MasiboLaw

By Meshack Masibo

There are different ways of changing the world, you can have a groundbreaking idea or you can fund the people that do and help them execute it. The former is by being a founder and the latter is by being a venture capitalist.

Let’s break it down in an even simpler way, have you watched KCB Lions Den? 4 or 5 tycoons listen to novel business ideas and tear them apart before settling on one and throwing their millions at the founder.  The Lions in the Den are the Venture Capitalists and the ‘Daniels’ that emerge from the Den unscathed and with money are the Founders.

For many businesses, not just in Kenya but also throughout the world, venture capital is one of the best sources of funding. The number of venture capital firms investing in startups has increased in tandem with the rise of these companies. This article is a step-by-step guide for anyone who has a strong interest in investing in high-potential companies and wants to start their venture capital firm in Kenya.

The Steps

The steps provided for under Regulation 4(1) of the Capital Markets (Registered Venture Capital Companies) Regulations, 2007 are as follows;

1. Prepare a company profile demonstrating your expertise. This can include the company’s previous involvement in venture capital business for at least three years or in the alternative, evidence that one or more of your Company’s directors has a demonstrable track record in the management of venture capital funds for a period of at least three years.
2. Fill the application forms containing the details of your company, those of your directors including their qualifications, details of shareholders and the percentage or amount of shares they own in the firm as well as any subsidiary and associate companies you work with.
3. Attach certified copies of your Certificate of Incorporation, Certificate of Compliance, Memorandum and Articles of Association and Board Resolution approving the application for registration.
4. Prepare a detailed investment policy in respect of each fund to be operated by the company setting out investment objectives, minimum  and maximum investment amounts in any single enterprise, investment rules, investment process among other things that you can find in the regulations.
5. Procure and attach certificates of good conduct of all directors as well as the relevant declarations by the directors.
6. Attach the Fit and Proper Forms for Directors and key personnel
7. Attach the name of the Fund Manager duly licensed by the Authority by providing a letter of acceptance of the appointment from the Fund manager and a copy of the management agreement between the registered venture capital company and the Fund Manager containing particulars required in regulation 10.
8. Attach your Statement of Accounts (3 years audited where relevant and 6 months unaudited), evidence that your company has paid up share capital of KES 100,000,000 and a Minimum core fund of KES 100,000,000 (755,000 USD)  reflected in your Bank Account.
9. Attach details of your company auditor and company secretary that is, their name and ICPSK registration number.
10. Attach one letter of Bank Reference from a Commercial Bank stating the length of your relationship with them and a statement that you have been properly managing your accounts.
11. Where you have previously invested in some businesses, attach 2 Letters of Reference from at least two companies that you have invested in explaining the nature and duration of your investment and your contribution to the business.

Venture capitalists are in fact shaping the future of entrepreneurship, investment, and more at a time. If you are a venture capitalist, then embrace the thrill, register your firm, and watch the journey begin to unfold before your eyes. Great ideas have the power to change the world, and venture capital is the bridge that connects groundbreaking ideas with the resources needed, empowering entrepreneurs for groundbreaking success.

The writer is a lawyer who specializes in offering legal services to people in technology, in case you need further assistance, don’t hesitate to contact him at info@masibolaw.co.ke