Henk Kleynhans

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  • 1. Lifting the Venture Capital Skirt Looking under the hood and kicking the tires
  • 2. - Henk Kleynhans - founder - CEO CTO
  • 3. - 3 parts - - my past - - my (short) VC experience - - Venture Capital Aptitude Test
  • 4. - my past
  • 5. - student - financial aid - UCT
  • 6. - internet junkie
  • 7. - internet junkie
  • 8. - YouTube, I
  • 9. - 2003 - wifi - adsl - becoming mainstream
  • 10. - ADSL cost R1200 per month - Capped at 3GB usage
  • 11. - SHARE - adsl - wifi - $
  • 12. - looked far and wide
  • 13. - SHARE
  • 14. - the problem was
  • 15. - time
  • 16. - big problem
  • 17. - movies - slow down
  • 18. - hit my cap
  • 19. - only what they eat - NOT how much time they take to eat it
  • 20. - simply didn’t exist
  • 21. - So... - I decided to - build it!
  • 22. - scratch my own itch
  • 23. - solve a problem
  • 24. - laptop - broadband - cheap - share - convenient - neighbours - no modems - no line rentals - $$$ - no contracts
  • 25. - end-users
  • 26. - end-users == Skyrovers
  • 27. - start their own Skyrove hotspot
  • 28. - virally - spread affordable and convenient internet access
  • 29. - income
  • 30. - 100s
  • 31. - 1000s
  • 32. - small entrepreneurs
  • 33. - around the world
  • 34. - ?
  • 35. - who does NOT think - this was a brilliant idea?
  • 36. - just a BIG IDEA
  • 37. - competition - Big Ideas
  • 38. - National Innovation Competition
  • 39. - my buddy Al - marketing student
  • 40. - this thing called - a Business Plan!
  • 41. - Al was busy writing his thesis
  • 42. - “If you want something done... - ask a busy man!”
  • 43. - worked days and nights - this thing called: - Market Research!
  • 44. - & a thing called... - Financial Projections!
  • 45. - VERY CLEARLY
  • 46. - VERY CLEARLY
  • 47. - by Year 2 - 100 Million Dollars
  • 48. - Dr Evil Picture
  • 49. - i’m not joking!
  • 50. - business plan
  • 51. - brilliant - world-changing - earth-shattering - paradigm-shifting - business plan
  • 52. - fancy event
  • 53. - 3rd place winners
  • 54. - 2nd place winners
  • 55. - So...
  • 56. - clearing a path to the stage
  • 57. - ...
  • 58. - someone else won!
  • 59. - cried a little - hugged each other - moved on...
  • 60. - and on!
  • 61. - market research - financial projections
  • 62. - we were onto something big!
  • 63. - looking for funding - raised $20,000 - overseas investor - hired first programmer
  • 64. - launched 2006 - raised a million 2007
  • 65. - 9500 20,000 customers - 300 600 hotspots
  • 66. - 8 employees - Honours or Masters Degrees
  • 67. - except for me...
  • 68. - community - largest Hotspot network - continent
  • 69. - 2005 - Top ICT Entrepreneur - Business Report / Enablis
  • 70. - 2006 - TT100 Minister’s Award - Most Promising Emerging Enterprise
  • 71. - 2008 - Mail & Guardain - 200 Young South Africans - You Must Take To Lunch
  • 72. - Department of Science and Technology
  • 73. - trip to Germany
  • 74. - (thank you Minister)
  • 75. - overseas investors
  • 76. - proved - young South Africans - leaders in innovation - technology - commercialization
  • 77. - but -
  • 78. - Rotterdam - Berlin - Vancouver - Silicon Valley
  • 79. - part 2 -
  • 80. - My meandering VC experience
  • 81. - have raised SOME money
  • 82. - failed to raise MUCH more
  • 83. - first investor: Silicon Valley - $20,000
  • 84. - 3 year period
  • 85. - but get shares upfront
  • 86. - upside
  • 87. - family member - R100k
  • 88. - venture capital
  • 89. - mentor capital
  • 90. - zero money
  • 91. - flirted with big VC
  • 92. - term sheet
  • 93. - pulled out last minute - when principal left
  • 94. - *phew*
  • 95. - got lucky
  • 96. - (or smart)
  • 97. - found investor - zero bullshiitake - “gets it”
  • 98. - one bar
  • 99. - WILLs and WON’Ts
  • 100. - will NOT accept an offer
  • 101. - gives majority board control
  • 102. - to minority shareholder
  • 103. - I know my market and my product better
  • 104. - I will NOT accept an offer
  • 105. - for more money than I need
  • 106. - especially in tranches - = stock options
  • 107. - I will not accept VC before
  • 108. - 2-minute noodle profitable
  • 109. - I will
  • 110. - phone the founders - BEFORE - serious talks with any VC
  • 111. - I will
  • 112. - GRILL the VC at first presentation
  • 113. - portfolio companies - successes - experience
  • 114. - I will not...
  • 115. - pay for Due Diligence costs
  • 116. - spending time with you...
  • 117. - is more expensive to me...
  • 118. - than it is to you!
  • 119. - I will not...
  • 120. - give shares to “Mentor Capitalists”
  • 121. - will work harder for you - give better advice - keep your interests at heart
  • 122. - if it puts its money - where its mouth is
  • 123. - part 3
  • 124. - the Venture Capital Aptitude Test
  • 125. - (credit to Guy Kawasaki)
  • 126. - “You know you’re in a bubble when young people get into VC”
  • 127. - “VC should be your last job, not your first.”
  • 128. - “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:
  • 129. - ‘You should partner with MySpace! I can also introduce you to some of the losers in our portfolio’
  • 130. - entrepreneurs - aspirant VCs - existing VCs
  • 131. - 3.1 Work Background
  • 132. - Engineering - plus 5 points
  • 133. - understand technology - does it defy the laws of physics?
  • 134. - Sales - plus 5 points
  • 135. - introduce a product and - sell it
  • 136. - “sales fixes everything”
  • 137. - Management Consulting - minus 5 points
  • 138. - Investment Consulting - minus 5 points
  • 139. - Accounting - minus 5 points
  • 140. - 3 worst backgrounds - Consulting, Banking, Accounting
  • 141. - Management Consulting - “implementation is easy, - insights are hard”
  • 142. - opposite is true in startups
  • 143. - Investment Banking - “everything can be reduced to - cells on a spreadsheet”
  • 144. - P/Es - Build companies for JSE, not customers - do deals, don’t build companies
  • 145. - accounting - belief that history not only - repeats itself...
  • 146. - but it predicts the future
  • 147. - 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.
  • 148. - MBA - minus 5 points
  • 149. - upside
  • 150. - tools and knowledge may help
  • 151. - e.g. 25% of $1.6 billion - is $400 million
  • 152. - downside
  • 153. - hollow arrogance of someone - who’s never been tested
  • 154. - 3.2 The Right Stuff - (First Hand Experience)
  • 155. - you may have been in the right places
  • 156. - but have you been - KICKED - in the right places?
  • 157. - kicked in the groin by - major, long-lasting economic downturn - plus 1 point
  • 158. - worked at a successful startup - plus 1 point
  • 159. - worked at a failed startup - plus 3 points
  • 160. - 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
  • 161. - worked at a public company - plus 1 point - (know the end goal, warts & all)
  • 162. - held a CEO position - plus 2 points
  • 163. - fantasy experience out of your system - won’t try and run startup from a board position
  • 164. - been an angel investor...
  • 165. - with your OWN money - plus 2 points
  • 166. - understand the responsibility of investing other people’s money
  • 167. - 3.3 Necessary Knowledge
  • 168. - Can you answer the following questions for entrepreneurs?
  • 169. - How do I... - introduce a product with no budget? - plus 2 points
  • 170. - How do I... - determine if there really is a market demand for my product? - plus 1 point
  • 171. - What do I do... - if customers hate our first product? - plus 1 point
  • 172. - How do I... - get Walt Mossberg to return my call? - plus 2 points
  • 173. - How do I... - get to the folks who run DEMO? - plus 1 point
  • 174. - How do I... - get a plug in TechCrunch? - plus 2 points
  • 175. - How do I... - dominate a segment with 5 competitors doing essentially the same thing? - plus 2 points
  • 176. - How much... - time, energy & money - should I spend on patent protection? - plus 1 point
  • 177. - What do I do now... - if I bet on the wrong architecture for our product? - plus 2 points
  • 178. - What kind of... - people should I hire? - Young, old, proven, unproven, cheap, expensive, local, remote? - plus 1 point
  • 179. - How do I... - get them to leave their jobs - without throwing money - plus 2 points
  • 180. - How do I... - tell my friend that he cannot - be CFO - just because he’s a co-founder? - plus 2 points
  • 181. - How do I get... - the Buyer at Incredible Connection - to return my call? - plus 1 point
  • 182. - How do I... - handle a customer who wants to send back his purchase for a full refund? - plus 1 point -
  • 183. - How do I ... - fire people? - plus 2 points
  • 184. - How do I ... - lay people off? - plus 2 points
  • 185. - tally up...
  • 186. - 40 points or more
  • 187. - start your own fund!
  • 188. - 35 to 39 points
  • 189. - call Sequoia, Kleiner, Perkins
  • 190. - let them know you’re available...
  • 191. - 25 to 34 points
  • 192. - send your resume to - 2,000 VCs
  • 193. - and pray
  • 194. - 24 points or less
  • 195. - work until you score more - and in the meantime
  • 196. - fly kulula
  • 197. - fly kulula
  • 198. - bottom line...
  • 199. - only become a VC
  • 200. - after having the shit kicked out of you
  • 201. - stand out from all the other - full-of-**it artists - who entered VC when they were young
  • 202. - you’ll be really able to help - your portfolio companies
  • 203. - which is what VC is all about
  • 204. - .
  • 205. - Henk Kleynhans - www.skyrove.com - henk@skyrove.com - 0861 ROVERS - Blog: www.geekrebel.com