The three-part test, the honest conversation about exits and why some great businesses should never take VC money.

If you’re building a business in South Africa and wondering whether to raise venture capital, the first question to ask isn’t “how much should I raise?” or “which VC should I pitch?”

It’s “Should I be raising VC at all?”

That’s a question SA VC Keet van Zyl has spent 15 years helping founders answer honestly.

Keet is the co-founder of Knife Capital, one of South Africa’s longest-standing VC firms. He’s a chartered accountant turned investor, with stints at Investec’s specialised finance team and at HBD Venture Capital (Mark Shuttleworth’s fund) before co-founding Knife in 2010. His portfolio includes exits to Visa, Uber Eats, General Electric and Ticketmaster.

Here’s his workflow for working out whether your business is VC-fit — and what to do if it isn’t.

Before you put together a deck, before you try to get introductions, before you spend a month on projections, run Keet’s three-part test on your business.

He looks for three things: “three things we look for. A large addressable market must be big, whether it’s South Africa-sized or global-sized. Second thing, kickass product or service. And the third thing is an entrepreneur who can execute all three of those things. Then the magic happens.”

Miss one, and the business can still be great, but it’s not VC-fit, and everyone’s going to lose out on value.

VCs don’t need every investment to be a unicorn, but they do need the ones that work to return the whole fund. That means your market needs to be big enough to support a business worth at least 5x to 10x what they invest.

In SA terms, that’s not necessarily global domination. Keet is clear that Knife isn’t in the unicorn-hunting game. Their cadence is more like investing at a R50 to R100 million valuation and exiting somewhere between R250 million and R1 billion. That still requires a genuinely big market, but it doesn’t require you to be the next SpaceX.

Ask yourself honestly: if your business did really well, how big could it get? If the answer is “R20 million revenue, comfortable lifestyle business,” you’re not VC-fit. And that’s fine. It just means bootstrapping or bank finance is the smarter play.

This is the one founders flinch at. Keet doesn’t mince words on it.

“Most entrepreneurs’ products and services aren’t top-tier. It needs to be top tier, top 20%. That’s the first question entrepreneurs must ask themselves in the mirror: am I really that good?”

A good product isn’t enough. An “innovative” product isn’t enough. Your product needs to be in the top 20% of what exists in your space — either because it’s meaningfully better, or because it solves a real problem that nothing else solves well.

If you’re not sure, the honest test is to ask the users who actually pay for it. Not your friends. Not your advisers. The people writing cheques.

A big market and a great product aren’t enough if the founder can’t execute. Keet’s point is that all three have to line up for VC to make sense.

“If you get an entrepreneur who can’t execute a great product into a large market, it’s not going to happen. If you get an entrepreneur that’s amazing at execution, and it’s an amazing product, but there’s no large market for it, it’s going to be the best product never sold.”

Execution isn’t just product velocity. It’s the ability to hire, sell, manage cash, handle a board, navigate tough conversations and keep moving when things get hard. If you’ve done all three before, VCs will see it in your track record. If you haven’t, you need to be honest about whether you’re the right person for the next version of this business — or whether you need a co-founder who fills the gap.

This is the step most founders skip, and most VC relationships blow up over. If you take VC money, you are signing up to exit. Not maybe. Not eventually. On a defined timeline.

“Entrepreneurs need to know that we are in it for building your business, but at some point, there will be a divorce, because we have to exit. Entrepreneurs sometimes want to build a business for their kids. Then maybe VC is not a good fit.”

Funds have vintages. Typically, a 10 to 12-year window to both invest and exit. That means if you raise today, your VC is going to want a path to a sale or listing within about 5 to 8 years. If you’re building something you want to run for 30 years and pass on, VC isn’t for you. That’s not a criticism of your business — it’s just a mismatch of instruments.

If you’re not VC-fit, that’s useful information, not bad news. It just means the capital and the relationship that comes with VC money aren’t going to work for your business.

Your options are still good:

Finding out you’re not VC-fit before you spend six months pitching is one of the most valuable outcomes this workflow can produce.

Two things make this self-test more important in SA than in, say, the US.

First, our VC ecosystem is smaller and more concentrated. There are far fewer funds, which means wasted pitches burn through a finite pool of relationships. Pitching a fund that was never going to be a fit doesn’t just cost you time — it uses up a door you might need open later.

Second, SA VC returns come from a different shape of deal than Silicon Valley. Keet is explicit about this. SA funds can’t afford to bet on “nine fail, one becomes a unicorn.” The cadence here is more like two or three that shoot the lights out, most that become solid lifestyle businesses, and maybe two that fail. That changes what VCs need to see. They need real execution, real traction and a real path to an exit — not just a big vision.

As Keet puts it: “It has to be a commercial thesis. It can’t be a ‘help us create jobs’ thesis, because that’s venture socialism, not venture capitalism. At the end of the day, we have to return.”

Running this test honestly saves you years.

If you’re VC-fit, you’ll walk into pitches knowing exactly why your business qualifies, which makes every conversation sharper and faster. If you’re not, you’ll stop chasing a funding instrument that was always going to be a bad fit and start building the business with the capital structure that actually works for what you’re building.

It takes an afternoon to work through. It saves you the kind of mistake that’s very hard to undo.

Working out if you’re VC-fit is one part of a much longer conversation. In Keet’s full Founder Collab masterclass on The SA VC Funding Landscape, he walks through:

You can get access to Keet’s full playbook, plus 40+ other masterclasses from South African operators, founders and experts when you join The Founder Collab.

This workflow first appeared in our 22 April ‘26 edition on AI Diagnostics TB screening.

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