Pros
- Growth Opportunities: Access to capital and expertise.
- Regulated Environment: Managed by licensed financial service providers.
- Dual Benefits: Combines funding and BEE compliance for competitive advantage.
Cons
- High Costs: Management fees, transaction costs, and profit-sharing.
- Complex Processes: Lengthy deal negotiations and strict legal contracts.
- Control Concerns: Potential loss of board-level influence.
Common Challenges
- Identifying legitimate fund managers.
- Balancing empowerment goals with investment returns.
- Navigating “grey areas” in BEE rules, such as defining 25% direct black ownership.
