Mark Ein spent seven years investing in other people's companies.

Now, he's taking that experience and starting one of his own.

Ein, 34, has just left the Washington investment firm the Carlyle Group to launch Venturehouse Group, a cross between a venture fund and a technology incubator that nurtures new local companies.

"I found myself being most interested in working closely with the companies," says Ein.

"It's really cool to create stuff. I realized that was what I was passionate about," he says as he excitedly shows off the new Venturehouse space--a 7,500-square-foot loft with exposed brick and huge windows just above the District Chophouse downtown.

After years in the business, and working with companies such as LCC International and Telcom Ventures, Ein has in the past three months collected $25 million for his fund, with another $25 million promised. He expects to have the $50 million in hand by the end of the year.

"I've saved these relationships until I had the right thing," he says.

His first investors include Jeong Kim, the Yurie Systems founder who is now a Lucent Technologies executive; Teligent chief executive Alex Mandl; Telcom Ventures chief executive Rajendra Singh; Robert Allbritton of Allbritton Communications; and Nobel Prize winner Arno Penzias.

Besides $1 million to $2 million of initial funding, Venturehouse will give start-ups, mainly in the Internet and telecommunications industries, a roof over their heads and continual access to advisers who specialize in business management, law, finance and technology. While each deal will be structured differently, Ein and his investors will take a 30 percent to 40 percent equity stake in each business.

About four to six companies at one time will live in Venturehouse and then move out into the real world six or nine months later.

Raising the first pool of money has not been difficult. "The entrepreneurial bug is so widespread these days," he says.

The biggest challenges, he says, have been what all start-ups face: choosing a name and logo, developing a Web site (at www.venturehouse-

group.com because venture-

house.com was already taken), finding real estate and hiring a management team.

That Ein picked a downtown location, one near MCI Center, might surprise some who think Northern Virginia is the only place for techies to prosper.

But he joins a growing number of District-based tech companies, such as Enews.com, Blackboard Inc. and VarsityBooks.com, whose executives say they love the youthful downtown energy and believe that their location helps to recruit city-loving techies.

Ein, who grew up in Washington, says he'll have networking parties and fun all-purpose rooms in the space, which was built in the 1880s and was a bank in its previous incarnation.

"It's just the right environment," he says.

Turns out there's a behind-the-scenes story involving family favoritism that helped bring about last week's alliance between Value America of Charlottesville and Federal Express.

That's not a rap against Value America--an e-tailer for all kinds of products--because the company has a very clear policy on nepotism. "We encourage it," says chief executive and founder Craig Winn.

You'll see husbands and wives, brothers and sisters, and fathers and sons all working at the company. So when the son of company director Fred Smith was looking for a job, Value America was happy to give him one. Smith, who is chief executive of the parent company of FedEx, personally has invested $5 million in Value America, and FedEx has also invested $5 million.

"I needed a job and said, 'I'd like to intern for you,' " said Richard Smith, 22.

Richard Smith, in a much-publicized case, was on the job market because he had been suspended from the University of Virginia last year after being convicted of assaulting a fellow student. Smith is now suing the school.

His title at Value America is "FedEx project manager." He came up with the idea for a marketing deal in which FedEx promotes Value America on its well-trafficked www.fedex.com site, and Value America pays the shipping on those items. Winn says it's cheaper than advertising the old-fashioned way, in a newspaper or on television. Now they have 300 items in the deal but plan to offer many more.

Winn is philosophical about Richard's U-Va. incident. "The best victories of life are when something good comes out of something bad," says Winn.

In the Washington technology community, CyberCash Inc. has always been known as that company with the visionary ideas that didn't quite mesh with what the public wanted.

Now the man with the original vision is stepping down.

William Melton, founder of CyberCash, which makes e-commerce technologies for merchants, will remain as chairman but give up the chief executive title to Jim Condon, the company's president and chief operating officer.

As if to signify that he will still be involved, Melton also said this week he'll personally give $10 million to CyberCash, which has yet to see profitability and whose stock, now trading around $11 or $12 per share, so far has not benefited from the Internet trading frenzy.

"It's been clear for some time we needed additional funding," says Condon, adding, "It didn't have to come from Bill."

Condon says he thinks Melton, a serial entrepreneur, will not start another new company and instead will become more involved in charitable projects.

While Melton is big-picture, Condon is hands-on. And Condon says every company needs one of each kind of person at the top. "Love him or hate him, if Apple could have managed to keep Steve Jobs as chairman and found an operational guy to balance it out, it would have been better for shareholders," says Condon.

Send tips and tales of the digital capital's local people, deals and events to Shannon Henry at henrys@washpost.com.

TechThursday columnist Shannon Henry will host a live Web chat today at 1 p.m. with Raul Fernandez, founder of Proxicom, an Internet consulting and e-commerce company. To participate, go to www.washingtonpost.com.

CAPTION: Mark Ein says the downtown location for his Venturehouse Group, on Seventh Street NW, is "just the right environment."