Entrepreneurial activity at universities, especially spin-off formation, has emerged as an important mechanism for accelerating the transfer of technology and knowledge to commercial markets. With some exceptions, such as China, studies on university entrepreneurship have tended to concentrate on the experiences of developed countries. Perhaps because of the lack of a comprehensive database of university spin-offs, studies on experience in South Africa have typically included spin-offs only as part of a broad examination of university--industry partnerships, technology transfer mechanisms or academic entrepreneurship. This study is based on a questionnaire and interview survey of spin-offs at Cape Town and Stellenbosch Universities. The results suggest that the most important reasons cited for spin-off formation are market opportunities and a desire for commercial exploitation of knowledge and experience. As with university spin-off founders elsewhere, funding is regarded as the most significant problem, followed by such factors as recruiting skilled people, lack of facilities, product marketing and time pressure. It is argued that this exploratory study provides lessons and insights that will inform similar, future research on a larger scale. (Contains 8 tables, 1 figure, and 8 notes.)