About the Position

Description of Work: A senior associate who has a strong commercial background, can work independently and who will be responsible for their own client portfolio, developing client relationships and building a team.


  • 3/4 years post article experience in commercial law at a reputable firm.
  • Good understanding of commercial and legal aspects of transactional work.
  • Working experience in private equity, venture capital, mergers & acquisitions and generally the legal aspects of corporate finance is essential. Drive to be market-leading attorney is these fields.
  • Advanced computer knowledge with emphasis in MS Word, MS Excel and MS PowerPoint.
  • Excellent communication, reporting and interpersonal skills, verbal and written.
  • Ability to work independently and be proactive.
  • Ability to work within pressurized environment and adhere to tight deadlines.
  • Quality of work: accuracy, attention to detail.
  • Organisation: being meticulous in planning & prioritising work tasks.
  • Problem solving: anticipating and identifying problems, pro-actively solving them.
  • Leadership: managing, leading and building a team.
  • Consistently excel in the three core deliverables for senior team members: meeting and exceeding their own budget; managing team members to do quality work and also their targets; grow the value of the firm by bringing in new clients.

Primary competencies

  • High level transactional drafting and deal management experence.
  • Corporate finance transactions and specifically M&A work in mid-market environment; local and cross-border transactions
  • Fund raising (debt/equity).
  • Venture capital and private equity transactions – ability to negotiate and draft complex transactional documents without getting intimidated or overwhelmed.
  • Corporate restructuring.
  • Cross border transactions.

Secondary competencies

  • Joint venture deals – and the related sale of shares, shareholders’ agreements, partnerships.
  • Regulatory aspects with doing business across borders.
  • International expansion.
  • Ability to learn new areas of law and apply that to new jurisdictions.


  • LLB
  • LLM in commercial law and business courses will be advantageous but not a requirement.


  • Market related

Desired Skills

  • Commercial Law
  • Mergers & acquisitions
  • Drafting legal documents
  • Staff management
  • Cross border transactions

Desired Qualification Accreditation

  • Degree

Kindly send your motivation and CV to:



Description of Work:

A commercial law associate who can think independently and who will deliver bespoke start up legal services within a team environment.


  • Completed articles at a reputable firm.
  • At minimum 1 year’s post article experience in commercial law.
  • Comprehensive knowledge of the Companies Act and how that is applied to start up companies.
  • The candidate must show specific inclination to work with start-up companies.
  • A good understanding of legal issues facing start-up companies.
  • Excellent drafting skills.
  • Ability to work independently and be proactive.
  • Good communication, reporting and interpersonal skills, verbal and written.
  • Ability to work within pressurized team environment and adhere to tight deadlines.
  • Advanced computer knowledge with emphasis in MS Word and MS Excel.
  • Quality of work: accuracy, minimising level of review required by manager.
  • Organisation: being meticulous in planning and prioritising work tasks.
  • Problem solving: anticipating and identifying problems, pro-actively solving them.
  • Ability to learn new areas of law


Market related –  depending on skill level and experience (first year to third year post qualification)


May 2018


The Candidate must have their own transport and mobile phone

Application Process:

Each candidate will need to motivate their application by answering the following questions:

  1. What is a start-up lawyer?
  2. What commercial, legal skills should a start-up lawyer have? Please explain how you have these skills.
  3. What is the unique value which a start-up lawyer should display to a client?
  4. What skills or qualities do start-up lawyer have that are unusual for lawyers generally?
  5. What should the primary goals or values of a start-up lawyer be? Motivate why you have this goal, personally.
  6. How should the success of a start-up lawyer be measured?
  7. What steps would you take to build the public profile of a start-up law practice?
  8. What attributes do you think start-up clients want to see in their start-up lawyer?
  9. What do you think is the purpose of having a start-up team in a commercial law firm?

Kindly send your motivation and CV to



On 24 November, the Portfolio Committee on Trade and Industry published the draft National Credit Amendment Bill, 2018 and the Memorandum on the Objects of the Bill (the Bill) for public comment. The Bill establishes a procedure by which low income and over-indebted consumers under credit agreements (who may not qualify to undergo the debt review or sequestration processes) may apply for debt intervention.

The Bill provides for the National Credit Tribunal and National Credit Regulator to make a myriad of orders. Note that debt intervention orders will result in all qualifying credit agreements being suspended for an initial period of 12 months and, subject to a review of the consumer’s financial circumstances, may extend the suspension period for a further 12 months or make an order extinguishing the credit agreements, partially or in full, where the financial circumstances of the consumer have not improved. Further, where a credit agreement is subject to credit life insurance, the credit agreement may be suspended to allow for the consumer to claim from the insurance provider.

The Bill also implements criminal sanctions for certain contraventions of the National Credit Act, 2005.

The proposed amendments by the Bill will directly impact credit providers and consequences of the new provisions will need to be considered carefully.

The public has until 15 January 2018 to submit written comments to the Portfolio Committee on Trade and Industry where after public hearings will be held to discuss same.



This year we’ll be participating in National Wills Week from 11 – 15 September 2017.

For anyone who wishes to have a basic will drafted at no charge, all they’ll need to do is contact to schedule an appointment.

The attending practitioner will send a short questionnaire that each person is required to complete and return prior to any consultation.

Please note that this is a free service and is offered on a first come first serve basis.

Service agreements: why they are necessary and what they should cover

Service agreements: why they are necessary and what they should cover

If you are a service provider of any kind, regulating your engagement with your customers is crucial to show potential investors how you have secured your revenue stream and managed your risk. Investors are going to be interested in how you protect your revenue stream. They will typically assess how “water-tight” your agreements are with your clients in order to determine business level risk.

A service agreement is an example of a revenue contract. This is the agreement that describes how your company generates revenue in return for delivering services and describes the fees which you charge.

Some key considerations for a service agreement are as follows:

  1. Description of your services:

It is important to accurately describe your services so there is clarity and certainty regarding what it is your customers are paying for. It can sometimes work well to describe the services by referring to your website which then provides for a full description of the services in greater detail. This has the advantage of allowing you to evolve your services over time, and change the specific terms and pricing on your website (on notice to the client).

  1. Duration of the agreement:

How long do you expect the service agreement to be in place? Depending on the nature of the services rendered, it may be for a specific period or ongoing. Whether the contract can be renewed and on what terms should also be carefully considered together with termination rights. You will want to ideally strike a balance between easily terminating the relationship when it no longer suits you while still attracting and maintaining a constant revenue stream without too much unexpected disruption.

  1. Risk provisions:

You should consider what warranties you are willing to make with respect to the quality or outcome of your services. This will be specific to your service offering but you should also consider the industry in which you operate and what your average client would expect. Your appetite for risk and the level of risk associated with your services should also determine what warranties will be offered. Another related consideration is what your liability to your clients should be, whether you will have any liability at all and how you manage this.

The other considerations which we discuss with our clients for the purposes of drafting their service agreements include service levels, payment terms, exclusivity, IP and license arrangements, data and privacy matters and whether there are any specific regulatory aspects applicable.

We provide a Service Agreement Package to start-ups and through this process we are able to prepare bespoke service agreements applicable and appropriate for each client. We can also assist with reviewing and updating existing service agreements, if you are not sure whether your existing contract is up to scratch.

2017 Budget Speech implications for the externalisation of intellectual property (IP)

2017 Budget Speech implications for the externalisation of intellectual property (IP)

Relaxing the South African (SA) Exchange Control Regulations, in relation to IP in particular, is crucial for many of our start up clients (especially those operating in the software development and technology space). Up to now, SA resident companies could not export their IP to a non-resident, unless the approval of the Financial Surveillance Department (FSD) of the South African Reserve Bank (SARB) was obtained. This proved to be an insurmountable hurdle for many companies trying to externalise their businesses by moving them “offshore” for any reason, including that of attracting foreign capital investments.

The Exchange Control Regulations provide that when a SA resident (natural or juristic person) enters any transaction in terms of which capital, or any right to capital, is directly or indirectly exported (i.e. transferred by way of cession, assignment, sale transfer or any other means) from South Africa to a non-resident (natural or juristic person) such transaction falls in the ambit of the Exchange Control Regulations.

The export of “capital” specifically includes any IP right (whether registered or unregistered), which means the Exchange Control Regulations must be considered when dealing with an externalisation of IP.

The reasoning behind this regulation is that the offshoring of assets / capital belonging to SA residents amounts to an exportation of assets / capital and therefore erodes the asset base of the SA resident by way of a transfer of ownership from a SA resident to a non-resident. While this reasoning may have seemed sound, the application of the Exchange Control Regulations to the export of IP has led to many negative and unintended consequences for SA companies, and start ups in particular.

In the 2017 National Budget review the Government proposed that SA residents would no longer need the SARB’s approval for “standard IP transactions”. It was also proposed that the “loop structure” restriction for all IP transactions be lifted, provided they are at arms-length and at a fair market price. “Loop structure” restrictions prevent SA residents from holding any SA asset indirectly through a non-resident entity.

The SARB has started the process of relaxing the Exchange Control Regulations by issuing two circulars relating to IP. These latest amendments to the Currency and Exchanges Manual for Authorised Dealers mean that, under certain circumstances, approval for the exportation of IP can now be sought from Authorised Dealers (banks appointed by the Minister of Finance for exchange control purposes), as opposed to the FSD. This is good news for clients looking to restructure and offshore their IP, as the approval process should now be less administratively intense, less expensive and with faster turnaround times.

Approval can now be sought through an Authorised Dealer for:

  • a sale, transfer and assignment of IP;
  • by a SA resident;
  • to unrelated non-resident parties;
  • at an arm’s length and fair and market related price.

The Authorised Dealer will need to be presented with: (i) the sale / transfer / assignment agreement; and (ii) an auditor’s letter or intellectual property valuation certificate confirming the basis for calculating the sale price ((iii) together with any additional internal requirements).

For the approval of the licensing of IP by a SA resident to non-resident parties at an arm’s length and fair and market related price, the Authorised Dealer will need to be presented with: (i) the licensing agreement in question; and (ii) an auditor’s letter confirming the basis for calculating the royalty or licence fee ((iii) together with any additional internal requirements).

The second set of amendments provide that private (unlisted) technology (among others) companies in South Africa may now establish companies offshore without the requirement to primary list offshore in order to raise foreign funding for their operations. This effectively means that “loop structures” can now be created to raise loans and capital offshore, and these companies may hold investments in South Africa. Note that there are still certain requirements that must be met, for example, registration with the FSD.

Our commercial team has experience in making the necessary applications for exchange control approval. Feel free to get in touch if this is something on the horizon for your business.

Customers returning goods – what should you know as a supplier?

Customers returning goods – what should you know as a supplier?

You are a supplier of goods to customers – whether through a retail outlet at your business premises or online. The customer wants to return the goods purchased. Do you have an obligation in law to always allow the customer to return goods or are there exceptions? And what about the refund – should it be in full or can you deduct a “handling fee”? For defective goods, are you allowed to rather replace the goods? Can a customer return goods several months after the purchase date? These are all frequently asked questions in the industry which every new (or established) business should consider.

 The Consumer Protection Act 68 of 2008 (“CPA”) provides for a right to return goods only in specific circumstances. There is no such thing as an unlimited or “blanket” return right, even though customers often may think this is the case. Be careful though – the situation changes when it comes to online purchases.

The first thing to remember is that customers indeed have a “cooling off” right, but only in the following circumstances:

  • If not an online sale, a 5 day cooling off period for sales resulting from direct marketing applies (this means that the supplier directly approached the customer to sell him/her the goods and the customer bought the goods as a result of the marketing) – cooling off right in terms of the CPA.
  • If an online sale, a 7 day cooling off period applies in general (no marketing requirement as per the CPA) but note that some exceptions apply and not all goods can be returned in terms of this right – cooling off right in terms of the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”).

During the cooling off period, the customer has the right to a full refund when returning the goods and does not need to give a reason why the goods have been returned. However, the customer will have to pay the costs associated with returning the goods to the supplier. With all the other return rights in terms of the CPA discussed below, the cost of the return will be on the supplier.

In addition to the cooling-off periods, customers may return defective goods in accordance with the so-called CPA implied warranty of quality (the “CPA warranty”). This means, that if there are any defects in the goods within the first 6 months after purchase or delivery (the later date), the customer can return the goods based on the CPA warranty. Whether a customer can return goods within the 6 month period or not will, however, have to be assessed on a case by case basis and there are certain exceptions that could apply. The supplier is entitled to first investigate the complaint and run tests to determine whether a defect is indeed present. If the customer caused the damage to the goods, it goes without saying that the supplier should not be liable and the customer should not be able to rely on the CPA warranty.

In the case of a return of defective goods, the CPA does not give a supplier a first right to repair or replace and provides the customer with the right to return the goods that does not meet the quality requirements for a (i) refund, (ii) replacement or (iii) repair – at the customer’s choice, not the supplier’s. However, the customer’s right to return goods in terms of the CPA warranty will not apply where the goods have been altered, contrary to the instructions of the supplier.

Customers may also return goods if the customer indicated the purpose for which it wanted to use the goods at the time of purchase and the supplier confirmed that the goods will be suitable for that purpose, but it then turns out that the goods cannot be used for the purpose initially intended.

Make sure you know your rights as a supplier and exercise all options when a customer cries “Consumer Protection Act”!

Lastly, suppliers often offer more return rights than the rights afforded to customers in terms of the law. These are regulated through “Returns Policies”. Next time we will do a post on “What should your Returns Policy look like?”.

Registering your company for VAT

Registering your company for VAT


Businesses, whether large or small, have a vital role to play as taxpayers in our economy. Any business (whether a CC, a company, a partnership or a sole proprietor) has various tax obligations it must meet. If certain conditions are met, it is required to register and pay value added tax (VAT) to SARS, which is the amount that is levied on the value of most goods and services, whether supplied by sale, rental agreement, instalment credit agreement or any other form of supply. The standard VAT rate is currently 14%.

Your business must register as a VAT vendor if its income earned in any consecutive 12-month period exceeds the prescribed threshold. If your income earned is less than the threshold, it may still be beneficial for your business to register on a voluntary basis – although this will add to your administration, you can then claim VAT back on your expenses (which is then deducted from the VAT you owe SARS).


Compulsory registration: It is mandatory for a business to register for VAT if the total value of the taxable supplies made in any consecutive 12-month period exceeded or is likely to exceed R1 000 000.

Voluntary registration: A business may also choose to register voluntarily for VAT if the value of the taxable supplies made or to be made is less than R1 000 000, but exceeded R50 000 in the past 12-month period.

VAT registration when the value of your taxable supplies is less than R50 000: Per the new VAT Registration Regulations, an enterprise which has not made R50 000 in taxable supplies in the past 12 months may still register for VAT if it can satisfy SARS that, as at the date of the application, the following circumstances exist:

  • where you have made taxable supplies for more than two months (but not exceeding 11 months), you must prove that the average value of taxable supplies in the preceding months prior to the date of application for registration exceeded R4 200 per month;
  • where you have made taxable supplies for only one month preceding the date of application for registration, you must prove that the value of the taxable supplies made for that month exceeded R4 200;
  • where you have not made taxable supplies yet, you must have a written contract, in terms of which you are required to make taxable supplies exceeding R50 000 in the 12 months following the date of registration;
  • in any other case, you have entered into a finance agreement with a bank, specified credit provider, designated entity, public authority, non-SA resident or any other person who continuously or regularly provides finance, wherein finance has been provided to fund the expenditure incurred or to be incurred in furtherance of the enterprise, and the total repayments in the 12 months following the date of registration will exceed R50 000; or
  • in any other case, you have proof of expenditure incurred or to be incurred in connection with the furtherance of the enterprise as set out in a written agreement or proof of capital goods acquired in connection with the commencement of the enterprise and proof of payment or an extended payment agreement evidencing payment has either exceeded R50 000 at the date of application for registration; or that it will in any consecutive period of 12 months beginning before and ending after the date of application, exceed R50 000; or will in the 12 months following the date of application for registration exceed R50 000.


You can either elect to register your business for VAT yourself or you can make use of the services of a registered tax practitioner to handle the whole process for you. In both instances, the VAT 101 application form must be submitted to the SARS branch nearest to the place where your business is situated, together with the following supporting documentation:

  • if your business is operated through a company, certified copies of your company registration documents (i.e. CoR 14.1 Notice of Incorporation, CoR 14.1A Notice of Incorporation – Initial Directors, CoR 14.3 Registration Certificate, CoR 15.1A Standard Short Form MOI or custom-drafted MOI (as the case may be);
  • certified copies of the identity documents of all the directors / members / partners;
  • originally signed and stamped letter from the bank confirming the business account’s banking details;
  • latest original copy of the business municipal account;
  • if the business’ property is leased, a certified copy of the signed lease agreement;
  • latest three months’ bank statements; and
  • latest three months’ invoices to confirm income.


  • For any sale of more than R50, you must issue a tax invoice (with the words “tax invoice” printed on it). This is the most important document in the VAT system so make sure you get it right.
  • The frequency with which you have to pay VAT to SARS depends on your “taxable period”. For businesses who file their returns and make payments electronically, VAT is due by the 25th day of the first month commencing after the end of the taxable period, while for businesses that file via eFiling, the due date is the last business day of the month after the end of the taxable period.
  • Failure to submit a VAT return at the end of each VAT cycle can lead to a business facing heavy penalties and interest on late submission.
  • You must keep your records for a period of five years from the date of the last entry in any book, as SARS can ask to see these records at any time within this timeframe.
The Art of the Exit: drags, tags and everything in between

The Art of the Exit: drags, tags and everything in between

In the world of venture capital funding, it’s easy for the role players involved (lawyers included) to make the mistake of losing sight of the other party’s objective in an intended funding transaction. There are a myriad of fears and expectations that need to be balanced and measured in order to formulate a funding and capital structure that speaks to the parties’ bespoke needs. It is therefore fundamentally important for investors and investee companies alike to appreciate the main objectives of the party on the other side of the term sheet. In this article we look at investors’ main aims. Hint: it’s not to get a free T-shirt with your company’s logo on it.

Some investors are genuinely driven to expose their cash and commit their expertise (at least in early-stage funding) by an interest in the business they are investing in and a desire to see the economy flourish as investee companies grow and generate economic welfare. This might be true in most cases, but even the most start-up friendly investor has one primary objective: to realise returns from their investment that matches the relative risk associated with the investment. Your uncle who waived his morning coffee to crowd-fund your potato salad ( wants to know when he is getting his bite of the salad. That’s just how life works.

While this may be obvious to some, parties often fail to think “exit” when they start a journey together. It is important for both the entrepreneurs and investors as they seek to get a return on their investment (whether time, money or other resources) to understand and manage their exit strategies in order to strike a balance between their own aspirations and motivations on the one side and the stark commercial realities on the other.  It is therefore crucial to determine and negotiate the best exit strategies well in advance. In light of the above, this article will aim to provide an overview of the exit strategies commonly found in later stage Seed Round investments or Series A investments.

Difference between Seed and Series A investments

Seed Round (Series Seed)

A Seed Round is an early round of investment into a start-up entity which is meant to support the business until it generates its own cash or until it is ready to receive further investments as soon as it is cash-generative. Terms associated with Seed Rounds are usually still fairly simple and exit strategies are still relatively low priority in most of these transactions, although investors typically aim to be protected from negative events and benefit from positive events.

However, investors would typically subscribe for a different class of shares, which gives them certain preferential rights (senior to that of ordinary shareholders) when a liquidation event occurs in the company.


Series A

Series A investments are mostly made by astute and experienced venture capital firms. They are less flexible on their funding terms – for good reason. Venture capital firms are mostly structured as funds managed by persons or a separate entity (called a managing partner) on behalf of various investors in the fund (called limited partners). Limited partners can include high net worth individuals or institutional investors. The managing partners have a very clear and limited investment mandate and have an investment committee that are obliged to ensure that the firm invests on specific terms and has a clear exit strategy as to how the investment may be realised. For this reason, Series A funding is provided on more strenuous terms and includes various provisions aimed at securing and advancing the return on investment for the firm and eventually, the limited partners. All of these usually activate on an exit event occurring.

Like Seed shareholders, Series A shareholders subscribe for preference shares, but their shares will rank senior to ordinary shares and Seed shareholders when a liquidation event occurs. So if a liquidation event occurs, the liquidation preferences are paid first to Series A shareholders, then to Seed shareholders and then only will all the other shareholders participate in the balance on an as-converted basis.

Basic liquidation events

An exit on equity investments (such as Seed and Series A investments) will see the parties cashing in on the equity they own and receiving monetary reward (and hopefully some upside) for taking the initial commercial risk. The following methods are referred to as “liquidation events” in funding documents:

  1. transferring ownership of the investee company, business or other assets owned by the investee company to a third party (by way of sale of business, mergers, acquisitions or management/employee buyouts);
  2. listings or other offers of shares to the public by way of an Initial Public Offering (IPO); or
  3. by liquidating the company.

There are various ways in which each of the methods above can be applied to realise a return for shareholders. Liquidation is very rarely a feasible option, as there is simply too much value lost on liquidation costs. It therefore falls beyond the scope of this article.

Exit strategies: the good, the bad and the ugly

When considering liquidation events, it is important to consider who controls the occurrence of a liquidation event. In other words, who needs to approve an event before it can occur? This is often referred to as a “drag along” right. If the preference shareholders have the drag along right and can force an event without the ordinary shareholders’ approval, this might, on face value, seem like an effective exit strategy for the investors. However, in reality, this means that founders will not be motivated to grow the value of the company as investors can simply force a liquidation event that merely repays their liquidation preference. If the founders of the company (who usually hold ordinary shares) have the drag along right, this means that the Seed shareholders and Series A shareholders will be forced to accept a liquidation event if the ordinary shareholders approve it. This is not an ideal scenario either, as the preference shareholders are unlikely to receive any returns until the company has grown in value to such an extent that the ordinary shareholders receive a favourable return after payment of the liquidation preference to preference shareholders.

A good balance to strike is to require a high percentage of ordinary shareholders to approve a liquidation event (i.e. considerably more than majority), but then to give the preference shareholders the right to convert their preference shares to ordinary shares and vote accordingly. This means that there is no possibility of a sale at low value if the company is doing well as the drag along right is not held by the shareholders who have the liquidation preference rights. If the company is not doing well and raises funding at a lower valuation at some point (also called a down-round), the anti-dilution rights will enable the preference shareholders to convert to more ordinary shares in any event. This means that if a sale is done after a down-round, the preference shareholders will enjoy a higher participation in the liquidation event if they convert to ordinary shares.

If investors insist that provision is made for the approval of a majority of preference shareholders before a drag along is triggered, then you may want to provide for the liquidation preference to fall away once the company reaches a certain valuation. This still forces the liquidation event and allows Series A and Seed investors to get a return on their investment, but removes the hurdle of the liquidation preference. This ensures that founders are adequately incentivised to grow the value of the company and get the company to a favourable liquidation event that promises returns for all shareholders.

Other ways in which exits are achieved (especially in Series A funding) are as follows:

Co-sale rights: if a founder intends to sell his/her shares to a third party on favourable terms, he/she has to provide the opportunity for the Series A shareholders to convert a proportionate number of its Series A shares to ordinary shares and then tag along on the founder’s sale. The Series A shareholder has a put option to sell any portion of its converted tag along shares to the founder before the founder can proceed with the sale to the third party. This enables the Series A shareholders to exit when a key founder exits the company and forces the company to negotiate exit terms for the Series A shareholder. Depending on the circumstances this can be very restrictive to founders and founders should aim to negotiate a right for them to sell their shares to third parties by means of a gradual earn-out without triggering the co-sale right.

Registration rights: this is a right provided to Series A shareholders in Series A funding documents and is essentially a right (based on the registration of securities in terms of Rule 144 of the Securities Act of 1933 – USA) to either force the company to register the Series A shareholders’ preference shares (convertible to ordinary shares) if the company undergoes an IPO (called demand registration rights). An alternative to demand registration rights are “piggyback” registration rights, in terms of which a Series A shareholders have the right to register their shares with other shares if the company or another shareholder registers its securities. Both options have the effect that Series A shareholders will be entitled to sell their shares when the IPO is done. In the absence of that, they will have to wait at least a year before shares may be sold. Registration rights are usually quite standard and Series A investors are not upon for material negotiation. However, the cost of registering securities can be fairly significant, so from the company’s perspective the less severe “piggyback” registration rights are favourable.

Put option/redemption right: this is when the preference shareholders have a put option to sell their shares back to the company or force the company to redeem the shares and get their invested funds back if certain negative events occur. This is a good example of a provision that should be avoided at all cost. There are various reasons for that, one being that redemption rights for preference shares should always be handled carefully, as they may cause the preference shares to be classified as debt rather than equity, which may render the company insolvent in certain scenarios. It will also cause any dividends or other returns on the capital invested to be taxed as interest in the hands of the investor.

Exit rights are found in various shapes and sizes, especially in Series A transactions. It is very important to formulate an exit regime that strikes a healthy balance between the interests of all stakeholders in the company. This ensures that all the role players are incentivized to drive the company to a healthy exit with favourable returns for all involved.

Deciding on joining an incubator: the ins and outs

Deciding on joining an incubator: the ins and outs


A business incubator is a programme that helps new and start-up companies to grow, by providing an assortment of business support services, ranging from the potential provision of start-up capital (which may or may not involve the acquisition of equity in the start-up company), structured training and guidance on how to commercialise an idea and to develop a business out of it, operational support (data, phones, admin etc), networking activities, links to strategic partners and investors, marketing assistance and office space, amongst other things.

Unlike many business assistance programmes, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation programme, must first apply for admission. Acceptance criteria vary from programme to programme, but in general, only those with feasible ideas and a workable business plan are admitted.


Focus: Joining a good incubator gives you incredible focus. You can make great leaps in realising and achieving your business goals.

Credibility: As a start-up business, it’s always a good idea to be affiliated with a well-known / prestigious institution, since investors will know that you have undergone a stringent selection process, giving investors more confidence in your ability to commit and deliver.

Administrative Support: The administrative side of the business, including basic bookkeeping and secretarial work, is taken away from you so that you can focus on developing your business.

Professional services: Incubators often have a wide range of support structures and professional networks which will be able to offer assistance that is suited to your business needs, ranging from legal to tax and even immigration.

Facilities: Joining an incubator offers advantages of being able to work (together with other entrepreneurs) in a professional atmosphere (rather than in your basement or garage for instance), which includes a shared office space, board rooms and access to computer and internet facilities.

Access to capital: All types of investors work with incubators, ranging from angels, seed funds, and venture capital.

Building your network: Connecting with fellow incubatee companies and the opportunity to interact with like-minded people presents an excellent shared space to work in. You get real life business people to review, critique and / or validate your business idea, allowing you to start off on a better footing than if you had no input or support.

Learning Opportunities: The more structured incubators will involve you in formal lectures and workshops, dealing with the most important elements of starting, funding, growing, and presenting a business to investors, customers and / or buyers.


The success of any business depends ultimately on the company being able to deliver on its goals, to develop the products and services people care about and the ability of the founders to adapt and innovate. An incubator will only take you so far. Although incubators are a good place to consider when starting out, different incubators have different requirements and goals of their own. An incubator is run just like any other business, and has specific goals which they want to achieve. Understand what that goal is and what they want from you, so that you are well-informed and know what is expected of you and what to expect of them.

Some incubators may really just be investment vehicles which use the incubator as an opportunity to find early stage businesses and create the opportunity to invest in them. The incubator will most likely want preferential terms, so be very careful to make sure you understand what these terms are and how they could affect the way another investor views your company. Good incubators add enough value to justify their equity stake in your company (rather than tagging along for a free ride). So, as with any investor, remember that their money is the least valuable contribution to your business and that they should add value strategically first!