Are you right for the venture capital business?
Guy (Kawasaki) has created an aptitude test, Venture Capital Aptitude Test (VCAT).
The main points:-
Part I: Work Background
What is your background?
* Engineering (add 5 points)
* Sales (add 5 points)
* Management consulting (subtract 5 points)
* Investment banking (subtract 5 points)
* Accounting (subtract 5 points)
* MBA (subtract 5 points)
Part II: First-Hand Experiences
You may have been in the right places, but you also need the right experiences in those places. Specifically, have you gone through these?
* Been kicked in the groin by a major, long-lasting economic downturn, so that you know how powerless you are. (add 1 point)
* Worked at a successful startup, so that you can speak first-hand about the ecstasy of entrepreneurship. (add 1 point)
* Worked at a failed startup, so that you understand three things: first, how hard it is to achieve success; second, that the world doesn’t owe you a thing; and third, what it’s like to be fired or laid off. (add 3 points)
* Worked at a public company, so that you know what the end goal looks like, warts and all. (add 1 point)
* Held a CEO position, so that you have this fantasy experience out of your system and will not try to run the startup from a board position. (add 2 points)
* Been an angel investor with your own money, so that you understand the fiduciary responsibility of investing other people’s money. (add 2 points)
Part III: Necessary Knowledge
Finally, can you answer these questions for entrepreneurs? Because this is the kind of advice that entrepreneurs need. (Don’t worry: many current venture capitalists would fail this part.)
* How do I introduce a product with no budget? (add 2 points)
* How do I determine whether there’s really a market demand for my product? (add 1 point)
* What do I do if customers hate our first product? (add 1 point)
* How do I get Walt Mossberg to return my call? (add 2 points)
* How do I get to the folks who run Demo? (add 1 point)
* How do I get a plug in TechCrunch? (add 1 point)
* How do I get the folks at Fox Interactive to return my call? (add 1 point)
* How do I dominate a segment when there are five other companies doing essentially the same thing? (add 2 points)
* How much time, energy, and money should I spend on patent protection? (add 1 point)
* We bet on the wrong architecture for our product; what do I do now? (add 2 points)
* What kind of people should I hire: young, old, unproven, proven, cheap, expensive, local, remote? (add 1 point)
* How do I get them to leave their current jobs without throwing a lot of money at them? (add 2 points)
* How do I tell my best friend that he can’t be chief technical officer just because he was a cofounder? (add 2 points)
* How do I get to the buyer at BestBuy to return my call? (add 1 point)
* How do I handle a customer who wants to send back his purchase for a full refund? (add 1 point)
* How do I fire people? (add 2 points)
* How do I lay people off? (add 2 points)
Got result of your own assessment? See what you should do at
- Indian Entrepreneur Mindset - June 19, 2011
- Presentation on Innovation Engineering at SlideShare - April 4, 2011
- Entrepreneurs and VCs can use Innovation Engineering - February 5, 2011
Vijay and All
The first line is:-
“Are you right for the venture capital business?”
A question to persons who want to be in venture capital business and MAY BE who are already in that.
It is NOT for entrepreneurs.
Whatever Vijay wrote about entrepreneurs is right, I think
Hahahaha…its so true…I’ve been meeting some VCs last few months and Part 1 is so true hahahaha
Guy’s article brings a smile to my face. I remember readnig somewhere that in one of his lectures he quoted (a monk) from oriental philosophy, who said “A great man makes everyone feel small … but a truly great man makes everyone feel big.” If Investors were to look at people behind the proposals as ‘people’, they would see many more ‘venturable’ ideas and complain less!
So theres a piece of prudence … “Life isnt fair … because it isnt supposed to be … so lets just get on with the business of living!”
Thanks While the article is a great piece of work summarising some of the major key competencies required by entrepreneurs, it seems it is written by an ivy-league MBA or an academician who try and put everything in frameworks.
With limited exposure of entrepreneurship and bad-luck of gong to a b-school myself, my experience says that there are no frameworks that can be applied. Entrepreneurship is about value creation and leading trends and not trying to catch the trends. It is prescient to give 1, 2, 3 or 5 points for critical competencies that are rarely available. To be honest, even one of those competencies can ensure a creation of a successful business.
Of the three sections, I find I and II useless and limited to the discussions in elitist boys clubs. Entrepreneurs would not waste time to create CV to generate I. II anyway is a function of hit and trial. III is relevant and equally relevant is building of the team (probably IV).
My advise – love your customers and products/services – money/VCs will follow.
Best regards, Vijay Shukla
I liked the inventory at Part III, a real gem – in particular, the caveat linked to its title ( “don’t worry…many current VCs would fail this part” ).
If at Guy’s level, that’s from 30,000 feet this is the experience, the VCs will have a lot to rethink.
If some of our VCs take this test, the final scores could deflate quite a few ego balloons…! They wouldn’t hear it from others, but now when one of them ( a celebrity that too ) hurls it at them, at least, their level of arrogance should come down.