Startups and their early-stage lifelines — angel networks — will now have to walk a thin line to be on the right side of law. A few weeks ago, Sebi told these networks that they can in no way violate the rules of 'private placement' of securities — a stricture that would restrict these crowdfunding agencies as well as the startups they help to raise money from offering and selling stocks to more than 200 investors. Networks that break the rules will be labelled as "unrecognised stock exchanges" and penalised for misusing their platforms; along with their startup clients, the networks can be pulled up under various laws like Companies Act, Sebi Act, and Securities Contract (Regulation) Act.