I'll keep this one short but it answers a question often asked. As is probably the case with most VC's and their LP contracts, there are industries we can't invest in. Very simply put, we won't invest in gambling, porn, first-person shooter games and anything having to do with alcohol, drugs or tobacco. All LP contracts vary but it's pretty clear why some of these areas are taboo for VC funds.
Hence, if your company is in one of these industries, you will most likely have difficulty finding a venture fund to back your business. Note that I am not making any judgement on these industries and if you argue with me about this when asking to pitch me, it's a dead-end. I can't get around these rules in regards to my fund. Some VCs' contracts are a bit more lenient, i.e. they can invest in the gambling segment and have non qualms about first-person shooter games. This may change ever more in the future but they exist.
Finally, a new area where we are having trouble putting our money to work is segments which reek of a scam. Arrington just went on a rant about the social gaming segment and I agree with many of his points. We are therefore ever more critical of business cases where a grey area exists and customers can be misled into contracts or payments without knowing. I have to admit I've been seeing more and more of these deals the past couple of months. I predict we'll be seeing ever more of this crap with the growth of Facebook, Twitter and other social networks and respective monetization attempts. Even if there are some legitimate business cases there, anything reeking of scam is going to get passed over by VC's.