Not necessarily. Some of the best businesses in the valley were turned down by several VCs before getting funded. Many VCs are like sheep..."good" or "bad" is irrelevant, as long as others want in on the deal.

I know several companies that I know are going to be great businesses, but haven't had an easy time raising money because of lack of skills in other areas. The presentation is at least as important as the product, because getting past stage one requires a good presentation. There are lots of PowerPoint-fu masters in the valley who've been funded numerous times, and have yet to build a business.