Venture capital
Provides capital to start-ups and early-stage businesses under the scheme's mandate.
What to review: Company stage, follow-on funding, valuation and exits
Early-stage & impact · Category I
Category I AIF in India
Explore venture capital, SME, social impact and infrastructure strategies. Understand the mandate, investment horizon and risks before committing.
Category I / Explained
What Is a Category I AIF?
One regulatory category. Several distinct investment mandates.
A Category I Alternative Investment Fund is a SEBI-regulated pooled vehicle for areas considered socially or economically desirable. Its registered sub-category and PPM determine what a particular scheme can invest in.
- Scope
- Includes venture capital, SME, social impact and infrastructure funds, subject to applicable rules.
- Horizon
- Schemes are close-ended. Their tenure, capital calls and exit process are described in fund documents.
- Investor risk
- Capital and returns are not guaranteed. Private assets may be hard to value and sell.
Category I AIF Investment Strategies
SME funds
Focuses on small and medium enterprises that meet the fund's investment criteria.
What to review: Business quality, concentration and growth assumptions
Social impact funds
Invests in eligible social impact opportunities according to its stated objectives.
What to review: Impact measurement, financial terms and reporting
Infrastructure funds
Invests in infrastructure opportunities within the scheme's permitted scope.
What to review: Project execution, regulation, cash flows and tenure
How to Evaluate Category I AIFs
Ask for the latest PPM and verify the scheme's registration before comparing opportunities:
- Mandate: registered sub-category, eligible assets and investment limits.
- Manager: relevant experience, realised outcomes and team capacity.
- Portfolio: concentration, follow-on funding needs and diversification.
- Economics: fees, expenses, carry and distribution terms.
- Valuation: methodology, frequency and independent oversight.
- Exit: tenure, extensions, transfer restrictions and likely exit routes.
Investment Horizon and Liquidity
Category I AIFs are close-ended with a minimum three-year tenure under the AIF framework; a scheme may run longer. Investments can be called in stages, and there is generally no on-demand redemption. Eligibility, minimum commitment and transfer conditions should be checked against current regulations and the specific scheme documents.
Risks of Category I AIF Investments
Business risk
Early-stage companies and SMEs may miss targets or fail.
Project risk
Infrastructure investments may face approvals, execution or cash-flow delays.
Valuation
Private holdings may lack frequent, observable market prices.
Liquidity
Exits and distributions can take longer than expected.
Concentration
A small number of investments can have an outsized effect on results.
Frequently Asked Questions
Yes. Cat 1 and Category 1 are common short forms for Category I Alternative Investment Funds. Confirm the actual registration and sub-category in the latest official fund documents.
No. A start-up focus alone does not establish an AIF's registration category. Check the fund's SEBI registration and private placement memorandum (PPM).
Generally no. Category I AIF schemes are close-ended, and their tenure and transfer terms are set out in the fund documents. Investors should plan for limited liquidity.
No. Early-stage companies, SMEs, social impact investments and infrastructure projects can underperform. Delayed exits and loss of capital are possible.
Compare the registered sub-category, investment mandate, manager experience, portfolio concentration, fees, capital calls, valuation policy, tenure and exit approach using current scheme documents.
Discuss Category I AIF options
Tell us your investment horizon and preferred strategy. We can help you review current fund documents and suitability considerations.
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