Everything You Need To Know About Large Value Funds (LVF)

India’s venture capital firms now have a new type of fund structure that fits how serious capital actually behaves.

For years, most AIF (Alternative Investment Fund) rules were written assuming every investor needed a lot of hand-holding and standardised protection. That is fair for smaller cheques and first-time investors. It is less useful when you are dealing with large family offices, institutions and ultra-HNIs who already invest globally and have their own advisors.

On 8 December 2025, SEBI issued a circular on Modalities for migration to AI-only schemes and relaxations to Large Value Funds for Accredited Investors, which became effective immediately.

In simple words, this circular tells us:

• If a fund scheme takes money only from Accredited Investors, SEBI is willing to lighten the rulebook.
• If those investors also write large tickets and the scheme qualifies as a Large Value Fund (LVF), the rules become lighter still.

For venture and growth managers, this is not just a compliance update; it is a way to run India-domiciled funds with less friction and more flexibility, while staying fully within the SEBI framework.

What are AIs, AI-only schemes and LVFs?

Let us keep definitions simple.

• An Accredited Investor (AI) is someone SEBI considers financially sophisticated. They meet specific thresholds for income, net worth or size and are recognised through an accreditation process that SEBI introduced earlier for AIFs and other products.
• An AI-only scheme is an AIF scheme that takes money only from such Accredited Investors. No one else can invest.
• A Large Value Fund (LVF) is a special type of AIF scheme that:
  • onboards only Accredited Investors and
  • takes a minimum commitment of ₹25 crore per investor.

Earlier, the LVF minimum was ₹70 crore. SEBI’s 2025 accredited-investor reforms and the Third Amendment to the AIF Regulations brought it down to ₹25 crore to make the structure usable, without diluting the sophistication of the investor base.

SEBI also wants these schemes to be clearly visible:

• AI-only schemes must carry “AI only fund” in the scheme name.
• LVFs must carry “LVF” in the scheme name, for example, “ABC Growth Fund LVF”.

Anyone reading the name immediately knows that this scheme is meant only for Accredited Investors and runs under a lighter rule set.

There is one more important, practical rule:

If an investor qualifies as an Accredited Investor at the time of joining an AI-only scheme or LVF, they are treated as an AI for the entire life of that scheme, even if their wealth later dips below the thresholds.

That gives both the investor and the fund manager certainty. You do not have to re-test or worry that one investor’s status change will suddenly knock the scheme out of the AI-only/LVF bucket.

What exactly did SEBI relax for LVFs?

The December 2025 circular, read together with SEBI’s earlier board-level proposals, introduces several concrete relaxations for LVFs for Accredited Investors.

The two major benefits are:

1. No standard PPM template
   A normal AIF has to use SEBI’s standard Private Placement Memorandum (PPM) template and file it through a SEBI-registered merchant banker. LVFs are now exempt from that template requirement.
2. No annual PPM audit
   For normal schemes, SEBI mandates an annual audit to check if the fund is following the PPM in letter and spirit. LVFs are exempt from this annual PPM audit.

And importantly, these two exemptions:

• apply automatically to qualifying LVFs and
• do not require individual waivers from investors.

So a manager does not need to collect separate waiver letters or side letters just to use these benefits.

From SEBI’s point of view, this is a trade-off. If every investor is a large Accredited Investor with their own capability to review documents, the regulator does not need to micro-standardise the PPM format or insist on an annual PPM audit in the same way as it does for broader AIFs.

Alongside this, the new Accredited Investors Only Fund (AI-only) framework notified via the SEBI (AIF) Regulations, 2012 (Third Amendment) Regulations, 2025 and explained in the same 2025 material and law-firm summaries, introduces other flexibilities that also apply where a scheme is structured as an AI-only fund or LVF. These include:

• Relaxed certification requirements for the key investment team of managers who run only AI-only schemes (including LVFs), compared to the standard NISM certification obligation.
• Removal, for AI-only schemes, of the earlier cap on the number of investors under the usual 1,000-investor limit, as long as all investors in the scheme are Accredited Investors.
• A clearer allocation of operational responsibility between trustee and investment manager in the AI-only context, as set out in the amended AIF Regulations.

These are technical shifts, but together they move LVFs and other AI-only schemes into a “light-touch” regulatory lane, while keeping them inside the AIF framework.

Why this matters for venture capital

For a venture capital or growth equity firm, all this translates into three very practical advantages.

a) Lower ongoing compliance cost

The standard PPM template is detailed, prescriptive and often needs external advisors to navigate. The annual PPM audit adds another recurring line item. For LVFs, both of these drop away.

That means:

• fewer hours spent rewriting documents to fit a template,
• fewer back-and-forth with auditors on whether every clause matches the template perfectly and
• lower external legal and audit bills over the life of the fund.

This is not about “avoiding regulation”. The fund still reports to SEBI and follows the AIF Regulations. It is about cutting the format-driven work that does not add much for large, sophisticated investors.

b) Better fit for serious capital

The kind of investors who can write ₹25 crore-plus tickets and qualify as AIs are usually not new to this game. They may already be LPs in funds in Delaware, Singapore, Luxembourg or ADGM.

Those investors are used to:

• PPMs that are tailored to the strategy,
• negotiated terms instead of one rigid template and
• flexibility around reporting format and co-investment rights.

Because LVFs are free from the standard template and PPM audit, an India-domiciled LVF can be drafted to look and feel much closer to these global structures. The manager can write in clear English, add the sections that matter for their strategy and LPs and skip the boilerplate that is there “just for the template”.

That makes it easier to position an Indian LVF as a credible alternative to an offshore vehicle.

c) Faster decision-making and fund operations

Speed matters in venture and growth investing. A hot round can come together in weeks or even days. Anything that reduces internal friction helps.

LVFs help on two fronts:

• At the fund formation stage, you are not wrestling with a rigid PPM template or waiting on an annual “PPM clean-up” to launch a new scheme for Accredited Investors.
• At the ongoing operations stage, your legal and compliance bandwidth is less tied up in format-driven tasks, leaving more time for real risk work: due diligence, conflicts checks and portfolio monitoring.

In a market where global funds are increasingly active in India, that extra speed is a real edge.

How migration works for existing schemes

SEBI has not limited LVFs to new schemes. The December 2025 circular explicitly sets out how existing AIF schemes can move into the AI-only / LVF lane.

The steps are straightforward but strict.

Eligibility check

• Every existing investor in the scheme must qualify as an Accredited Investor.
• For LVF treatment, each investor must also meet the ₹25 crore commitment threshold.

Positive consent from all investors

• The scheme can only convert to AI-only or LVF status if every investor gives explicit consent. There is no “deemed consent” or opt-out path here.

Rename the scheme

• Once consent is in place, the manager updates the scheme name to add “AI only fund” or “LVF”, depending on the route chosen.

Notify SEBI and the market infrastructure

After conversion, the AIF must:

• inform SEBI of the change within 15 days and
• ensure that depositories and other relevant intermediaries also update their records.

Reflect it in the Compliance Test Report (CTR)

Future CTRs filed by the AIF must confirm that the scheme complies with the circular and with the conditions for AI-only/LVF status.

There is also a rule on fund life. AI-only schemes, including LVFs, can have a maximum extension of five years in total, counting any extensions taken before conversion. That gives managers room for long-duration bets but prevents “zombie” funds that linger indefinitely.

For a VC firm with a relatively concentrated, large-ticket scheme already backed mostly by big family offices or institutions, this migration path is attractive. It lets you modernise the scheme’s regulatory treatment without starting from scratch.

What about investor protection?

It is natural to ask: if SEBI is relaxing rules, is investor protection being diluted?

The answer is that protection is being recalibrated, not removed.

For LVFs and AI-only schemes:

• Only Accredited Investors are allowed in, so there is no retail money in these vehicles.
• These investors are assumed to have their own advisors and internal processes to assess risk.
• SEBI still oversees the AIF, receives periodic reports and expects compliance with core AIF Regulations, including KYC, AML, concentration norms, valuation and related areas.

What changes is the amount of regulatory scaffolding around documents and some process requirements that were originally built with smaller or less experienced investors in mind.

There is also built-in transparency:

• The naming convention (“AI only fund”/“LVF”) tells anyone looking at the scheme that this is an accredited-investor-only product with a lighter framework.

In other words, SEBI is drawing a clear line: full-strength, highly standardised protection for schemes with broader investor bases; more flexible, principle-driven supervision for schemes that are deliberately restricted to large, sophisticated investors.

How a VC firm can practically use LVFs

If you run or are planning a venture or growth platform, a simple decision lens looks like this.

Who are your core investors?
If you mostly raise from large family offices, UHNIs, corporates and global LPs who are comfortable with ₹25 crore-plus cheques and easily meet AI criteria, LVFs are a natural fit. If you need to mix in smaller investors who cannot be accredited, you probably need a separate, standard AIF scheme alongside.

What is your strategy?
LVFs work best where ticket sizes are bigger, portfolios are more concentrated and holding periods can be long. For example, late-stage venture, growth equity, climate infrastructure or specialised tech strategies. For micro-VC or very early-stage strategies with many smaller cheques, LVFs may be more niche.

Do you value customisation and speed?
If you want to harmonise your India vehicle with global structures, negotiate PPM terms with LPs and avoid template-driven audits, LVFs give you that room. If your LPs are primarily domestic and prefer heavily standardised documents, you may be fine with a regular AIF.

Used thoughtfully, a platform can even run both: a standard AIF scheme for a broader domestic base and an LVF for large Accredited Investors who want more customised terms.

The bigger picture: why LVFs are a real upgrade for India

Seen in isolation, each clause in the December 2025 circular looks technical: exemptions from a template here, a consent process there. Taken together, they amount to a clear message from SEBI:

“If you are raising money only from large, Accredited Investors, we will give you more flexibility and expect you and your investors to take more responsibility.”

For India’s venture ecosystem, that is a big step.

It reduces the incentive to default to offshore fund domiciles purely for flexibility. It makes it easier for global capital to participate in India through India-regulated vehicles that still feel familiar. And it lets serious venture and growth managers spend more of their time on finding and supporting great companies and less on re-formatting documents to satisfy a one-size-fits-all template.

Put simply:

LVFs are SEBI’s way of saying “we trust grown-ups to behave like grown-ups”.

Venture capital firms that understand and adopt this structure early will have an advantage in cost, in speed and in their ability to offer India-centric, globally credible products to the investors who matter most.