Madhu has raised some interesting, and perhaps, furstrating, questions regarding what really VCs want. A fair description of the same has been outlined by Chris Wand.

Still being more of an entrepreneur than a VC, one learning I have is that VCs are not a homogeneous entity. Some key parameters as you look to choose a VC:

1. Stage — Angels, Series A VCs and Series B VCs are different breeds. While the first one will invest (maybe under a crore in India) for an innovative team and idea, the series A VC wants to see a more broad based team, lead paying customers and clear differentiation — this kind of VC funds the path to profitability. Gaps in team are acceptable but to be clearly recognized. Investment size will very with plan, but typically under $5m. Series B VC will typically take a profitable (or close to it) company, with the management pretty much in place, and basically fund expansion (depends on the business, but typically over $5m).

2. Expertise of the VC — Especially at early stage, it is hard to understand and fund businesses where none of the VC partners have expertise.

3. Portfolio — See if the firm you are looking at has made some prior investments which are synergistic.

Part of the frustration in India arises from the fact that some of the parts of the financing ecosystem are underdeveloped. But its getting there…