Want to invest in startup IPOs? Shell out over Rs 5 lakh

MUMBAI: Market regulator Sebi, which will soon come out with regulations for fund raising by start-up companies, is likely to fix the minimum investment size anywhere between Rs 5 lakh and Rs10 lakh.

The regulator, which had floated a discussion paper on alternative fund raising platform for start-up companies in March this year had proposed a minimum application size of Rs10 lakh. However, market participants have suggested a minimum investment of Rs 5 lakh so that more investors could participate in such offers.

Considering the risk involved in such ventures, the idea behind the Sebi proposal was to allow only well informed investors like the high net-worth investors and institutional investors to participate in the IPOs.

“While there is an urgent need to carve out a separate set of regulations for these companies, Sebi is also cautious on the matter. That is the reason why Sebi  has propos-ed a higher investment size. However, there is no unanimous view in the industry on the minimum application size and market participants have suggested various amounts ranging from Rs 5 lakh to Rs10 lakh. So when the final regulations come, it is going to be somewhere between Rs 5 lakh and Rs10 lakh,” said a person familiar with the deliberations.