By every measure except one, Licom Inc. of Herndon, is a home-grown business.

Its founders worked at M/A-COM Inc. in Germantown before they left the communications giant to start their own company. They opened Licom's first office in Rockville, staffed their new telecommunications firm with local employes and began buying parts and services from 21 other Washington area companies.

The glaring hole in this otherwise amiable portrait of a new and flourishing local enterprise involves the $3 million it took to start Licom and the $6.75 million it took to propel Licom through three years of development. That money came not from Washington but from venture capitalists in New York; Westport, Conn.; Cleveland, Ohio, and San Francisco.

"The venture funds in the Washington area do not have a lot of experience in doing high-tech deals," said Larry Campbell, chairman of Licom and one of the company's two founders.

Going outside of the Washington area for money to start new businesses seems to be the rule rather than the exception. Washington has relatively few firms that offer venture capital, especially when compared with New York, San Francisco and Baltimore.

While there are several venture capital firms in the Washington area, the money they have available for investing is far smaller than the needs of new companies. The dearth of venture capital reduces the number of potential entrepreneurs, said David Gladstone, president of Allied Capital Corp., the major venture capital provider in Washington.

"My perception of the world is that you've got to have the money available and have the venture people out knocking on doors and trying to find investments before you will have entrepreneurs going into business for themselves," Gladstone said.

Allied Capital has about $85 million invested in about 90 venture companies. Greater Washington Investors has about $17 million invested in 35 companies. Neither fund has all of its money invested in the Washington area.

Two other firms, Atlantic Venture Partners of Alexandria, an affiliate of Wheat, First Securities in Richmond, has a $20 million fund; and Venture America of Vienna, has two funds totaling $5 million.

At Greater Washington Investors, Marty Pinson, senior vice president, offered these reasons for the relative scarcity of venture capital in Washington.

"Washington is not one of the great money centers. It doesn't have a history as a financial town. While it has substantial wealth, it is more real estate-oriented than technically oriented," he said.

Two years ago, a Greater Washington Board of Trade task force concluded that despite a large number of high-tech businesses in this area, "Washington does not have a reputation as a major, national investment area for new technology-based businesses. ... " Especially when compared with the Silicon Valley in California or the Route 128 corridor near Boston.

"In these communities, the presence of major, internationally renowned research universities supporting entrepreneurial efforts and the existence of an effective business development infrastructure are important factors in attracting venture capital to the region. Washington has no significant national reputation in either."

An estimated 250 to 300 high-tech companies opened for business in the metropolitan area in the past 12 months, according to Prof. Mark A. Spikell, faculty adviser to the Entrepreneurship Center at George Mason University. Only about 10 percent received any venture funding, Spikell estimated, and most of that came from investors outside of Washington.

D.C. technology companies clearly are attracting increased attention from outside the area. Jeffrey Harris, vice president of E.M. Warburg, Pincus & Co., in New York, Licom's key financial backer, said his firm had identified the Washington area as "a place we should spend more time" because of the number of high-tech companies developing in this region.

Gladstone of Allied Capital said most Washington area banks show little interest in lending money to young firms unless they have real estate, machinery or other hard assets to use as collateral. A high-tech or service company may make millions of dollars a year in sales, but that is not likely to persuade bankers to lend them money, Gladstone said.

Gladstone, a longtime critic of the banks' reluctance to put money into venture capital, said, "I blame myself in some regards because I'm not able to raise a $100 million technology-oriented venture fund. I blame the banks. I blame the financial institutions that don't back people like me. That's my frustration."

Thomas J. Owen, chairman of Perpetual Savings Bank, said the attitude of the financial community was based, in part, on tradition. "You have to recognize that the regulated lending community in Washington has made a good living for decades on real estate lending and lending to the more traditional type of businesses such as auto dealers and the retail community."

He said the bankers "are trying to overcome an uncomfortable feeling with start-up companies or manufacturing companies that don't fit the normal pattern." Financial institutions in other cities of the size of Washington seem to be more accustomed to dealing with these companies, he said. "We have to get more comfortable with loans that are dependent on a one-year government contract," he said.

When Campbell was looking for start-up money, he said, he talked with Allied Capital but Allied wasn't doing first-round financing or high-tech investing. Allied prefers to invest at somewhat later stages.

Campbell found his money in the coffers of Warburg, Pincus, and from Penn Central Corp., both of New York. They each put up $1.5 million in the first round of financing.

Warburg, Pincus, with $1.5 billion, is perhaps the nation's largest venture capital firm. Penn Central began investing in new high-tech firms in the years after it emerged from bankruptcy. Warburg, Pincus has more than $6 million invested in Licom, Penn Central has more than $3 million.

Henry Kressel, managing director of Warburg, Pincus, said he advised his firm to invest in Licom because he considered Campbell "a genuine pioneer" in fiber optics communications and believed that, with changes taking place in the industry, "we could build a major company." Kressel serves on Licom's board of directors.

Licom's products allow managers of telecommunications systems, such as those at the Bell operating companies, to better control the flow of voice and data traffic in an era when fiber optics permits a sizable increase in communications flow.

Campbell said he expects to make $3.5 million in sales in 1987. And he looks forward, he said, to sales of $13 million to $15 million in 1988. He expects Licom to be profitable by mid-1988.

Gregory Kenny, director of business development at Penn Central Telecommunications Co., will soon join Licom's board of directors as a representative of his firm. Kenny said Licom's success thus far was based on having developed key products well before the bigger companies. "They seized on a concept with a lot of guts and went like mad on it," he said.

In the second financing round, which raised $6.75 million, Warburg, Pincus put up $1.5 million; Penn Central $1.5 million, Welsh, Carson, Anderson & Stowe of New York, $2.25 milllion; Oak Management Corp. of Westport, Conn., $750,000; Weiss, Peck & Greer of San Francisco, $750,000.

In the third round, which raised $11 million, Citibank of New York joined the list of investors, putting in $1.5 million. Morgenthaler Ventures of Cleveland contributed $1 million, while several of the previous investors put in a total of $7.75 million.

The only investment in Licom by a Washington venture company came in the third round when Greater Washington Investors put up $750,000. It came about in an informal way that typifies the venture capital world.

Greater Washington's Marty Pinson recalled that he met Campbell at a seminar on venture capital, heard about Campbell's company and told Campbell to let him know if he needed money. Sure enough, when Campbell was looking for third-round money, he called Pinson.

Campbell said he did so because he was interested in having a local company participate in the funding.

Pinson said he invested because he was impressed with Licom's mission, its management and the caliber of the investors already backing the company.

In retrospect, Pinson noted, Greater Washington Investors might not have been able to invest in Licom at the "seed money" stage because of the large amount of money -- $20.75 million -- that it eventually took to finance the company. Greater Washington generally is limited to smaller investments.

Before starting Licom, its founders were working at M/A-COM in Germantown in 1983. Campbell, now 43, was managing the Lightwave Communications Division. Chapman, 33, worked for Campbell as department manager of fiber optics programs. Both were interested in starting their own businesses and each was convinced he could find a profitable niche by developing telecommunications products that took advantage of the benefits of fiber optics.

Chapman was the first to leave M/A-COM, departing in June 1983, after accumulating enough money to support his wife and four children for about six months.

"I decided there were opportunities out there, and I was going to go out and look for them," he said.

True to the best traditions of the entrepreneur, Chapman started work in the basement of his Gaithersburg town house, working on a fiber optics protective relay system for utility companies.

Giving up a well-paying job for a fling at the unknown was an experience filled with uncertainty, Chapman said.

"It was a little like jumping out of an airplane while wearing a parachute. You might get down safely but it was kind of scary," he said.

Campbell left M/A-COM in November of 1983, facing the same mixed emotions. He and his wife had three children at the time -- they now have a fourth. Beyond the financial risks, Campbell recalled, there was the awareness that he would be working extremely long hours to build his business. "It seems the families take it on the chin," he said.

Shortly after Campbell left M/A-COM, he and Chapman formed Licom. Again true to the entrepreneurial tradition, their first office was in a converted garage in Rockville.

Before Licom was formed, Chapman made a stab at trying to raise some start-up money in the Washington area by calling on banks. He got a blank stare, he said.

"I found that people {at the banks} were not at all familiar with the concept of venture capital." If they were, they were looking for the kind of collateral he didn't have.

When Campbell and Chapman began talking with Warburg, Pincus in New York, it was a different experience, Chapman said. Warburg, Pincus officials understood their ideas and what they were trying to do. "There was a completely different perspective," Chapman said.

The three rounds of financing have left Campbell, Chapman and others working in the company with less than a 20 percent ownership of Licom. Both men said they had no regrets about giving up so much of their ownership to attract venture capital funds.

"I decided it was better to own a small part of something very big than a big part of something small," Campbell said.

The general strategy being followed by Campbell is to build his company until it is strong enough to make a public stock offering, making his stock and the stock of the investors worth many times its initial cost.

The influx of money from outside Washington is going to grow, said Kirk D. Brown of Arthur Young Entrepreneurial Services.

"There are more deals being financed by investors from outside of Washington than are being financed by investors from Washington. ... A lot of these investors are going to have branch offices. ... And they are going to bring a whole different level of player to the city," he said.

Players in the venture capital arena often resemble miners sifting through tons of gravel to find a single gold nugget. George Mason's Spikell described the odds that confront people trying to get funding for new businesses.

"The typical venture capitalist will have a fund of at least $10 million. He will see 1,000 potential deals in a year. Of those proposals, he will spend more than 10 minutes with only 100. He will seriously investigate only 32 proposals and will spend from $5,000 to $25,000 studying whether to make the investment. Out of the 32, he will eventually invest in only 10. Of the 10, the venture capitalist must have one outstanding winner. And he needs at least two others that are moderately successful. Two others will be wiped out. The remaining five may return some of the invested capital but will make no profit."

What kind of return do venture capitalists hope to get on their money? They are looking for a return of five to 10 times their money in five years, said John Sanders of Wachtel & Co., in Washington, a brokerage firm that specializes in raising money for small, promising companies.

"The key is patience," said Sanders. "There's not near as much guts as there is patience."