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Can You Announce Your Fundraise on LinkedIn? What Indian Law Actually Allows When You Raise From Angels, Communities and Platforms
A LinkedIn post saying "we are raising, DM for the deck" can breach the Companies Act. What Section 42 allows, why equity crowdfunding is not legal in India, and how to talk about your raise without a penalty.
Published 28 September 20265 min read
The short answer
An Indian private company raises money through a private placement under Section 42 of the Companies Act, which must be offered only to identified persons, no more than 200 in a financial year, and must not be advertised through any media, marketing or distribution channel. There is no legal equity crowdfunding route for Indian startups. You can announce a closed round and talk about your company; you cannot publicly solicit investment in a live round.
Who this is for: Founders raising angel or seed rounds from their network, communities, social media or online platforms.
Summary: what most founders miss
- "We are raising, DM me if interested" on LinkedIn or in a large WhatsApp group can amount to public solicitation of a private placement, which Section 42 prohibits.
- The 200-person limit counts everyone you make an offer to in a financial year, not just those who invest. Excluded are qualified institutional buyers and employees under an ESOP scheme.
- India has no SEBI framework for equity crowdfunding. Registrars and SEBI have acted against platforms and companies that offered unlisted securities to the public.
- Angel networks and platforms that stay compliant usually operate through SEBI-registered angel funds or introduce investors privately, not through open listings.
- Announcing a round after it closes, with your investors' consent, is fine. So is talking about your business. The line is soliciting investment from the public in a live round.
Every week, Indian founders post some version of "We're raising our seed round. Looking for angels who believe in the future of X. DM me." Most assume this is harmless networking. Legally, it can be something else: an advertisement for a private placement, which Indian company law specifically prohibits.
This is one of the least discussed rules in Indian fundraising, and one of the most frequently broken.
What does Section 42 actually say?
Every issue of shares, CCPS or convertibles by a private company to outside investors is a private placement under Section 42 of the Companies Act, 2013. The core conditions:
| Rule | What it means in practice |
|---|---|
| Offer only to identified persons | The board must identify the persons to whom the offer is made, and the offer letter (Form PAS-4) is addressed to them by name |
| Maximum 200 persons per financial year | Counts every person offered, whether or not they invest; qualified institutional buyers and employees under an ESOP scheme are excluded |
| No public advertisement or media | The company must not use "public advertisements or utilise any media, marketing or distribution channels or agents" to inform the public about the issue |
| Money only from the investor's own bank account | No cash, no third-party payments |
| Separate bank account, allotment within 60 days, return of allotment within 15 days | Money cannot be used until the return of allotment is filed |
So, can you post about your round on LinkedIn?
| Communication | Generally fine | Risky or prohibited |
|---|---|---|
| Announcing a closed round with investor consent | Yes | |
| Posting about your product, growth and hiring | Yes | |
| "We are raising, DM me to invest" to thousands of followers | Can be public solicitation of a private placement | |
| Posting your deck, valuation and minimum cheque publicly | Looks like an offer to the public | |
| Pitching in a closed room of 30 invited angels | Yes, if each potential investor is then identified and the 200 limit respected | |
| Sharing a round in a 5,000-member founder WhatsApp group | Effectively a public channel | |
| Listing your live round on an open website where anyone can sign up and invest | This is what regulators have acted against |
The distinction is not about the platform. It is about whether you are making, or inviting, an offer of securities to the public at large rather than to specific people you have identified.
Is equity crowdfunding legal in India?
No. SEBI consulted on a crowdfunding framework in 2014 but never introduced one. There is no legal route for an Indian private company to raise equity from the general public online. Donation-based and reward-based crowdfunding are different and are not securities offers.
Regulators have acted on this. In 2024, the Registrar of Companies penalised companies that used online platforms to tell the public about private placements, including cases involving compulsorily convertible debentures offered through a platform, "community" stock plans offered widely to users, and structures where an intermediary entity down-sold shares to dozens of investors to get around the 200 cap. In November 2024, SEBI also issued an interim order against unregistered online platforms selling unlisted debt securities to the public, treating them as public offers in substance.
How do compliant angel platforms work, then?
Most established angel platforms in India now work in one of two ways. Either they introduce a curated set of investors privately to each startup, with the startup making a private placement to identified persons, or they pool investors into a SEBI-registered angel fund, which then invests in the startup as a single shareholder. The second route also keeps your cap table clean. SEBI tightened the angel fund rules in September 2025; see SEBI's New Angel Fund Rules.
How to raise from your network without breaking the rules
- Build a target list of named investors before you start. That list is your "identified persons".
- Talk about your company publicly as much as you like. Talk about the round privately.
- Send the deck and terms only to people on the list, and issue PAS-4 only to those who commit.
- Count every person you formally offer to. Keep well under 200 in the financial year, including earlier rounds that year.
- If you want many small cheques, use a SEBI-registered angel fund or pool rather than a long cap table of individuals.
- Announce the round after it closes, with investor consent.
Case study
The community round that became a compliance project
D2C personal care brand with a large Instagram following, raising ₹2 Cr from customers and fans
Situation
The founders wanted to reward loyal customers by letting them invest. They posted a link to a form inviting followers to "own a piece of the brand" with a ₹50,000 minimum. Over 600 people filled the form.
What was missed
Their lawyer flagged that the post was a public advertisement of a private placement, and the number of people offered far exceeded 200. Accepting the money would have made the issue non-compliant from day one.
What changed
They closed the form, returned no money because none had been collected, and restructured: a SEBI-registered angel fund's scheme took the round as a single investor, with accredited individuals from the founders' network participating through it, while customers were offered a loyalty programme instead of equity.
Outcome
The round closed at ₹1.6 Cr with one line on the cap table. The Series A lead's lawyers later noted the clean structure as a positive.
The lesson
Your community can be your best marketing and your worst cap table. Keep securities offers private and structured.
Illustrative case. Figures are representative of patterns in Indian rounds, not a specific company.
Related: Angel Tax Is Gone: The Tax and Compliance Traps. If you are planning a community or angel-heavy round, talk to us about structuring it cleanly.
Read next: the deposit rules for loans from friends and directors. Preparing to raise? See how our seed and angel round support works.
Questions founders ask us
Can I post on LinkedIn that my startup is raising funds?
Posting that you are raising and inviting anyone to invest can amount to publicly advertising a private placement, which Section 42 prohibits. Talking about your company is fine, and announcing a closed round with investor consent is fine. Keep the live round conversation private and targeted.
How many investors can a private company raise from in India?
An offer can be made to a maximum of 200 persons in a financial year, excluding qualified institutional buyers and employees under an ESOP scheme. This counts people offered, not just people who invest.
Is equity crowdfunding allowed in India?
No. India has no SEBI framework for equity crowdfunding, and regulators have acted against platforms that offered unlisted securities to the public. Reward-based and donation-based crowdfunding are different and are not securities offers.
Can I raise from 50 small angels in one round?
Legally possible if each is identified and the 200 limit is respected, but it creates a heavy cap table and closing process. A SEBI-registered angel fund pooling those investors is usually cleaner.
What happens if we already broke Section 42 in an earlier round?
The default can often be compounded, but it takes time and the penalty can be significant. Fix it before your next round's diligence finds it.
About the author
Written by the Alphamark Ventures team, a fundraising advisory firm helping founders raise seed, angel and pre-Series A rounds, with a focus on consumer, consumer tech and consumer AI. Figures are as of the date shown and are for general information; this is not legal, tax or investment advice.
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