Welcome to the Entrepreneurs Q&A, which features entrepreneurial experts on the issues facing the local start-up community. The guest in this Q&A is Charles Heller, director of the Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business.

As one of several local organizations addressing the Washington area's need for start-up help, the Dingman Center runs a mentor program that has assisted hundreds of early-stage companies by providing them with low-cost counseling by a corps of successful entrepreneurs, accountants, attorneys, financiers, corporate executives and faculty members. The Center also facilitates investments by private investors and venture capitalists in the region's emerging growth companies.

Q: What opportunities are open to entrepreneurs in the D.C. area?

Dr. Charles Heller: For a long time, our region was populated by so-called "beltway bandits" -- companies which performed professional services for the government. Investors were not interested in such companies because, with a few notable exceptions, there was low profitability and little chance of explosive growth.

However, two phenomena, both spin-offs from government business, changed this. First, we had small biotech companies coming out of NIH and local medical schools. Second, and this is the major event, was the development of the Internet -- a local phenomenon. The latter has sprouted literally hundreds of hot start-up companies. In parallel with this, a few of us -- most notably the Dingman Center for Entrepreneurship -- have been working on creating both an entrepreneurial culture and infrastructure. This is a critical piece of the puzzle.

The Washington area is one of the hottest regions in the country for high-tech start-ups -- as evidenced by recent start-up successes, including UUNet, Ciena Corp., Proxicom, Visual Networks and MicroStrategy. This surge in high-tech start-up activity has also created opportunities for a supporting structure of market researchers, financial consultants, public relations specialists, accountants and lawyers. Right now, we not only have a tremendous shortage of technical professionals but also of experienced managers and chief financial officers. Opportunities are everywhere.

Q: Where are the best networking opportunities in the D.C. area?

C.H.: Networking is critical. When I started my first company, there were no such opportunities because the only "entrepreneurs" in this area were real estate barons and "beltway bandits." I missed the chance to talk with other CEOs who had encountered problems similar to mine. Today, things are totally different.

The best places to network are events created primarily for the purpose of networking, as are the ones sponsored by the Dingman Center for Entrepreneurship and the Baltimore-Washington Venture Group. The latter runs bi-monthly networking breakfasts, which are sold out every time because they have become THE place for entrepreneurs, members of the financial community, and service providers to meet and talk. The Morino Institute's Netpreneur Program and the Northern Virginia Technology Council also provide excellent networking forums for local entrepreneurs.

Q: How much seed and early-stage investment capital (vs. venture capital) is available to local emerging businesses?

C.H.: There is much more venture capital available here now than ever in the past. The Mid-Atlantic region (and we should think of ourselves that way -- not as the Washington area or the Baltimore area) received more VC funds than anywhere else in the country last year.

However, there is a tremendous lack of capital at the seed stage. Seed-stage companies are pre-revenue firms. Typically, they are in the business plan stage, with perhaps a prototype of their product. While such companies present the greatest risk to the investor, they also offer the largest potential reward for the bold investor who gets in on the bottom floor, while the valuation is low. Very few venture capital firms are interested in making investments at this high-risk stage. Venture capitalists typically like to invest when there is a revenue flow and the companies are at, or near, breakeven.

Q: Who and where are the D.C. area's angels?

C.H.: Angel investors -- high-net-worth individuals -- often are successful entrepreneurs who "have been there." They like to invest at the seed stage and to provide the companies with mentoring based on their personal experiences. Typically, angel investors like to put $50,000 to $250,000 into any one deal, whereas VCs start at $500,000 and prefer deals over $1 million (because they have to work as hard, or harder, for the large deal as the small one).

The Private Investors Network (PIN), a partnership between the Mid-Atlantic Venture Association and the Baltimore-Washington Venture Group (B-W VG), is one of the few sources of equity capital at the seed stage. Approximately 100 of the region's most active private ("angel") investors look at deals each month; the B-W VG is the sole gateway for entrepreneurs into the PIN. More than $2 million has been invested in seed-stage companies in recent months.

Q: What mistake do entrepreneurs most often make?

C.H.: Don't fall in love with your idea or your technology. In order to have a successful company, there must be a market need. So, before beginning the journey, make certain that there are willing buyers out there. The Web is the most wonderful thing that has ever happened to entrepreneurs who are formulating their marketing strategies.

On the Internet, they can gather information which will tell them about market size, market growth and competition. In addition to the Web, there are the traditional approaches. For me, the best source of market information has always been the trade fair. Getting started is a hell of a lot harder than any beginning entrepreneur ever imagines; but, don't ever give up. It's worth it!