"The venture capitalists are back. They are new and improved" after being roughed up by huge losses in the telecommunications and other technology sectors, James Zukin, a partner with investment bankers Houlihan Lokey Howard & Zukin, told the International Finance Corp.'s Global Technology Conference.

Zukin and other panelists stressed that venture capitalists will be far more intrusive once they decide to back technology ventures. Startups "will get an investor and his attorney," he added.

Other bankers said the days of funding "vaporware" companies are over. "Great intellectual property and future contracts don't repay bank loans," said April Young, senior vice president of Detroit-based Coamerica Bank. The more vaporware, the more bank scrutiny technology companies will face, Young added.

The hard-headed realism of the venture capital community is also extending to areas like initial public offerings. There's plenty of capital available for startups, Zukin said, but there are simply too many of them. "I encourage startups to merge [with established companies] to build critical mass," he said.

Young agreed that startups should take their "good ideas" to established companies, especially those investing in emerging overseas markets.

A strong management team will be just as important for startups as the technology development team. Investors will want to know whether there is a "Dr. No" on the management team who can control spending and develop a realistic business plan, Zukin said. "Investors are evaluating management."

Investment bankers also will have little patience for companies that can't control spending and are unable to show results in a few years. Young recounted a discussion about whether her bank should provide a startup with a "bridge loan." "That's not a bridge," the colleague said, "it's a pier."