Most applications can be installed on to Custom Virtual Machines in a completely standard way, as long as all of the pre-requisites are satisfied (eg. RAM, free disk space, software updates and so on).
However, a small subset of applications, the most common of which is SQL Server 2016, need a specific update installed prior to installation. The root cause is that certain applications do not correctly check for and detect whether certain CPU capabilities, such as AVX, are present when running under certain virtualised environments.
SQL Server 2016 (any edition) requires Microsoft Update 3174417 to be installed prior to starting the SQL installation (older versions of SQL Server are not affected). Otherwise, installation will fail while trying to start some of the SQL Server services, with errors stating "the service did not respond to the start or control request".
If the installation has already been attempted and failed, it is necessary to install Microsoft Update 3174417 (and in some cases also Microsoft Update 3179560), before uninstalling and then re-installing SQL Server 2016.
Both of the updates mentioned above, as well as further information, are all available here.