Mumbai, June 23 -- India's capital markets regulator has restricted angel fund investments to only accredited or "sophisticated" investors, a shift that may delay early-stage startup funding till the time these investors get accommodated into the new regime.

"Sophisticated" or accredited investors (AIs) are individuals who have a higher understanding of the risks associated with complex financial products. To qualify as an accredited investor, the Securities and Exchange Board of India (Sebi), India's capital markets regulator, has set minimum thresholds for net worth and annual income.

"By mandating only accredited investors in angel funds, Sebi is aiming for higher credibility and better governance, but the added formalities of accred...