Venture Capitalists Love Tech -- Here's How to Compete

Companies that can increase the quality of video transition or converge cable, satellite and Internet will draw dollars because of their growth potential, he says.

Cochran invests in Broadcast Technology, which allows for video transmission of content in real time. The company has grown significantly and recently signed a two-year agreement with IBM(IBM Quote).

Will VC Want Me?

No matter what's hot at the moment, the tech company that maintains a comprehensive revenue model and a solid management team will appeal most to investors, says Cochran.

"I bet on the jockey not the horse," he says of his investment choices, 95% of which are based on the company's management.

Investors also want proof that the management team invested their own money in the company -- this way management has more to lose if the company fails.

Art Chang, CEO of Tipping Point Partners, looks for companies that have garnered interest from family members. This shows the entrepreneur has a more personal commitment to the company, he says.

When dealing with sophisticated investors, always know the net present value of your customer, says Cochran. "Most entrepreneurs will never think about [their customers] in those terms but the astute investor always will," he explains.