A Category 1 AIF is a SEBI-registered fund that invests in startups, SMEs, infrastructure and other sectors the government treats as economically or socially valuable. The minimum investment is Rs 1 crore. Category I AIFs in India held Rs 1,13,041 crore in commitments as of 30 June 2026, up 7.4% in a single quarter (SEBI data).
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Category I at a glance
Key Numbers
A Cat 1 AIF is a close-ended fund with a Rs 1 crore minimum ticket, a minimum life of three years and a cap of 1,000 investors per scheme. These five numbers decide whether the category fits your portfolio.
Rs 1 crore
Minimum investment per investor
Rs 20 crore
Minimum corpus for each scheme
3 years
Minimum tenure, close-ended only
1,000
Maximum investors in one scheme
Rs 1.13 lakh cr
Category I commitments, 30 June 2026
Sources: SEBI (Alternative Investment Funds) Regulations, 2012 as amended; SEBI AIF data for the quarter ended 30 June 2026, reported by Cafemutual, 21 September 2026.
Definition
A Category I alternative investment fund is a privately pooled investment vehicle, registered with SEBI under the AIF Regulations, 2012, that invests in start-ups, early-stage ventures, SMEs, infrastructure, social ventures and stressed assets. SEBI groups these sectors together because it sees them as socially or economically desirable.
Unlike a mutual fund, a Category I AIF does not sell units to the public. It raises money through a private placement memorandum (PPM) from a limited group of investors, and it runs for a fixed term. Your money is committed up front and called in stages as the manager finds companies to back.
Category I funds cannot borrow to boost returns, which sets them apart from Category III AIFs. They also hold mainly unlisted securities, so returns come from companies growing over several years and then being sold or listed. That is the trade: long-term capital appreciation in exchange for low liquidity.
New to alternatives? Start with our guide to Alternative Investment Funds in India, then come back to compare the categories.
Sub-Categories
SEBI recognises six Category I AIF types open to private investors. Each one backs a different part of the economy and carries a different mix of risk, ticket size and holding period.
A venture capital AIF backs start-ups and early-stage companies with new products or business models. SEBI requires it to put at least two-thirds of investable funds into unlisted equity of venture capital undertakings or companies listed, or proposed to be listed, on an SME exchange.
An angel fund AIF pools money from accredited investors to back very young start-ups. Since SEBI's September 2025 amendment, angel funds sit directly under Category I, accept only accredited investors, and invest between Rs 10 lakh and Rs 25 crore in each start-up.
An SME AIF invests in small and medium enterprises, including companies listed or planning to list on the SME platforms of the stock exchanges. It is the smallest Category I segment by commitments, which can mean less competition for good deals.
An infrastructure AIF funds roads, renewable energy, ports, logistics and similar projects or the companies that build them. Cash flows often come from contracted revenue, so the profile tends to be steadier than venture capital, but holding periods are long.
A special situation fund buys stressed loans and securities of companies under resolution and works to recover value. It needs a Rs 100 crore corpus and a Rs 10 crore minimum ticket (Rs 5 crore for accredited investors). It was the fastest growing Category I type last quarter.
A social impact AIF invests in businesses that aim for a measurable social or environmental outcome, such as affordable healthcare, education or rural livelihoods, alongside a financial return. Some schemes also support not-for-profits listed on the Social Stock Exchange.
Where Category I money is committed, by sub-category
Rs 1,13,041 crtotal, 30 June 2026Source: SEBI AIF statistics for the quarter ended 30 June 2026, as reported by Cafemutual on 21 September 2026. CDMDF (Corporate Debt Market Development Fund) is a backstop facility funded by mutual funds and is not open to individual investors.
Investment Options
ALTPORT works with 250+ AIF and PMS fund partners, and Category I schemes open and close fundraising through the year. Start with a fund already on the platform, or ask for the full list of Category I opportunities open right now.
On ALTPORT · Category I AIF
A close-ended, long-only Category I AIF that follows a venture capital approach focused on India's SME ecosystem, across pre-IPO, IPO and listed SME opportunities, using its LMVT framework.
Updated Every Week
Most Category I funds raise money for a limited window before their final close. Our research desk tracks which ones are open, and sends you only those that pass the 3Is review and fit your ticket size.
Fund details are taken from the fund's page on ALTPORT. Inclusion here is not a recommendation; suitability depends on your profile, and each scheme's PPM is the final reference. Looking for the wider list? See our top AIF funds in India.
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Eligibility
Any resident Indian, NRI, foreign national, company, trust, LLP or HUF can invest in a Category I AIF, provided they commit at least Rs 1 crore and complete the fund's KYC. A few sub-categories set their own entry rules.
For HNIs who already hold listed equity and mutual funds, a Category I AIF adds exposure to private companies that the listed market cannot offer. We usually suggest it as one sleeve of a wider alternatives allocation, sized so that a long lock-in never strains your liquidity.
How AIFs fit an HNI portfolioNRIs can invest in Category I AIFs on a repatriable or non-repatriable basis through NRE or NRO accounts, subject to FEMA rules and the fund's own policy on overseas investors. Our NRI desk handles KYC, FATCA declarations and remittance paperwork without an India visit.
AIF investment guide for NRIsFamily offices often build a Category I programme across vintages, committing to two or three funds a year so that capital calls and exits overlap. We help map commitments, track drawdowns across managers and consolidate reporting into one view.
Family office solutionsSEBI Rules
The Category I AIF minimum investment is Rs 1 crore, and every scheme must be close-ended with a tenure of at least three years. The table below sets out the other SEBI rules that protect you as an investor.
| Rule | What SEBI requires |
|---|---|
| Minimum investment | Rs 1 crore per investor (Rs 25 lakh for employees or directors of the fund or manager) |
| Minimum corpus | Rs 20 crore per scheme (Rs 100 crore for special situation funds) |
| Structure | Close-ended only, minimum tenure of 3 years |
| Tenure extension | Up to 2 years, with approval of two-thirds of unit holders by value |
| Number of investors | Maximum 1,000 per scheme |
| Sponsor contribution | Sponsor or manager keeps a continuing interest of 2.5% of corpus or Rs 5 crore, whichever is lower |
| Concentration limit | No more than 25% of investable funds in one investee company |
| Leverage | No borrowing to invest; only short-term borrowing for temporary needs |
| Offer document | Private placement memorandum (PPM) filed with SEBI through a merchant banker |
| Valuation and reporting | Periodic NAV and portfolio reporting to investors as set out in the PPM |
A Category I AIF has no early exit for investors. Your money stays in for the full tenure, which is often 7 to 10 years for venture capital funds, plus any extension. Units can in theory be transferred, but there is no active secondary market, so plan for capital you will not need back soon.
Category I AIFs cannot borrow to invest. They may borrow only for temporary funding needs: up to 10% of investable funds, for no more than 30 days, no more than four times a year, with a 30-day gap between two borrowings (SEBI, August 2024).
Tell us how much you plan to commit and for how long. We will match you with open schemes whose minimum, tenure and drawdown pace suit you.
Check My FitYou sign a capital commitment, but the fund asks for the money in parts as it finds deals. This drawdown schedule means your full Rs 1 crore is rarely invested on day one. The timeline below is an illustration only; the actual schedule is in each fund's PPM.
Swipe the timeline sideways to see all years.
Process
Investing in a Category 1 alternative investment fund through ALTPORT takes four steps and usually about two weeks from first call to signed commitment, depending on how quickly KYC documents come in. New to the process? Read how to invest in an AIF.
A call to map your current portfolio, goals, liquidity needs, tax position and how long you can stay invested. No product enters the conversation until this is clear.
Open Category I funds are run through our 3Is review. You get a short list with manager background, fees, tenure and drawdown terms, plus a call with the manager.
Read the PPM, sign the contribution agreement and complete KYC online. For NRIs we also handle FATCA and remittance documents. The first drawdown follows the fund's schedule.
We follow capital calls, NAV updates and portfolio changes, flag anything that needs your attention, and review how the fund fits your wider portfolio each quarter.
Free Second Opinion
A Category I commitment can lock up Rs 1 crore or more for close to a decade. Before you sign a contribution agreement, let our research team look at the fund, the manager and how it fits what you already own.
Open Category I funds that passed our 3Is review, filtered for your ticket size, investor status and time horizon.
Send Me The ShortlistResponse within 2 working hours.
Already have a Category I PPM on your desk? We will check the manager, the fee terms and the drawdown plan, and tell you what we would ask before investing.
Review My FundNo fee. No obligation.
Tax
Category I AIF taxation in India follows a pass-through model: income other than business income is taxed in your hands as if you had invested directly, and the fund itself does not pay tax on it. Business income, if any, is taxed at the fund level.
Pass-through status sat in Section 115UB of the Income-tax Act, 1961. From 1 April 2026, the Income-tax Act, 2025 carries it in Section 224, which covers funds registered as Category I or Category II AIFs. Income keeps its character when it reaches you, so a capital gain stays a capital gain and interest stays interest. The Finance Act, 2025 also confirmed that securities held by Category I and II AIFs are capital assets, so gains on them are taxed as capital gains, not business income. Non-business losses pass through to you only if you have held the units for at least 12 months; business losses stay with the fund.
The fund deducts TDS at 10% on income distributed to resident investors. This was Section 194LBB under the old Act and is now Section 393 of the Income-tax Act, 2025. TDS is not your final tax; you report the income at the applicable rate and claim credit for the TDS.
For NRIs, TDS applies at the rates in force for non-residents, and you may claim lower treaty rates under the relevant DTAA if you submit a Tax Residency Certificate and Form 10F on time. For a full walkthrough, read our AIF taxation guide for 2026.
Rates apply to resident individuals for transfers on or after 23 July 2024, before surcharge and cess. Tax laws change; confirm your position with a chartered accountant.
Upside
The main benefit of a Category I AIF is access to private-market investments that most investors cannot reach on their own.
Downside
The biggest risk of a Category I AIF is that your money is locked in for years, in companies that may fail.
Compare
Category I AIFs back sectors SEBI wants to grow and cannot use leverage, Category II covers private equity and private credit, and Category III runs trading strategies that may use leverage. Here is how they compare.
| Feature | Category I AIF | Category II AIF | Category III AIF |
|---|---|---|---|
| What it invests in | Start-ups, SMEs, infrastructure, social impact, stressed assets | Private equity, private credit, real estate, funds of funds | Listed equity and derivatives, long-short, hedge strategies |
| Structure | Close-ended | Close-ended | Open or close-ended |
| Minimum tenure | 3 years | 3 years | No minimum for open-ended |
| Leverage | Not allowed, except temporary borrowing | Not allowed, except temporary borrowing | Allowed within SEBI limits |
| Taxation | Pass-through (Sec 224) | Pass-through (Sec 224) | Taxed at fund level |
| Liquidity | Low, money returned at exits | Low to moderate | Higher for open-ended schemes |
| Commitments (30 June 2026) | Rs 1,13,041 crore | Rs 13,02,837 crore | Rs 3,37,192 crore |
Read more: Category I vs II vs III explained · Category II AIF · Category III AIF · What is a Category 2 AIF?
A Category I AIF suits patient capital that can sit in private companies for years; PMS and mutual funds suit investors who want listed markets and the option to exit.
| Feature | Category I AIF | PMS | Mutual Fund |
|---|---|---|---|
| Minimum investment | Rs 1 crore | Rs 50 lakh | As low as Rs 100 to Rs 500 |
| What you own | Units of a pooled fund holding mainly unlisted companies | Listed shares held directly in your demat account | Units of a pooled fund, mainly listed securities |
| Liquidity | Locked in for the fund's tenure | Can exit any time, subject to exit load | Daily liquidity for open-ended schemes |
| Regulated by | SEBI AIF Regulations, 2012 | SEBI PMS Regulations, 2020 | SEBI Mutual Fund Regulations, 1996 |
| Best suited to | Long-term growth, private-market exposure | Concentrated listed equity with a personal portfolio | Core, diversified, liquid investing |
Go deeper: Mutual fund vs PMS vs AIF · AIF vs PMS · Portfolio Management Services
Due Diligence
SEBI publishes the full list of registered AIFs, including every Category I fund, on its website at sebi.gov.in under its list of registered intermediaries. Each entry shows the fund's name, registration number and category, so you can confirm a fund is genuine before you invest.
A place on the SEBI list confirms registration, not quality. Before committing, work through these checks:
We do not rank Category I funds on past returns alone, because early-stage portfolios take years to show their true value. Every fund goes through our 3Is review before it reaches a shortlist.
Frequently Asked Questions
Open Category I AIF funds in India change through the year, because each fund raises money only for a limited window before its final close. VentureX Fund, a Category I AIF focused on India's SME ecosystem with a 4 + 2 year tenure, is available on ALTPORT now. Other venture capital, angel, SME, infrastructure and special situation funds open and close regularly, so a list goes out of date quickly. Request the current Category I shortlist to see which funds are open this week.
Choose a Category I AIF by matching its strategy, ticket size and tenure to your goals and how long you can stay invested. Start with the sub-category: venture capital and angel funds aim for high growth with high risk, while infrastructure funds tend to be steadier. Then check the fund's minimum investment, tenure of 7 to 10 years or more, drawdown pace, fees and the manager's realised exits from earlier funds. Our guide on choosing an AIF for your risk appetite explains each step.
Yes, ALTPORT compares Category I AIF funds side by side before you invest. Our research team puts open funds through the 3Is review: Investment Manager Style, Investment Portfolio Quality and Investment Performance Consistency. Fewer than 2% of the managers we evaluate pass this filter. You then get one view of each fund's fees, hurdle rate, tenure and drawdown schedule, plus a call with the manager. You can also compare AIF performance on our website.
The minimum investment for a Category I AIF is Rs 1 crore per investor. Employees and directors of the fund or its manager can invest from Rs 25 lakh. Two sub-categories follow their own rules: angel funds accept only accredited investors and set no minimum ticket, and special situation funds need Rs 10 crore, or Rs 5 crore for accredited investors. You do not pay the full amount at once, because the fund calls it in parts over time. Read more on AIF minimum investment.
Resident Indians, NRIs, foreign nationals, HUFs, companies, trusts and LLPs can invest in Category I AIFs, as long as they commit at least Rs 1 crore and complete the fund's KYC. You can also invest jointly with a spouse, parent or child if the joint commitment is Rs 1 crore. NRIs invest through NRE or NRO accounts under FEMA rules. In simple terms, these funds suit investors who can leave money untouched for 7 to 10 years. See our AIF guide for NRIs.
You can invest in a Category I AIF through ALTPORT in four steps that usually take about two weeks. First, an understanding call about your goals, liquidity and tax position. Second, a researched shortlist of open funds that passed our 3Is review. Third, digital onboarding, where you read the PPM, sign the contribution agreement and complete KYC online. Fourth, quarterly tracking of drawdowns, NAV and portfolio changes. Read how to invest in an AIF or start with step one.
Yes, ALTPORT sends a free Category I AIF shortlist matched to your investment budget. Tell us how much you plan to commit, from Rs 1 crore to above Rs 10 crore, along with your investor status and time horizon. Our research desk then shares open funds whose minimum ticket, tenure and drawdown pace fit you, with manager background and fee terms. A member of our research team calls you within 2 working hours. Request your shortlist using the form at the top of this page.
Check the management fee, carried interest, hurdle rate, set-up and operating expenses, and GST on fees before investing in a Category I AIF. The management fee pays the manager every year, while carried interest is the manager's share of profits above the hurdle rate. Fund expenses and 18% GST on fees also reduce your net return. All of these are set out in the PPM. Read our guides to AIF fees and charges, hurdle rate and carried interest.
A Category I AIF locks in your money for the full life of the fund, with no early redemption. SEBI requires these funds to be close-ended with a minimum tenure of three years, and venture capital funds often run 7 to 10 years. Tenure can be extended by up to two more years with approval of two-thirds of unit holders by value. You get money back as the fund sells or lists its companies. Read more about the AIF lock-in period.
The main risks of a Category I AIF are illiquidity, start-up failure, valuation risk and manager risk. You cannot redeem early and there is no active secondary market. Many young companies fail, so returns often depend on a few big winners. Unlisted holdings are valued by models, not market prices, and results vary widely between managers. Returns are not guaranteed and you can lose capital, so invest only money you will not need for many years. See our guide to AIF liquidity.
Category I AIF income is taxed on a pass-through basis, which means income other than business income is taxed in your hands, not the fund's. Since 1 April 2026, this rule sits in Section 224 of the Income-tax Act, 2025, which replaced Section 115UB. The fund deducts 10% TDS on income paid to residents under Section 393, and long-term gains on unlisted shares held over 24 months are taxed at 12.5%. See our AIF taxation guide and TDS on AIF distributions.
You can verify a Category I AIF on sebi.gov.in, in SEBI's list of registered intermediaries under Alternative Investment Funds. Each entry shows the fund's name, SEBI registration number and category. Match these details with the registration number in the fund's PPM. Registration only confirms the fund is regulated, not that it is a good investment, so also review the manager, fees and portfolio. Our guide to reading an AIF PPM covers what to check.
Keep Learning
Angel Funds
SEBI Angel Fund Limits: No Extra Exposure Once Startup Status Ends
Read the updateTaxation
AIF Taxation in India 2026: Category I, II and III Tax Rules Explained
Read the guideCategory II
What Is a Category 2 AIF? Private Equity, Private Credit and Real Estate Explained
Read the explainerNRI
AIF Investment for NRIs
Read the NRI guideGet the current shortlist of open Category I funds, researched and matched to your profile.
Disclaimer: ALTPORT Experts Private Limited is an APMI registered distributor (APRN00074) and AMFI registered mutual fund distributor (ARN 171040). This page is for information only and is not investment, tax or legal advice, or an offer to sell units of any fund. AIF investments are subject to market and liquidity risk, and capital may be lost. Read the private placement memorandum and all scheme documents carefully, and consult your tax adviser before investing. Regulatory and tax figures are as of 14 October 2026.
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