Things VCs look for in an investment

I'll tell you what VCs look for : zero risk and a short to mid-term ROI of several thousand percent. You, on the other hand, are looking for bags of cash with no risk and no strings attached.

Going with a VC means entering a relationship. If you read this list and went 'oh yeah, I never thought of that!', you don't want to go near a VC.

VCs mean (potentially) millions invested in your company. Not revenue, certainly not profits, but investment. Millions in investment is going to be protected one way or another, which means you should have beancounters and legal advisors before you even talk to a VC.

Once you start talking to VCs, don't accept whatever comes your way. You have plenty of time to talk to other people.

Develop a relationship and establish some trust before you dive in there. VCs come in all kinds of different forms. Some just have bags of money and want you for their lottery, some have less money but can contribute in other ways (networks, financial management, etc).

If you have a successful product it's likely that at some point you'll need extra capital for expansion or product growth which is a lot more than you can loan from a bank. Take your time, look around, talk to people and remember that you don't have to make a decision overnight.

When going after VC money, entrepreneurs should understand that while the financial interest of VC’s can be aligned with that of an entrepreneur, they can never be identical. VC's portfolio is much more diverse than ours. Therefore, after we take VC money, it is not enough that we succeed; we must succeed big enough to make up for their other losses (or losses by other partners of their firm). In general the VC's and their partners are willing to take much greater risk than entrepreneurs alone since in their eyes, succeeding small is as bad as failing big (“go big or go home”). So by taking money from VC, we will substantially increase our own risk profile and force our financial outcome to be binary, either a small piece of a big pie or nothing. My own experience is that with VC investment, your probability of having a zero outcome is not only real but common.