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Henk Kleynhans
 

Henk Kleynhans

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    Henk Kleynhans Henk Kleynhans Presentation Transcript

    • Lifting the Venture Capital Skirt Looking under the hood and kicking the tires
    • - Henk Kleynhans - founder - CEO CTO
    • - 3 parts - - my past - - my (short) VC experience - - Venture Capital Aptitude Test
    • - my past
    • - student - financial aid - UCT
    • - internet junkie
    • - internet junkie
    • - YouTube, I
    • - 2003 - wifi - adsl - becoming mainstream
    • - ADSL cost R1200 per month - Capped at 3GB usage
    • - SHARE - adsl - wifi - $
    • - looked far and wide
    • - SHARE
    • - the problem was
    • - time
    • - big problem
    • - movies - slow down
    • - hit my cap
    • - only what they eat - NOT how much time they take to eat it
    • - simply didn’t exist
    • - So... - I decided to - build it!
    • - scratch my own itch
    • - solve a problem
    • - laptop - broadband - cheap - share - convenient - neighbours - no modems - no line rentals - $$$ - no contracts
    • - end-users
    • - end-users == Skyrovers
    • - start their own Skyrove hotspot
    • - virally - spread affordable and convenient internet access
    • - income
    • - 100s
    • - 1000s
    • - small entrepreneurs
    • - around the world
    • - ?
    • - who does NOT think - this was a brilliant idea?
    • - just a BIG IDEA
    • - competition - Big Ideas
    • - National Innovation Competition
    • - my buddy Al - marketing student
    • - this thing called - a Business Plan!
    • - Al was busy writing his thesis
    • - “If you want something done... - ask a busy man!”
    • - worked days and nights - this thing called: - Market Research!
    • - & a thing called... - Financial Projections!
    • - VERY CLEARLY
    • - VERY CLEARLY
    • - by Year 2 - 100 Million Dollars
    • - Dr Evil Picture
    • - i’m not joking!
    • - business plan
    • - brilliant - world-changing - earth-shattering - paradigm-shifting - business plan
    • - fancy event
    • - 3rd place winners
    • - 2nd place winners
    • - So...
    • - clearing a path to the stage
    • - ...
    • - someone else won!
    • - cried a little - hugged each other - moved on...
    • - and on!
    • - market research - financial projections
    • - we were onto something big!
    • - looking for funding - raised $20,000 - overseas investor - hired first programmer
    • - launched 2006 - raised a million 2007
    • - 9500 20,000 customers - 300 600 hotspots
    • - 8 employees - Honours or Masters Degrees
    • - except for me...
    • - community - largest Hotspot network - continent
    • - 2005 - Top ICT Entrepreneur - Business Report / Enablis
    • - 2006 - TT100 Minister’s Award - Most Promising Emerging Enterprise
    • - 2008 - Mail & Guardain - 200 Young South Africans - You Must Take To Lunch
    • - Department of Science and Technology
    • - trip to Germany
    • - (thank you Minister)
    • - overseas investors
    • - proved - young South Africans - leaders in innovation - technology - commercialization
    • - but -
    • - Rotterdam - Berlin - Vancouver - Silicon Valley
    • - part 2 -
    • - My meandering VC experience
    • - have raised SOME money
    • - failed to raise MUCH more
    • - first investor: Silicon Valley - $20,000
    • - 3 year period
    • - but get shares upfront
    • - upside
    • - family member - R100k
    • - venture capital
    • - mentor capital
    • - zero money
    • - flirted with big VC
    • - term sheet
    • - pulled out last minute - when principal left
    • - *phew*
    • - got lucky
    • - (or smart)
    • - found investor - zero bullshiitake - “gets it”
    • - one bar
    • - WILLs and WON’Ts
    • - will NOT accept an offer
    • - gives majority board control
    • - to minority shareholder
    • - I know my market and my product better
    • - I will NOT accept an offer
    • - for more money than I need
    • - especially in tranches - = stock options
    • - I will not accept VC before
    • - 2-minute noodle profitable
    • - I will
    • - phone the founders - BEFORE - serious talks with any VC
    • - I will
    • - GRILL the VC at first presentation
    • - portfolio companies - successes - experience
    • - I will not...
    • - pay for Due Diligence costs
    • - spending time with you...
    • - is more expensive to me...
    • - than it is to you!
    • - I will not...
    • - give shares to “Mentor Capitalists”
    • - will work harder for you - give better advice - keep your interests at heart
    • - if it puts its money - where its mouth is
    • - part 3
    • - the Venture Capital Aptitude Test
    • - (credit to Guy Kawasaki)
    • - “You know you’re in a bubble when young people get into VC”
    • - “VC should be your last job, not your first.”
    • - “When you’re young, you should work 80 hours a week to create a product or service that changes the world. You should not sit in board meetings listening to an entrepreneur explaining why she missed her numbers while you read mail on a Blackberry and intermittently spew forth gems like:
    • - ‘You should partner with MySpace! I can also introduce you to some of the losers in our portfolio’
    • - entrepreneurs - aspirant VCs - existing VCs
    • - 3.1 Work Background
    • - Engineering - plus 5 points
    • - understand technology - does it defy the laws of physics?
    • - Sales - plus 5 points
    • - introduce a product and - sell it
    • - “sales fixes everything”
    • - Management Consulting - minus 5 points
    • - Investment Consulting - minus 5 points
    • - Accounting - minus 5 points
    • - 3 worst backgrounds - Consulting, Banking, Accounting
    • - Management Consulting - “implementation is easy, - insights are hard”
    • - opposite is true in startups
    • - Investment Banking - “everything can be reduced to - cells on a spreadsheet”
    • - P/Es - Build companies for JSE, not customers - do deals, don’t build companies
    • - accounting - belief that history not only - repeats itself...
    • - but it predicts the future
    • - financial models are almost totally irrelevant because there’s no financial wizardry involved in making a good product and selling the heck out of it.
    • - MBA - minus 5 points
    • - upside
    • - tools and knowledge may help
    • - e.g. 25% of $1.6 billion - is $400 million
    • - downside
    • - hollow arrogance of someone - who’s never been tested
    • - 3.2 The Right Stuff - (First Hand Experience)
    • - you may have been in the right places
    • - but have you been - KICKED - in the right places?
    • - kicked in the groin by - major, long-lasting economic downturn - plus 1 point
    • - worked at a successful startup - plus 1 point
    • - worked at a failed startup - plus 3 points
    • - you’ll understand 3 things: - 1. how hard it is to achieve success - 2. world doesn’t owe you a thing - 3. what it’s like to be fired or laid off
    • - worked at a public company - plus 1 point - (know the end goal, warts & all)
    • - held a CEO position - plus 2 points
    • - fantasy experience out of your system - won’t try and run startup from a board position
    • - been an angel investor...
    • - with your OWN money - plus 2 points
    • - understand the responsibility of investing other people’s money
    • - 3.3 Necessary Knowledge
    • - Can you answer the following questions for entrepreneurs?
    • - How do I... - introduce a product with no budget? - plus 2 points
    • - How do I... - determine if there really is a market demand for my product? - plus 1 point
    • - What do I do... - if customers hate our first product? - plus 1 point
    • - How do I... - get Walt Mossberg to return my call? - plus 2 points
    • - How do I... - get to the folks who run DEMO? - plus 1 point
    • - How do I... - get a plug in TechCrunch? - plus 2 points
    • - How do I... - dominate a segment with 5 competitors doing essentially the same thing? - plus 2 points
    • - How much... - time, energy & money - should I spend on patent protection? - plus 1 point
    • - What do I do now... - if I bet on the wrong architecture for our product? - plus 2 points
    • - What kind of... - people should I hire? - Young, old, proven, unproven, cheap, expensive, local, remote? - plus 1 point
    • - How do I... - get them to leave their jobs - without throwing money - plus 2 points
    • - How do I... - tell my friend that he cannot - be CFO - just because he’s a co-founder? - plus 2 points
    • - How do I get... - the Buyer at Incredible Connection - to return my call? - plus 1 point
    • - How do I... - handle a customer who wants to send back his purchase for a full refund? - plus 1 point -
    • - How do I ... - fire people? - plus 2 points
    • - How do I ... - lay people off? - plus 2 points
    • - tally up...
    • - 40 points or more
    • - start your own fund!
    • - 35 to 39 points
    • - call Sequoia, Kleiner, Perkins
    • - let them know you’re available...
    • - 25 to 34 points
    • - send your resume to - 2,000 VCs
    • - and pray
    • - 24 points or less
    • - work until you score more - and in the meantime
    • - fly kulula
    • - fly kulula
    • - bottom line...
    • - only become a VC
    • - after having the shit kicked out of you
    • - stand out from all the other - full-of-**it artists - who entered VC when they were young
    • - you’ll be really able to help - your portfolio companies
    • - which is what VC is all about
    • - .
    • - Henk Kleynhans - www.skyrove.com - henk@skyrove.com - 0861 ROVERS - Blog: www.geekrebel.com