“Why should I marry you?” and other questions to ask VCs (during fund raising process)

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Time commitment

Raising capital in India is not difficult. Raising capital from the right partner is challenging. Just money might not be the right kind of resources you need from a VC. Sometimes, the time that a VC is willing to spend on the business is far more important than the capital the VC firm supplies.

Ask the VC how much time is the firm willing to spend with you – on the phone every week, face-to-face meetings, board meetings every quarter, any other time you need them. Ask the VCs other portfolio companies how much time they are able to get from the VC on daily, weekly monthly basis. What kind of a working relationship does the VC have with the entrepreneurs? Is the VC there for the entrepreneur when needed? The last thing you want is VC who you just cannot get hold of because they are too busy with other activities.

Industry experience

Does the VC have the industry experience that you want from your investor? This could be important because you might have become interested in the VC in the first place because their firm might have had a track record of investing in businesses in your sector, or might have built a business in the industry in the past. Understand what value you are placing on the industry experience. Is the partner who has done all these deals in your chosen sector still at the VC firm, or has he/she moved on, or changed his/focus.

Industry knowledge or experience is also important because it will help the VC understand the nuances and issues that are particular to the industry that your venture is in. This VC might also understand the hidden challenges and sources of value better than someone looking at the sector for the first time. Most importantly, this investor won’t panic when things don’t go according to plan, because they might be more familiar with issues confronting the industry or the operational issues that are peculiar to your industry.

I would also add that you might ideally want a VC who is familiar with how things work in India. Don’t underestimate the awareness or familiarity that someone has on how to build businesses in India.