The decision to have a VC invest in your venture should not be taken any less seriously than the decision of choosing a spouse. After all, your life and how you spend your time will be hugely influenced by the VC. You are going to be answerable to the VC on a lot of matters. Therefore, choose a VC with whom you feel you can work well and the constructively spend the next few years of your life.

Here are some matters on which you should be asking your potential VC suitors some probing questions on:

• How can a VC add value to your venture
• Time the VC is willing to commit
• Industry or domain experience the VC has
• Fund issues

[For those of you new to this series, please read the introductory post here and the entire series "Entrepreneurship in India".]

Don’t rush into signing up with the VC just because they are dangling a good valuation in front of you and you are desperate for money. Stay rational and understand whether the VC can genuinely assist your venture’s cause or not. Many of these discussions are best had upfront to avoid any misunderstanding or false expectations to be raised on either side.

You are probably thinking how can I ask a VC all these questions, aren’t they going to think that I am being a little too aggressive or arrogant. My view is that you are a client to the VC, so don’t feel shy about asking these questions at all. In their effort to serve you, if they really want your business, then the VC should be comfortable in candidly talking to you about all these subjects. Let the interrogations begin…..

How can you add value to my venture?

There are VCs who choose to be hands-on, and there are others who give enough free reigns to the entrepreneur and prefer to be hands-off. What kind of VC do you want? Understand whether your potential suitor satisfies what you want.

Many VCs in India are first time VCs and are still figuring out what kind of role they are most comfortable with and suited for. Many are working at first time funds, and are forming their reputations in India. So, they might not be willing to be completely detached from the investments they make from the first funds. Be aware of these dynamics.

The value that a VC can add can come in many ways. Here are some ideas for you to consider:

• Ability to open doors: As a start-up, you will need access to well connected people who can help in business development, getting to key decision makers at your customers. Ask your VC what kind of network they have in India. Is this the network that will help your business. Ask them how can this network help your start-up
• Ability to help recruit people: Attracting talent to your start-up will be a challenge, especially in the current economic climate in India. Having a VC who can turbo charge your recruitment efforts will be of immense help
• Strategic and operational reviews and inputs: As the entrepreneur you will be the driving force behind your business, but don’t ignore the business judgment that a VC might bring. Additionally, the VC might also be able to share operational lessons based on his/her experience with challenges faced by other portfolio companies
• Company building skills: You will need all the help in building the organization. VCs do this for a living, so take advantage of their experience and resources

If your VC is the hand-off type and you need someone who has built businesses before and who’s business judgment you need because that is a skill missing on the founding team, you might want to look somewhere else. No point in just taking the money when the VC is not interested in devoting his/her time to you. Lets expand on this a bit in the next section.

Tags: Entrepreneurship in India, VC speak