Entrepreneurs are always trying to figure out what it takes to get funded by the brand name venture groups. VCRatings recently wrote a post using Sequoia's website criteria for what they look for in a start-up. While these seem fairly straight forward, I thought it would be helpful to expand on some points. Historically, the elements that are the hardest and most intangible are:
1) Team DNA: this is one of those "you'll know it when you see it". However, if the VC knows more about your space or business model than you or you come across as naive due to your claims, it is not a good start. The tech world grows more Darwinistic each day and those with the best street smarts win (not always the brightest). "A's" attract "A's". Compare your team (honestly) and yourself to your highest profile competitors and determine how you stack up along the lines of creativity, tenacity, execution, public persona and such. Also, do the same against the "best in class".
2) Think Differently: VC's get lots of pitches on any given area. It is those teams that can think about a problem or solution from a different angle, especially one that makes it more defendable, that stand out. It makes a VC want to hear more about how the team views the problem. Teams that can approach a problem from a different angle are advantaged since other competitors will be biased towards their own way of thinking (which may be flawed or too traditional/cookie cutter). This gives the team a head start and on-going advantage if they have the better mousetrap regarding approach.
3) Agility and Frugality: Iterate quickly and see what the customer wants. Keep it simple. While you're at it, don't spend a lot. Money doesn't solve problems but usually causes defocus. Mike Cassidy (of Direct Hit and Xfire fame) believes in keeping everything to a minimum when launching to force focus and discipline. Think small and fast.