circleClose-ended structure with minimum 3-year tenure
gavelDisclosure Requirements
- check_circleOffer document / Private Placement Memorandum mandatory
- check_circleQuarterly portfolio disclosure to investors
- check_circleAnnual audit by registered Chartered Accountant
- check_circleMaterial changes require investor intimation
gavelOperational Obligations
- check_circleAppointment of Custodian for securities
- check_circleSeparate bank account for each scheme
- check_circleNo co-mingling of assets across schemes
- check_circleInvestment Manager must hold 2.5% co-investment or ₹5 Crore
Tax Treatment
Pass-Through Status
Category I AIFs enjoy pass-through tax treatment under Section 115UB of the Income Tax Act, 1961. This means income (other than business income) is not taxed at the fund level. Instead, it is deemed to be the income of the investor and taxed at the investor's applicable rate in the year of accrual.
Taxed at investor level — LTCG at 10% (listed), STCG at 15% (listed), as per slab for unlisted.
Passed through to investors and taxed at their applicable income tax slab rate.
Exception: Business income is taxed at the fund level at Maximum Marginal Rate before pass-through.
Key Characteristics at a Glance
Minimum Corpus
₹20 Crore
per scheme
Min. Investor Ticket
₹1 Crore
₹25L for employees
Max. Investors
1,000
per scheme
Fund Structure
Close-Ended
mandatory
Minimum Tenure
3 Years
from final close
Leverage
Not Permitted
fund level
Taxation
Pass-Through
Sec. 115UB IT Act
Skin-in-the-Game
2.5% / ₹5 Cr
whichever is lower
Explore Category I Funds
Browse registered Category I AIFs available through PlatAlt's institutional platform.