The document provides a summary of lessons learned from 25 years in venture capital by Chris Golis. It includes 5 key lessons: 1) Ensure there is a sustainable competitive advantage. 2) Lease assets like office space instead of owning them. 3) Understand how venture capital funding rounds work. 4) Recognize the 3 stages of entrepreneurship: starting, growing, and managing. 5) Seize opportunities to profit from successful ventures. The document also discusses Australia's economic challenges around risk tolerance and lack of large population centers and export markets.

1. 5000 business plans,
50 deals,
25 write-offs
Lessons learnt from 25 years in VC
Chris Golis MA MBA FAICD FAIM
© Christopher Golis 2010 1

2. Agenda
• Who am I?
• 5 key lessons
• Q&A
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3. Who am I?
• Graduate of Cambridge, LBS, SIA
• Started working in 1967
• IT (general manager) Financial Services (VC)
• Director of some 30 companies
• Neverfail, Scitec/VeCommerce
• Nanyang Founder in 1994, raised $140m
• Fellow of AICD and FAIM
• Author of 3 books
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4. 1992
1989
2007
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5. Who am I?
• Australia’s expert practical EQ
• Emotions drive people; people drive
performance.
• Workshop attendees:
– Recognise the hidden 7 core emotions
– Skills self- and social mastery
• www.emotionalintelligencecourse.com
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6. Lesson #1: Do you have a Sustainable
Competitive Advantage (SCA)
• Finished Cambridge 1967
• Joined IBM North London working in Welwyn Garden
City
• 2 years later joined start-up based in Oxford Circus
• Went from this to this
•
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7. Computer Time International Limited
• Sold the night shift on other people’s
computers
• 4 major customers
• Decided to rent own computer (largest in the
UK)
• Employed as systems programmer
• Only 2 customers came across
• In the tank after 9 months: Undercapitalised?
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8. Why CTIL was always going to fail
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9. Successful SCAs
• Cochlear
• Resmed
• Neverfail SpringWater
• CBD printer
“If you don’t have a competitive advantage don’t compete.”
Jack Welch, former CEO General Electric
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10. Lesson #2 Lease the Pencils
• Dialog International - 1969
• Computer timeshare on
IBM computer $8 million
capital 50/50
• $2m to set up Dialog UK
• 100 terminals
• 98 in-house application
programmers
• 2 customers
• Separate H/0 5 miles away
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11. Lesson #3 Know the Game 1986
• Founders put in $50K - $50K
• Govt. grant of $200K - $250K
• Angels put in $500K - $1.5M
• 1st VC round $1M - $4M
• 2nd VC round $2M - $10M
• List raising $10M - $50M
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12. Visit to 5 of top 10 VCs in USA
• What is VC heaven?
• ‘I have 3% of Tandem’
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13. Funds are raised in stages
8
6
$M 4
2
0
-3 -2 -1 IPO 1
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14. Founder’s ownership decreases
80%
60%
40%
20%
0%
-3 -2 -1 IPO 1
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15. Value of equity increases
25
20
15
$M
10
5
0
-3 -2 -1 IPO 1
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16. www.yahoo.com
• 1994 David Filo & Jerry Yang start web-index
• Late 1994 Sequoia Capital $1m for 25% $4m
• Early 1995 5 VCs $9m for 20% $45m
• Late 1995 Softbank $100m for 30% $330m
• Listed early 1996: $300m for 25% $1.2b
• At valuation $100 b what are they worth?
• 75% x 80% x 70% x 75% = 30%
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17. Peg Technologies
Date Who Amount Val. $m
• 1990 Founder $100k $0.1m
• 2/99 SGDCL $0.75m $2.25m
• 12/99 Gowings $3m $18m
& SGDCL
• 6/00 IPO $12m $60m
What is founder now worth?
2/3 x 5/6 x 4/5 = 40/90 = 44% of $60m = $26.7m
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18. http://www.youtube.com/watch?v=WX2METdzjxU
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19. Entrepreneur’s objective
Not this! Shareholdings
Inv 1
51%
Founder
49%
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20. But this!!
Shareholdings
Inv4 Inv5
Inv3 12% 12%
12%
Inv2
12% Founder
Inv1 40%
12%
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21. Lesson #4 Steve Gilbert’s 3 stages of
Entrepreneurship 2002
• Stage 1 – come up with idea & start the
business
• Stage 2 – rapidly grow the business
• Stage 3 – manage the far flung empire
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22. Andrew Demetriou
• Best Sports CEO in Australia
• Great Stage III manager High IQ High EQ
• Had to be replaced as Stage I CEO
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23. Lesson #5 Grab the gold ring
• 1975 Chris Golis & Lonely Planet
• 1980 Gordon Bell & DEC
• 1994 Sheridan Forbes & Yahoo
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24. Australia’s big problems
• Too risky to send the elevator back down
• 6σ
• Only 2 or 3 markets – need an export strategy
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25. No Elevators
“If you have done well in your chosen career, it’s
your obligation to send the elevator back
down. Inspire and give opportunities to others
on the way up.” Jack Lemmon as quoted by
Kevin Spacey AFR 23 October 2010
• 700 state & federal laws about directors’
liability
• Why I am not a director
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26. 6σ
6σ = 3 in a million
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27. Population Centres
New York-Northern New Jersey-Long Island 19.1
Los Angeles-Long Beach-Santa Ana 12.9
Chicago-Joliet-Naperville 9.6
Dallas-Fort Worth-Arlington 6.4
Philelphia-Camden-Wilmington 6.0
Houston-Sugar Land-Baytown, 5.9
Miami-Fort Lauderdale-Pompano Beach 5.5
Washington-Arlington-Alexandria, 5.5
Atlanta-Sandy Springs-Marietta 5.5
Boston-Cambridge-Quincy 4.6
Sydney Newcastle Wollongong 5.5
Melbourne -Geelong 4.3
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28. Q&A
• Why did you choose this seminar before all
the others you could have attended this
month?
• What was the #1 thing that impressed you in
my profile?
• How did you find out about today’s event?
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29. Call to Action
• Readers are leaders: Buy E&VC
• Contact Chris Golis cgolisau@gmail.com
• www.emotionalintelligencecourse.com
• 1 day workshops:
– EQ in Selling: The Most Useful Sales Technique I
have ever used
– EQ in Management: Lifting Your Level of
Emotional Intelligence
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