“You now need to take a SEBI-approved exam if you want to start a fund in India” said my slightly panic-stricken lawyer

Starting a regulated VC fund is not easy. You need to have a detailed application running into 100s of pages. You need to form multiple entities as approved by the regulator. Most importantly, you need to have people willing to invest in your fund.

Now there was new curve ball, a new exam on regulations, law, tax, accounting and investing

We were on track to make our SEBI application by late May. But as we were preparing to file our application, SEBI dropped this unexpected notification. I asked my lawyers if we would also need to take it, as we were just a few weeks away from applying.

“No, it’s effective from today - and only partners are allowed to take it”

I took my last online exam in 2013, the CAT. My last exam was in 2016 in B-School. 8 years later, I was asked to take another exam. I wondered about other founding partners at VC firms in their late 50s. I assumed it would not be challenging.

The book was a 550-page dense tome covering everything connected to being a fund manager

Clearly, I was wrong. I didn’t want to delay our SEBI application. But along with everything, I also needed to prepare for this exam. To not delay, I decided to book an exam date as early as possible. The first available one was on 26th May. The notification was out on the 11th.

I had 15 days to prepare.

Whether it would turn out to be smart or foolhardy would be known on the 26th. As we filled reams of documents for the application during the day, I studied for the exam at night. I learnt about AIF structures, tax rules, computing waterfalls, obscure vehicles, what filings need to be done. Don’t get me wrong, I enjoy exams. But I was like a retired cricketer who may be past his prime. In the world of reels, I would sit through 3 hours. As the exam finished on the 26th, I pressed finish.

The screen froze, then loaded “PASS” with a solid score on the scoreboard

I would be lying if I said I wasn’t relieved. Unlike the JEE or CAT, which were family affairs, this one was simply a small business milestone. Instead of just family, I was calling my lawyer and tax teams to tell them. As we applied to SEBI, we now had this exam result as well. People told us it could take 6 months to get the approval.

We got it in 6 weeks.

I think the exam has a big part to play. SEBI now moves lightning fast, unlike what people think of “government”. It is democratising access to starting a fund. I think almost all of what I learnt during those 15 days are extremely useful for fund managers.

Starting something has never been more accessible in India, even if it is a VC fund