Spend ten minutes talking to any investor in the community who sees a lot of deals and inevitably you find that the companies that've been around are largely the same. The good ones (whatever your definition is) and the not so good. And, when the "not so good" come back around every six months or so it makes it harder and harder for them to get any traction.
In the latter category, it strikes me how often the common characteristics arise that prevent these companies from reaching their goals.
Some of those characteristics include, of course, product issues. I looked at a medical product recently and asked the obvious questions about competition, distribution strategy, pricing, and so forth. I sort of knew a couple of the probable answers but assumed the entrepreneur knew more. What I got for a response consisted largely of "we're not worried about that," but without any ability to explain why. I took it as "whistling past the graveyard."
I once spent a lot of time talking to an entrepreneur about an energy product for which he claimed there was no competition. After a half hour of web searching I found Khosla Ventures investing in essentially the same thing - to the tune of $10MM or so. When I next met him and asked, he said "Well, yes if they succeed we'll probably get killed," but then went on to add "I didn't mention them because I don't count them as competition since they're not launched yet."
I wish that entrepreneur appreciated how that sounded. We moved on.
On the flip side, sitting through pitch two recently (I'd also heard pitch one) in introducing the company I overstated the size of the upside potential and was promptly corrected by the entrepreneur. Made the opportunity look less good but the entrepreneur looked a lot better. We wound up investing.
To be in the "good" category - beyond the product and market and competitive issues -- be prepared to:
Have a good grasp of comparables for your stage of development;
Talk about uses of funds as the fastest path to risk reduction in the shortest time for the least money;
Explain the facts and the hypotheses and where they diverge be prepared to explain your Plan B and how you'll get there.
Realize there are always two things going on - questions and answers and an underlying test for integrity and knowledge.
And finally realize that you leave a trail. Make it a great one.