So what do VCs want? A few tips from my conversation with a VC representing a global venture management firm. I really can’t say more than that ~ new friendship and privacy at stake.

Startup Qualities

• Be disruptive. Does your technology offer a disruptive edge that will change or influence the consumer market. Think You Tube.
• Be on the upward momentum. VCs like startups with long-term potential and growing power. At this juncture startups have the option to go for a business model that prioritizes growth in users and profits later or profits first with a smaller user base. I found this post on the Harvard Business blog from Scott Anthony that further explains the thought process.
• Be sexy. Some VCs are attracted to startups that are in the social utility genre. You may not have a clear path of monetization and are not clearly solving a consumer problem, yet your user growth and activity is phenomenal. Think Twitter.

He further opines that with the dismal economic state “a serious correction in the venture capital universe” is needed. Venture capital management firms are closely considering more than ever the companies they invest in. A sharp decline in investment activity of 33% was reported by Stacey Higginbotham of Gigaom. Early technology stage startups will find it challenging to survive the tough economy without a compelling product and a revenue model.

His advise for startups in general until the health of the economy is revived: manage your marketing spend, manage human capital and generate revenue. Stretch those venture dollars as far as you can. The startups that prevail through economic adversity will certainly blossom.

How is your startup doing? Does your startup have the qualities that would make a VC look twice?