VC Funds to Shift to AIF Next Year

Sebi is directly engaging with the industry to smoothen their transition to the new regulatory framework

- Neha Joshi

The Securities and Exchange Board of India (Sebi) has extended a crucial deadline for older venture capital funds (VCFs) to wind up expired schemes, following direct engagement with the industry to smooth their transition to a new regulatory framework.

The Sebi granted a one-year extension for liquidations, but maintained a firm stance on migration, requiring funds to apply to the Alternative Investment Fund (AIF) framework by 19 July 2025. They will have one year after that to liquidate their assets.

People aware of the matter told Mint that Sebi's outreach—both independently and through industry associations such as the Indian Venture and Alternate Capital Association (IVCA) and the Private Equity and Venture Capital Chief Financial Officer Association (PEVCCFO)—helped clarify longstanding challenges and led to the extension for VCFs to wind up expired schemes.

Sebi's engagement came amid concerns over a tepid response to its 2024 circular offering VCFs an opportunity to migrate under specified conditions. Many VCFs, some of which still operate despite the expiry of their scheme lifespans, have yet to begin the transition.