The document discusses the author's experience as an entrepreneur and with venture capital. It is divided into three parts: the author's background as an entrepreneur starting an internet sharing business called Skyrove, his experience raising some venture capital but failing to raise more, and a "Venture Capital Aptitude Test" with criteria for assessing one's suitability to become a venture capitalist. The author advocates having real-world experience building and running businesses before entering venture capital.

1. Lifting the Venture
Capital Skirt
Looking under the hood and kicking the
tires

2. - Henk Kleynhans
- founder
- CEO CTO

5. - 3 parts
- - my past
- - my (short) VC experience
- - Venture Capital Aptitude Test

6. - my past

7. - student
- financial aid
- UCT

8. - internet junkie

9. - internet junkie

10. - YouTube, I

11. - 2003
- wifi
- adsl
- becoming mainstream

12. - ADSL cost R1200 per month
- Capped at 3GB usage

13. - SHARE
- adsl
- wifi
- $

14. - looked far and wide

15. - SHARE

16. - the problem was

17. - time

18. - big problem

19. - movies
- slow down

20. - hit my cap

21. - only what they eat
- NOT how much time they take to eat it

22. - simply didn’t exist

23. - So...
- I decided to
- build it!

24. - scratch my own itch

25. - solve a problem

26. - laptop
- broadband
- cheap
- share - convenient
- neighbours - no modems
- no line rentals
- $$$
- no contracts

27. - end-users

28. - end-users == Skyrovers

29. - start their own Skyrove hotspot

30. - virally
- spread affordable and convenient
internet access

31. - income

32. - 100s

33. - 1000s

34. - small entrepreneurs

35. - around the world

36. - ?

37. - who does NOT think
- this was a brilliant idea?

38. - just a BIG IDEA

39. - competition
- Big Ideas

40. - National Innovation Competition

41. - my buddy Al
- marketing student

43. - this thing called
- a Business Plan!

44. - Al was busy writing his thesis

46. - “If you want something done...
- ask a busy man!”

47. - worked days and nights
- this thing called:
- Market Research!

48. - & a thing called...
- Financial Projections!

49. - VERY CLEARLY

50. - VERY CLEARLY

51. - by Year 2
- 100 Million Dollars

52. - Dr Evil Picture

53. - i’m not joking!

54. - business plan

55. - brilliant
- world-changing
- earth-shattering
- paradigm-shifting
- business plan

56. - fancy event

57. - 3rd place winners

58. - 2nd place winners

59. - So...

60. - clearing a path to the stage

61. - ...

62. - someone else won!

63. - cried a little
- hugged each other
- moved on...

64. - and on!

65. - market research
- financial projections

66. - we were onto something big!

67. - looking for funding
- raised $20,000
- overseas investor
- hired first programmer

68. - launched 2006
- raised a million 2007

69. - 9500 20,000 customers
- 300 600 hotspots

70. - 8 employees
- Honours or Masters Degrees

71. - except for me...

72. - community
- largest Hotspot network
- continent

73. - 2005
- Top ICT Entrepreneur
- Business Report / Enablis

74. - 2006
- TT100 Minister’s Award
- Most Promising Emerging Enterprise

75. - 2008
- Mail & Guardain
- 200 Young South Africans
- You Must Take To Lunch

76. - Department of Science and Technology

77. - trip to Germany

79. - (thank you Minister)

80. - overseas investors

81. - proved
- young South Africans
- leaders in innovation
- technology
- commercialization

82. - but
-

83. - Rotterdam
- Berlin
- Vancouver
- Silicon Valley

84. - part 2
-

85. - My meandering VC experience

86. - have raised SOME money

87. - failed to raise MUCH more

88. - first investor: Silicon Valley
- $20,000

89. - 3 year period

90. - but get shares upfront

91. - upside

92. - family member
- R100k

93. - venture capital

94. - mentor capital

95. - zero money

96. - flirted with big VC

97. - term sheet

98. - pulled out last minute
- when principal left

99. - *phew*

100. - got lucky

101. - (or smart)

102. - found investor
- zero bullshiitake
- “gets it”

103. - one bar

104. - WILLs and WON’Ts

105. - will NOT accept an offer

106. - gives majority board control

107. - to minority shareholder

108. - I know my market and my product
better

109. - I will NOT accept an offer

110. - for more money than I need

111. - especially in tranches
- = stock options

112. - I will not accept VC before

113. - 2-minute noodle profitable

114. - I will

115. - phone the founders
- BEFORE
- serious talks with any VC

116. - I will

117. - GRILL the VC at first presentation

118. - portfolio companies
- successes
- experience

119. - I will not...

120. - pay for Due Diligence costs

121. - spending time with you...

122. - is more expensive to me...

123. - than it is to you!

124. - I will not...

125. - give shares to “Mentor Capitalists”

126. - will work harder for you
- give better advice
- keep your interests at heart

127. - if it puts its money
- where its mouth is

128. - part 3

129. - the Venture Capital Aptitude Test

130. - (credit to Guy Kawasaki)

131. - “You know you’re in a bubble when
young people get into VC”

132. - “VC should be your last job, not your
first.”

133. - “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:

134. - ‘You should partner with MySpace! I
can also introduce you to some of the
losers in our portfolio’

135. - entrepreneurs
- aspirant VCs
- existing VCs

136. - 3.1 Work Background

137. - Engineering
- plus 5 points

138. - understand technology
- does it defy the laws of physics?

139. - Sales
- plus 5 points

140. - introduce a product and
- sell it

141. - “sales fixes everything”

142. - Management Consulting
- minus 5 points

143. - Investment Consulting
- minus 5 points

144. - Accounting
- minus 5 points

145. - 3 worst backgrounds
- Consulting, Banking, Accounting

146. - Management Consulting
- “implementation is easy,
- insights are hard”

147. - opposite is true in startups

148. - Investment Banking
- “everything can be reduced to
- cells on a spreadsheet”

149. - P/Es
- Build companies for JSE, not customers
- do deals, don’t build companies

150. - accounting
- belief that history not only
- repeats itself...

151. - but it predicts the future

152. - 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.

153. - MBA
- minus 5 points

154. - upside

155. - tools and knowledge may help

156. - e.g. 25% of $1.6 billion
- is $400 million

157. - downside

158. - hollow arrogance of someone
- who’s never been tested

159. - 3.2 The Right Stuff
- (First Hand Experience)

160. - you may have been in the right places

161. - but have you been
- KICKED
- in the right places?

162. - kicked in the groin by
- major, long-lasting economic downturn
- plus 1 point

163. - worked at a successful startup
- plus 1 point

164. - worked at a failed startup
- plus 3 points

165. - 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

166. - worked at a public company
- plus 1 point
- (know the end goal, warts & all)

167. - held a CEO position
- plus 2 points

168. - fantasy experience out of your system
- won’t try and run startup from a board
position

169. - been an angel investor...

170. - with your OWN money
- plus 2 points

171. - understand the responsibility of
investing other people’s money

172. - 3.3 Necessary Knowledge

173. - Can you answer the following questions
for entrepreneurs?

174. - How do I...
- introduce a product with no budget?
- plus 2 points

175. - How do I...
- determine if there really is a market
demand for my product?
- plus 1 point

176. - What do I do...
- if customers hate our first product?
- plus 1 point

177. - How do I...
- get Walt Mossberg to return my call?
- plus 2 points

178. - How do I...
- get to the folks who run DEMO?
- plus 1 point

179. - How do I...
- get a plug in TechCrunch?
- plus 2 points

180. - How do I...
- dominate a segment with 5 competitors
doing essentially the same thing?
- plus 2 points

181. - How much...
- time, energy & money
- should I spend on patent protection?
- plus 1 point

182. - What do I do now...
- if I bet on the wrong architecture for
our product?
- plus 2 points

183. - What kind of...
- people should I hire?
- Young, old, proven, unproven, cheap,
expensive, local, remote?
- plus 1 point

184. - How do I...
- get them to leave their jobs
- without throwing money
- plus 2 points

185. - How do I...
- tell my friend that he cannot
- be CFO
- just because he’s a co-founder?
- plus 2 points

186. - How do I get...
- the Buyer at Incredible Connection
- to return my call?
- plus 1 point

187. - How do I...
- handle a customer who wants to send
back his purchase for a full refund?
- plus 1 point
-

188. - How do I ...
- fire people?
- plus 2 points

189. - How do I ...
- lay people off?
- plus 2 points

190. - tally up...

191. - 40 points or more

192. - start your own fund!

193. - 35 to 39 points

194. - call Sequoia, Kleiner, Perkins

195. - let them know you’re available...

196. - 25 to 34 points

197. - send your resume to
- 2,000 VCs

198. - and pray

199. - 24 points or less

200. - work until you score more
- and in the meantime

201. - fly kulula

202. - fly kulula

203. - bottom line...

204. - only become a VC

205. - after having the shit kicked out of you

206. - stand out from all the other
- full-of-**it artists
- who entered VC when they were young

207. - you’ll be really able to help
- your portfolio companies

208. - which is what VC is all about

209. - .

210. - Henk Kleynhans
- www.skyrove.com
- henk@skyrove.com
- 0861 ROVERS
- Blog: www.geekrebel.com