These are NOT meant to be all inclusive of what questions to focus on ..... but will arm you with a solid framework to work from.
1) What resources do they bring to the table from a high-level perspective - all VC's claim they add value, but in what ways?
2) How often would board meetings be held, how often and in what manner do we maintain communication? Weekly calls, email reports, KPI's, or do they want access to internal systems, bank access. What's the threshold before a purchase, hire, expense/expenditure should be shared with them? (Is it $500, $5000, or $50,000?)
3) If they claim they know everyone under the sun, what is the "process" to make those introductions. Do you share a spreadsheet of contacts you want to meet, do they "go to bat for you" and "tee up" the introduction, do you have to go to their events/meetings, or are you suppose to drop their name and expect a callback?
4) What boards of other companies is the "VC on your board" sitting in on? How much time does he have for you - what is the caliber of those companies versus yours? If Mark Zuckerberg calls an emergency board meeting, and he has to go - he will go, let's face it, you're not quite FaceBook yet.
5) Which law firms do they work with, have worked with, and feel comfortable with. How much do they charge, what are the estimates for closing funding (negotiate for a cap!)
6) I assume you are talking to early-round VC's, how many companies have the VC participated in their portfolio companies' later round? Do they pump and dump or do they stick it all the way through?
7) Look at their portfolio companies and find out whether they were the lead investors or just follow-ons. Do they usually lead or follow?
8) What's a typical due-diligence process like? (Yes, you own your code, right? You have all the work-for-hire agreements and intellectual property transfer agreement... if not, you better get them quick).
9) Most VC's will show you a their tombstones (trophy) of startups that went public, or sold for many millions of dollars. Ask for the real tombstones, which companies have they funded are in the deadpool or delisted from their glossy website. What happened? (Don't dwell too much on this, makes everyone uncomfortable, but it’s good to know how they treat the founders of companies that didn't make it versus claiming how they are BFF with Sergei and Larry)
10) When did they close their most recent fund. How big is it? Are they towards the end of the fund (it’s about to dry up, son) or at the beginning (happy days are here again).
11) What is their investment thesis. (What's yours?) What is their exit expectations (ask for a ballpark range - the real answer will be revealed in the term sheet hidden somewhere in the text between their liquidation preferences and protective provisions <--- Google it)
12) Can I have some references of other founders and companies you have funded? (No, their internal EIR does not count, he already made money and will have nothing but happy roses to talk about how they came in at the last moment and saved their asses and now its kumbaya and happily ever after)
If you ask at least the above questions … you’ll be much better off than 95% of other start-up business who don’t ask these questions. Be prepared.