What Should the Founding Team Consider While Fundraising? Most successful startups end up having a vastly different product offering and business model than what they started out with. This is inevitable in a fast changing and competitive environment. Which brings me to the single most important aspect for me when I evaluate a startup: the founding team

Before I became a VC in 2006, I'd spent most of my prior career as a software executive in Silicon Valley. The last startup I worked at was doing okay, but really nothing to write home about. Customer feedback was mixed. The company was bleeding cash with no path to profitability. To us on the inside, the future looked bleak.

And yet, we were able to raise a large Series C round, in a brutal funding environment! After the dot-com bubble burst in 2001, Silicon Valley became a graveyard. Every third office building had an "Available for Rent" sign on it. Many VCs also closed shop. Despite all these odds, this company raised a large round.

Years later, I realized how this happened. It was the founder! He knew his stuff like nobody else did. Despite the average company performance, VCs would have decided that this was someone they wanted to back. They would have felt that this founder had the passion and the ability to navigate the business through thick and thin and to build a long-term sustainable business.

When we evaluate a startup, we assess the market size, business model, competitive environment, and product differentiation. These are all critical aspects of any startup evaluation. It goes without saying that all founders should be ready to talk in detail on all these aspects. And most do. Today, I rarely attend a funding pitch where the founders are not very well prepared - the ecosystem in India today ensures this.

Investing in a startup is akin to committing to a 10- year relationship. Like any relationship, one between a VC and a Founder has to be built on trust and mutual respect

That said, in almost every startup, the business landscape after five years is probably very different from what it was in year one. Most successful startups end up having a vastly different product offering and business model than what they started out with. This is inevitable in a fast changing and competitive environment. Which brings me to the single most important aspect for me when I evaluate a startup: the founding team.

There are two questions that I always ask myself:

a. Does this team have the passion and commitment to stick with this for the next ten years? In a recent board meeting, after 30 minutes of the investors relentlessly pushing the founders for more growth, the exasperated founder finally said: "Guys, I'm playing a Test Match and not a T20 game". What he meant was that a startup journey takes at least ten years. There will be both near-death moments and there will be exhilarating moments. However, building a long-term sustaining business requires focus, consistency, and commitment. Hitting a six in the third over is pointless if you're going to get out in the fourth over.

Making this assessment is not easy and is very subjective but is a critical aspect in my evaluation. Similarly, every founder should also ask the question: Does this investor have the deep pockets and commitment to continue to back me, particularly when times are bad?

b. The second question is even more subjective and that is: Is this a founding team that I personally can work closely with?

Investing in a startup is akin to committing to a 10- year relationship. Like any relationship, one between a VC and a Founder has to be built on trust and mutual respect. I talk to my founders every week. Sometimes, we chat about random things completely unrelated to work. I tell them to call me right away when there is bad news - good news can wait.

There are times when I might lead an investment into a company, but I ask a colleague to take the board seat instead of me. That's because I feel that the founder- investor equation would be more effective with them rather than with me. Similarly, every founder should ask the question: Is this investor really the right individual to sit on my board?