What VC’s want in a software/services startup

Here are some notes from a seasoned entrepreneur who attended this SDForum VC Roundatble event last night in Palo Alto featuring the following panel:  Rebecca Lynn (Morganthaler Ventures), Evan Liang (Shasta  Ventures) and Rohit Gupta (Opus Capital).
Comments re. what VC’s are seeking in a software/services startup:

subscription models are favored; free first, [...]