My VC journey: Building startups on solid legal foundations

I started my career in 1998 as a corporate attorney in mergers and acquisitions with a leading South African law firm in Johannesburg, learning the ropes in contract negotiation, mergers and acquisitions, and listed equities. 

After leaving formal practice, I took a few turns before deciding to put my finance degree to work in leveraged finance and corporate banking for a top South African bank. After a few years, I met Ian Lessem and took a bet on South Africa’s burgeoning tech space. 

It was 2016, and it was the start of HAVAÍC. Personally and professionally, it certainly was the road less travelled, given that Venture Capital (VC) in Africa was still very much a developing industry. Luckily, the move paid off. 

Being a lawyer in African VC has given me a unique opportunity to apply my trade in one of the continent's most dynamic and fast-evolving sectors. 

My legal background and 20+ years of experience have been instrumental in ensuring the business was set up to stand the test of time and protected against the pitfalls suffered by many in the industry. 

Today, I am one of only a handful of partners in African VC with a strong legal background. Added to our senior team’s full complement of banking, finance, accounting, and analytical skills, it certainly gives us a unique advantage. 

Our portfolio companies continue to leverage our extensive expertise in tax, international structuring, exchange control regulations, and capital raising, as well as a hand-up in commercial contract negotiations.

The rise of African VC

Over the past ten years, we have seen significant growth in African VC. Countries like Nigeria, Kenya, South Africa and Egypt have developed into major hubs for startup ecosystems, while the continent as a whole has seen an influx of investment in the technology and innovation sectors. 

Africa’s young, tech-savvy population, coupled with rapidly improving infrastructure and growing mobile connectivity, has created a fertile ground for venture-backed startups to flourish.

Africa offers enormous potential, which is reflected in the increasing number of legal professionals entering private markets, particularly VC. The demand for legal expertise in the field will only grow as more international investors focus on African markets and local entrepreneurs continue to scale their businesses. The role of lawyers will also keep evolving as the continent’s legal and regulatory frameworks mature.

Successful VC lawyers must combine legal expertise with an understanding of the region’s complexities, including specific legal, tax, cultural, and economic conditions - providing critical support to startups and our investor base, which includes large institutions, high-profile wealth managers, and family offices.

Moreover, as Africa’s startup ecosystem becomes more interconnected and sophisticated, there is potential for greater collaboration across borders. This will require lawyers to work not only across African countries but also with legal teams in Europe, Asia, and North America, fostering a truly global legal ecosystem.

Why proactive legal support is vital for Africa’s startups

The African legal landscape does not come without its complications. It requires innovation and proactive legal professionals with an appetite for navigating underdeveloped regulatory structures or shifting legal environments.

In addition to key responsibilities - including due diligence, negotiating investment agreements, ensuring regulatory compliance in diverse African markets, structuring funds, dispute resolution, and developing exit strategies - VC lawyers regularly face unprecedented challenges.

1. Complex legal and regulatory frameworks. Many African countries have still-evolving legal systems that create uncertainty. Inconsistent regulations across different jurisdictions, coupled with issues of enforcement, can complicate the investment process.

2. Cross-border transactions. VC transactions often involve investors from different regions, including Europe, North America, and Asia. Lawyers require a deep understanding of local and international laws, including cross-border tax regulations, foreign exchange control, and the repatriation of profits.

3. Intellectual property (IP) protection. IP laws across African countries can vary widely. Lawyers must ensure that startups take appropriate steps to protect their innovations, including registering trademarks, patents, or enforcing copyright and ensuring compliance with international IP treaties.

4. Cultural sensitivities. Legal practice in Africa is not just about following laws. It also requires understanding the cultural nuances and local business practices. Lawyers need to be adaptable, able to bridge the gap between Western investors and local entrepreneurs, and sensitive to regional differences in doing business.

5. Limited legal precedents: VC law in Africa is still developing, meaning there may be limited legal precedents to guide lawyers. Legal professionals must be innovative and proactive in interpreting laws, offering legal solutions, and structuring transactions to protect their clients' interests.

6. Access to legal education and resources. Access to world-class legal education and resources may be limited in some parts of Africa. This makes it challenging for lawyers to stay up-to-date on global best practices and trends in VC law.

By facilitating investment, growth, and successful exits, lawyers are integral in shaping Africa’s entrepreneurial landscape. We look forward to the sector's growth over the next 10 years, with hopefully more structured and clearer regulations across this fascinating continent.

About Grant Rock 

An experienced corporate lawyer with a global track record in banking, mergers and acquisitions, and equity markets, Grant is renowned for helping early-stage companies succeed with strategic guidance and practical advice.

One of the few partners in African VC with a strong legal background, Grant is well-versed in preparing African-born technology startups to mitigate legal and regulatory risks when scaling into regional and international jurisdictions. His expertise includes corporate governance, board composition, and redomiciling. 

Grant started his career at Bowmans Johannesburg - one of South Africa’s ‘big five law firms’ -  as a corporate lawyer specialising in mergers and listed securities. Before rejoining Bowmans as a senior associate, he spent a year at Simpson Thacher & Bartlett LLP in New York, a tier-one, global law firm specialising in mergers and acquisitions and private equity.

In 2007, Grant relocated to the United Kingdom, gaining further international experience as an in-house counsel and corporate solicitor. Back in South Africa, Grant joined Nedbank as a senior legal advisor in corporate and investment banking before co-founding HAVAÍC in Cape Town in 2016.