Here are some snippets from a 5 Dec 05 article in HBS Working Knowledge entitled "VCs Survey Post-Bubble Opportunities" by Julie Hanna.   I encourage you to read the whole article for the context:

"We're in the lottery business—but we know we're in the lottery business."

"It's an extremely hit-driven business that's becoming more and more like the movie industry in that sense."

" . . . it's easy for an entrepreneur to make a few phone calls and find out what value you added to your last venture and how you behaved when things didn't go well."

"A lot of opportunities in the tech sector are about execution, not technical expertise, said Kapoor. A sense of timing and a good marketing instinct are two qualities at a premium in today's market."

"You can't run against the wind, You have to have the market with you."

Bottom Line: Read the article for some frank comments. Draw your own conclusions. Know your investors' point of view. See a separate post for comments on sectors other than software.