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Start-up Advice

4 Legal Mistakes You Could Be Making When Starting Out

We have pinpointed the four biggest legal mistakes a start-up can make, and how you can leapfrog these common stumbling blocks.




There are thousands of start-ups out there trying to make it big with a game-changing idea. But, it’s only the ones with sound execution that can turn that idea into a success story. Often, businesses simply need to take one step back and incorporate a bit of extra planning to avoid common mistakes that can derail their business.

From our daily interaction with countless early-stage founders and entrepreneurs, we have pinpointed the four biggest legal mistakes a start-up can make, and how you can leapfrog these common stumbling blocks.

1. Failing to incorporate the right legal entity or even completely neglecting it

Don’t send your clients invoices with the details of your personal bank account you opened back in 1999. Set up the right legal entity and open a business bank account as soon as possible.

Related: 5 Common Legal Mistakes Start-Ups Make – And How To Avoid Them

In South Africa there are quite a few types of legal entities to choose from, but anything other than a private limited liability company (the so-called ‘PTY’ limited) and investors start feeling ill at ease.  So, if you’re looking to raise venture capital soon, a private limited liability company is the way to go.

Another benefit of a private limited liability company is that you only risk losing the money you’ve put into the company.  It is seen as a separate entity from you and so your personal assets, including your bank account, car, and house, will remain secure.

2. Failing to formalise the founder’s relationship

Possibly the most important first step in a new start-up, other than registering your company, is formalising the relationship between the founders. Sometimes due to the eagerness to get started, founders don’t stop to think carefully enough about the following four key principles:

  • Commitment: the success of the business you have embarked on will take commitment from each of the founders. Define it! How can each of you be sure that all the founders are committed? What do the founders need to bring to the party?
  • Control: Avoid disputes by asking these questions early on. How are the big decisions taken by the company? Who really has the power to make these decisions? Who really controls the company?
  • Economics: who owns the company, and in what proportions? Then, how can the founders get the value created by the business – how are the profits of the company distributed to the founders and when can the founders sell their shares?
  • Funding: how will the company initially be funded – loans from founders? Working for a low salary, or no salary at all? Or possibly Angel funding?

3. Failing to negotiate and consider proper vesting mechanisms for founder shares

How would you feel if you are foregoing a higher paid job to work on your start-up and one of your co-founders leaves the company for a lucrative position, and gets to keep all of her or his equity after leaving? Not great, right!

Be upfront about what you expect from each other and how long you agree to be tied up to the company. In comes “Vesting”. Vesting is the process by which a founder receives the economic rights in the shares of the start-up over time.

Related: 6 Costly Mistakes People Make When Starting a Business

A typical founder vesting schedule works like this: A Founder needs to be with the company for a minimum period of 12 months (called the “Cliff”) to receive 25% of his shares, and thereafter his remaining shares vests in equal percentages over a 36-month period. So, if a co-founder quits before the ‘Cliff’ /12 months, he or she leaves with nothing.

In practical terms, vesting protects founders from the risk that a co-founder will prematurely leave with his or her slice of the company, which he hasn’t ‘earned’ yet.

4. Failing to properly document employment relationships

Start-up founders often overlook the importance of intellectual property assignment and confidentiality agreements – falsely assuming that anything their employees create is owned by the start-up. This can create a whole host of problems which are likely to come up when an investor or buyer is conducting due diligence.

Protect your start-up’s intellectual property by requiring all employees to sign proper intellectual property assignment and confidentiality agreements at the very beginning of their employment. At minimum, these agreements should include language expressly stating the employee’s rights to the intellectual property that the employee creates during his or her employment. Furthermore, it should include a confidentiality provision, requiring the employee to keep the company’s proprietary information confidential.

These are only some of the issues to consider as you launch your start-up. And if you are in your second or third year of business, and realise you missed a few steps – rest assured that it’s not too late and it doesn’t have to be complicated. Find people with the right expertise to help you identify your legal gaps, so that you can get back to what is most important – building your business.

Dommisse Attorneys Inc. - a fully specialised corporate finance and commercial law firm, with a strong focus on providing start-ups with the legal support they need to achieve their business aspiration and vision. Jack O'Reilly is a commercial law associate at Dommisse Attorneys and forms part of the Start-up law team.


Start-up Advice

6 Resources For Start-ups Looking For Funding

Here are 6 online resources that can help you pay the bills and grow your business at the same time.

Josh Althuser




Anyone who has ever considered starting their own business, or is currently in the process of doing so, knows that every little bit helps when it comes to making ends meet. Part of the charm of start-up culture is the low-budget creative atmosphere that seems to continually fuel innovation. But, eventually you’re going to have to keep the lights on and water running, and you can’t do that with creativity alone.

Whether you are a business that is just starting out, or already well on your way, there are plenty of online platforms that offer start-ups advice and funding opportunities. Here are 6 online resources that can help you pay the bills and grow your business at the same time.

1. Kickstarter

kickstarter-logoAt one point it seemed that anyone with a clever idea could make a video showing why the world should invest in the next big thing. While a lot of crazy projects have gotten funded over the years, utilising a crowdfunding platforms like Kickstarter continues to be a viable way to get your project off the ground. Of course, if you want to reach your funding goals, it’s best that you have already done your market research, have a solid plan, and treat crowdfunding like a global VC.

Visit Kickstarter here.

Related: 4 Tips To Secure Funding For Your Start-up

2. Toptal

toptal-logoThose who are new to the start-up world might not know exactly where to start when it comes to looking for funding. While the freelance economy has grown immensely in the last 5 years, it’s important to know where to look.

Platforms like Toptal offer a wide range of freelance professionals that specialise start-up funding. Start-ups seeking a consultant on Toptal can also rest easy knowing that they carefully screen each candidate, ensuring they have the necessary professional background and experience to guarantee a successful project. 

Visit Toptal here.

3. Appbackr

appbackrIf you couldn’t already tell by the name, appbacker is definitely worth checking out if you are a start-up working in app technology for both Android and Iphone. The platform helps people discover different apps through the crowdsourcing model. Investors can scroll through apps from around the world, and if they like what they see, they can choose to invest. Funding incentive is based on an investor’s ability to purchase an app at the wholesale price, eventually making a profit once the app starts flying off the shelves in the official app store.

Visit Appbackr here.

Related: 7 Strategies For Development As An Entrepreneur

4. Gust

Gust logoInvestors are more likely to invest locally, which is why Gust is an attractive option for start-ups around the world, as they represent over eighty countries worldwide. Founded by a team of investors and lawyers, Gust knows their way around the start-up world.

With portals for both start-ups and investors, the platform seamlessly connects those seeking funds and those looking to invest. Start-ups can create a profile on Gust, and also have access to tools and tips to help them regulate finances and legal matters. 

Visit Gust here.

5. AngelList

angellist-logoNot just for investment, although that is a major part of the platform, AngelList is also a great place to find start-up jobs as well as recruitment. Those start-ups that are looking to expand can greatly benefit from this feature, while also getting their name out there to potential investors.

Their syndicate platform, led by technology experts make room for those who are looking to invest the chance to apply to a lead or directly invest in a fund.

Visit AngelList here.

Related: 6 Steps To Building A Million-Dollar Ecommerce Site In 60 Days

6. Seedrs

seedrs-logoFrom top corporations to big name accelerators, Seedrs aims to simplify the funding process for investors. Providing a vast network of investors from 48 different countries, who tap into an additionally impressive network of start-ups, there is plenty of room for collaboration on this platform. Seeders also encourages investors and start-ups to continue their relationship after the transaction is made. Their online and offline networks aim keep both start-ups and investors in the loop.

Depending at what stage of development your company has currently reached, exploring various funding options available to you is a worthwhile endeavour. Rather than blindly pitching investors, investigating each potential platform, whether it’s crowdfunding or a hiring a freelance funding expert, will save you time and resources so you can focus on the right type of investment based on your needs.

Visit Seedrs here.

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Start-up Advice

Picking Your Lane: Maximising Your Chances Of Success And Happiness

How do you choose? What do you prioritise? What’s right for me is almost certainly not right for you.

Anthony Miller




Most entrepreneurs start businesses out of necessity.  They do what they have to.  They don’t think far ahead.  They fight fires every day.  They are the foundation of every economy all over the world.  Some succeed, some fail, few shoot the lights out.  Some are happy, some are not.

For me, there’s nothing more thrilling than building a business.  Seeing your ideas turn into reality.  Seeing your team exceed your expectations every day.  Seeing your customers’ lives improved by your products.

But, entrepreneurship is not for the faint-hearted.  You pour blood and sweat and tears into your business.  You get more than your fair share of punches in the nose.  It’s hard, but if you’re lucky and you persevere, the rewards are great.

So, how do you maximise your chances of getting into the ‘happy and shooting the lights out’ club?

Related: 9 Quotes Every Entrepreneur Should Live By

Picking the right lane – figuring out what you’re going to do – is probably the most important decision you’ll make.  Once you’ve figured that out, you can get down to the nitty gritty of picking your team and building your business.

But, how do you choose?  What do you prioritise?  What’s right for me is almost certainly not right for you.

sweet-spot-modelThe Sweet Spot Model, which has been drifting around the web for years, provides great guidance.  If you do what you love, the hard yards won’t feel like work.  If you do what you’re good at, you’ll beat or (even better) outstrip the competition.  If you provide something the world needs, you’ll feel a sense of purpose.  If someone will pay for it, you have a business.

When I co-founded Simply, I wanted to tick all 4 boxes AND work from Cape Town AND be extremely flexible (so I could prioritise family health).

I worked on three different ideas: A GIS-platform for solar and other utilities; a transaction platform for stokvels; and a cheeky online life insurance play.

The life insurance play quickly emerged as my best choice (it helped that my partners are top actuaries J):

  1. What I’m good at – doing start-ups, connecting people and teams, and using technology and data to solve business problems.
  2. What I love – working with people I like and trust to build businesses that solve hard problems and make the world a better place.
  3. What the world needs – most adult South Africans have one or more funeral policies. Few have life or disability cover and policies are often very expensive.  There’s a clear need for simple, convenient, well-priced life, disability and funeral cover.
  4. What someone will pay for – the market we’re targeting is huge – nearly R7.5Bn of new premium is written annually.

Related: 7 Strategies For Development As An Entrepreneur

With the stars lining up, we pressed the go button in early 2016.  It’s now twelve months since we launched to market and early signs are good:

  1. Our innovative, online products – Family Cover, Domestic Cover and Group Cover – have been well received and are improving all the time.
  2. We have an amazing, engaged team – inspired by the purpose of protecting vulnerable people.
  3. We’ve sold more than 4 500 policies to date, providing more than R2.5Bn of cover to more than 20,000 people.
  4. We’re based in Cape Town, working hard and having fun, and I seldom miss a swimming gala, netball game or opportunity to go mountain biking.

While picking the right lane is no guarantee of success, it definitely helps stack the odds in your favour. You’re going to need all the help you can get. So, take the time to pick your lane. I bet it’ll be worth the effort.

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Start-up Advice

9 Quotes Every Entrepreneur Should Live By

Entrepreneurship takes great perseverance. Failure is common. In fact, it is expected. Over 75% of venture-backed start-ups fail.

Jennifer Keithson



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Entrepreneurship takes great perseverance. Failure is common. In fact, it is expected. Over 75% of venture-backed start-ups fail.

There are great learning opportunities that present themselves when we fail, but we must be willing to continue on and try again in order to learn anything at all.

It can be quite an arduous task to strive for your own means, to create your own vision and to rally the support within yourself that starting and running your own business requires.

Thankfully, we’re not in it alone. The wisdom of others can greatly ameliorate the process learning from our missteps and hiccups.

Taking from sagacious investors, inventors and thinkers can help you pick yourself up and make something meaningful out of your quest to become a successful entrepreneur.

By studying the thought processes of other entrepreneurs, we can become more enriched and more aware of how to approach the challenges we face in business and in life.

Here are 9 quotes every entrepreneur should live by:

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