Jeff, from SAP Ventures, has recently written an interesting post: Pick Your VC Carefully. A number of BlogoVCs have made reference and added interesting comments to it (Ed, Brad, Fred, Marc, Stephen).
I would tend to agree with most of Jeff's points, and they are certainly very valid for entrepreneurs to be aware of. The issue of alignment across investors (or lack thereof) is typically a critical problem that has sunk companies that might have had a chance to survive otherwise. However, when I read this post, I had to think a couple of times "Yeah right, that is true but only if have the luxury of picking your VC".
Looking at it from a VC standpoint, the firm and the partner involved in a deal, their track record, reputation, knowledge of that particular domain, and your previous experience co-investing with them, are definitely key decision factors in an investment process.
Quite often however, founders/executives do not have the luxury investors have to pass on funding opportunities where the syndicate does not feel "right". Entrepreneurs, especially first time founders, don't always manage to attract the interest of more than one firm for their initial rounds of financing, which means that they are "stuck" with the partnership which is willing to step in and take the risk of funding their company.
In these cases, Jeff's points are still valid, but have to be balanced during the terms negotiation phase, in order to focus on the ones that are the most important. One aspect I would recommend not compromising on is the "fit" with the partner who will be in charge of the deal, sit on the board, and work with the team for the next 3 to 7 years. It is acceptable (at least in many partnerships I have work with) for a startup to ask for another partner in the firm to take over the deal. As Brad states, "Partnerships are a 2 way street", and there is no reason expectations and requirements should only be expressed by VCs.
I also wanted to comment on a dimension added by Fred: brand names vs. specialist firms. Specialist firms focus on a very specific class of deals, with a narrow definition of industry, technology, market, stage,... Their principals need to have a deep expertise in the "niche" (which might represent a huge market) they have selected, very often both as investors and operators. They also have a very deep network in their industry, allowing them to access more easily than others potential partners, customers, and eventually acquirers.
In certain cases, it is very appropriate to combine a brand name with such a player, because of the wealth of relevant experience and contacts they bring. It might also happen that a brand name does have a partner with deep operating experience in the domain (like, for example, Venetia Kontogouris over at Trident Capital in the business information space).
That's like saying "Careful which supermodel you go out with." Most people count their blessings to find ONE.