> For revenue, most likely related to the business model.

You totally lost me: In the report, I just didn't see any mention of traction or revenue. I can't see that traction or revenue are part of the business model, product, technology, or anything else that was mentioned.

Business model? Sure, for some early stage, can discuss that independent of traction or revenue.

IMHO, from all I've seen, for information technology VCs and early stage, far and away, far above anything else, what VCs want to see is traction significantly high and growing rapidly. In comparison, everything else is small potatoes. The form of traction they want to see most of all is revenue, but they will also consider number of unique users per month, any COMSCORE data, number of Web pages viewed per month, etc.

My guess is that the LPs enforce the high interest in traction. Or, the LPs very much like traditional accounting, even the traditional approach of a commercial banker where a loan is against assets as counted by usual accounting. Well, for startups, the commercial banker approach won't work, so the VCs talk the LPs into accepting a substitute, a surrogate, traction. So, the asset they are investing in is the traction. For team, determination, technology, business model, etc. accountants and commercial bankers don't care about those, so LPs don't either, so VCs don't either.

Or the VCs believe in a Markov assumption: The past and future of the company are conditionally independent given the current traction and its rate of growth. Or, if the traction is good, then everything must be good. If the traction is not good, then nothing else matters.

The report mentioned that VCs can invest in ideas. My guesses are that information technology VCs regard an idea and a dime as not quite enough to cover half of a 10 cent cup of coffee. The standard remark is that "ideas are easy, plentiful, and worthless. Execution is hard, rare, and everything." Of course, by an idea what VCs have in mind is just some fast, over the back fence to a neighbor description of the project, say, as a user or customer would see it. For people in technology, an idea is something that might get a patent, be protected as a trade secret, is the crucial, core, enabling secret sauce and the main asset of the whole project. Information technology VCs won't evaluate such ideas. I can think of no sense in which a VC will invest in an idea. Moreover, I have to suspect that VCs really hate ideas that would be secret sauce from research. Why? Because the VCs know that that then would be part of the business they would not understand, and that scares them. For technology, what information technology VCs want is just some routine software that, if necessary, they could turn over to any of 20 programmers they could recruit in less than a week.

My guess about VCs is that they are looking for some special situations. So, there are, say, four co-founders. The company has traction significant and growing rapidly. But so far the company is still losing money and, really, is about to go out of business. All the credit cards are maxed out. All four co-founders are married, and all the wives are pregnant. Then, sure, a VC might give enough money for a little more runway and take a lot of control. The company is so desperate that they are ready to sign a bad business deal. The VC sees that even if the company totally flops, given the four co-founders, he could likely get his investment back from just an acqui-hire.