Large value funds: meaning, how it works in India and examples

An AIF is a pooled fund that is not a mutual fund. It collects money from investors and invests in startups, unlisted companies, real estate or other assets. SEBI regulates it under the AIF Regulations of 2012.

A large value fund is a scheme of such an AIF where every investor is accredited and has put in a large amount. SEBI first created the idea so that wealthy and institutional investors could get lighter regulation than ordinary AIF investors, who have less experience and more need of protection.

Large value funds are mostly used by family offices, institutions and very wealthy individuals who invest in venture capital, private equity and private credit funds.

The term is not a separate kind of fund like Category I, II or III. It describes a scheme inside one of those categories, which is why a headline can say a Category II AIF has launched a large value scheme. The category still decides what the fund may invest in, while the large value label decides who may invest and how light the paperwork is.

According to law-firm and news summaries, SEBI proposed the changes in an August 2025 consultation paper, its board approved them in September 2025, and the SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2025 were notified on 18 November 2025. A circular dated 8 December 2025 followed, setting out how existing funds can migrate and which relaxations apply.

Two changes matter most. The minimum commitment per accredited investor in an LVF was cut from ₹70 crore to ₹25 crore. And a new class, the accredited-investor-only scheme, was written into the rules. LVFs now fall inside that class.

It is an AIF or a scheme of an AIF where every investor is an accredited investor. The exceptions are the manager, the sponsor, and their directors and employees, who may invest even if they are not accredited.

The idea is that investors who meet SEBI's income or net worth tests can judge risk for themselves, so much of the standard paperwork can be cut. The tests for accredited investors are in the SEBI regulations and are covered in the guide on accredited investors in India.

As of November 2026, law-firm summaries list the points below. Details can differ between an LVF and a wider accredited-investor-only scheme, so the circular should be read for the exact wording.

The common thread is that SEBI trusts these investors to read documents and negotiate for themselves. The trade-off is that they get less standard protection, such as a fixed template for the placement memorandum, so side letters and fund documents matter more.

• Minimum commitment: ₹25 crore per accredited investor for an LVF, down from ₹70 crore.
• Investor cap: the 1,000-investor limit per scheme counts only investors who are not accredited.
• Tenure: tenure can be extended up to five years, against two years earlier, with approval of two thirds of unitholders by value.
• Placement memorandum: an LVF need not follow the standard template or the annual audit of memorandum compliance.
• Side letters: differential rights for some investors are allowed through side letters if they do not harm others.
• Team certification: the usual certification requirement for key investment team members does not apply.

The circular allows existing AIFs and schemes to convert into accredited-investor-only status, but only with the consent of all investors. A converted or new scheme must carry the words AI only fund or LVF in its name. The manager must tell SEBI by email and inform the depositories within 15 days of conversion.

Funds are also allowed to keep onboarding investors on the earlier minimum commitment thresholds for a while, so nobody is forced to switch at once.

For a startup founder, this has little direct effect on a term sheet. It matters in the background: a fund that converts may extend its life by up to five years with investor approval, which can change when it needs to sell its stakes and how patient it can be with a portfolio company.

A lower minimum widens the pool of money that can reach venture and growth funds. At ₹70 crore, only very large investors fit. At ₹25 crore, more family offices and wealthy individuals qualify, and a manager can raise a fund from fewer, bigger cheques without the work of managing hundreds of small investors.

For startups, more capital in funds means more money available for rounds, especially in later stages where cheques are larger. For investors, lighter rules mean lower costs of running the fund, but also less regulatory hand-holding. The investors must do more of their own checking.

There is also a competitive angle. Offshore structures in places such as Singapore and Mauritius have long attracted large Indian investors with lighter rules. A lower minimum and lighter paperwork at home is partly an effort to keep that money in India-based funds, though how well it works will only be clear over time.

A regular Category I or II AIF has a minimum commitment of ₹1 crore per investor and must meet the full set of disclosure rules. An LVF or accredited-investor-only scheme has a higher minimum, no mass of small investors, and lighter paperwork.

It is also different from a co-investment scheme. A co-investment scheme backs a single company next to a main fund, while an LVF is a whole fund. A fund can be both: a large value scheme can run its own co-investment vehicles for accredited investors.

Check whether a fund announced as an LVF or accredited-investors-only fund is a new fund, a converted scheme or a close of an existing one. Check the stated size: is it the target, the first close or the final close? Also check whether the amount includes commitments from the manager itself.

This guide is general information and not legal, tax or investment advice. Check with a professional before relying on any of these rules.