A new regulatory sandbox designed to unlock global capital for South African startups has been formally unveiled at the SA Venture Capital and Private Equity Association’s Venture Capital Conference. The initiative aims to give qualifying startups a quicker, compliant route to structure offshore intellectual property while keeping jobs, headquarters, and core operations in South Africa. Stakeholders see the framework as a practical response to long-standing constraints around exchange controls and slow deal execution.
Breaking Down Legacy Barriers
Panelists at the conference warned that outdated rules were undermining South Africa’s ability to build globally competitive startups. Pieter de Villiers, CEO of Clickatell, argued that rand-denominated structures limit founders’ ability to hire internationally or access major markets, which ultimately weakens potential exits. He stressed that meaningful reform of exchange control and related regulations is essential if South African ventures are to compete on equal footing with global peers.
How the Sandbox Works
The sandbox was developed over nearly a decade of engagement between the South African Reserve Bank, the South African Revenue Service, and ecosystem advocates including the SA Startup Act Movement, SAFTA, and Endeavour South Africa. It will allow eligible, primarily tech-focused startups to test legally compliant cross-border structures for raising offshore capital without breaching tax or exchange control laws. Safeera Mayet, SAVCA’s Head of Policy and Regulatory Affairs, said the framework is intended to shorten deal timelines and reduce friction for high-growth companies.
Balancing Founder Needs and Fiscal Interests
Legal experts emphasized that the model is designed to benefit both entrepreneurs and the public purse. Adrian Dommisse, founder and director of Dommisse Attorneys, noted that the structure lets founders scale internationally while keeping their IP and main entities in South Africa, reversing a long-standing trend of forced offshoring to access capital. He added that once the flow of funds was mapped, it became clear that SARS could gain from retained local activity, making the arrangement a “win-win” for founders and the fiscus.
Standardization to Increase Deal Velocity
Beyond regulatory innovation, speakers called for a coordinated push to standardize early-stage legal documentation, term sheets, and ESG reporting. Dommisse pointed out that South African venture deals are often slowed by overly complex, bespoke contracts that add cost without improving outcomes. He argued that adopting open-source, template-driven documentation similar to that used in the United States and United Kingdom could significantly accelerate deal-making.
Policy Groundwork for a Stronger VC Ecosystem
Mayet confirmed that SAVCA is working with local legal practitioners to develop a domestic, open-source suite of VC documents. She believes standardization can make transactions faster, cheaper, and more transparent, which in turn should encourage more investors to engage with the South African market. Panelists agreed that regulatory efficiency, while not glamorous, is foundational to building a deeper and more resilient venture capital asset class.
The sandbox will initially be piloted with a small group of qualifying startups, with its performance expected to inform potential permanent legislative changes. Far from bypassing institutions like the Reserve Bank and SARS, the initiative seeks to create a more streamlined, predictable environment for cross-border capital flows. As Mayet noted, the ultimate goal is to enable South African founders to compete globally while keeping their operations and intellectual property anchored at home.