CED seeks to sow more seed money.

• Position: ECONOMIC OUTLOOK - Interview

North Carolina companies struck fewer venture-capital deals in 2005 than the year before. But the amount they received grew 61% to $507.5 million, according to the MoneyTree Report, a national study of the industry. Companies in Research Triangle Park grabbed about 80% of the state's total, says the Council for Entrepreneurial Development, a Durham-based nonprofit that helps new businesses in the state. One concern: Seed funding declined 62% last year. Monica Doss is president of CED.

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BNC: Why the increase in venture capital?

Doss: The economy has a lot to do with it. Venture capitalists were very wary in 2001, 2002 and 2003, the years following the hightech bubble, but that didn't stop the influx of companies. We were seeing a steady stream of new technologies and entrepreneurs coming out of universities. They just weren't getting funded.

What industries are benefiting the most?

Life sciences were very strong. Because they take such a long time to gestate, those are companies that have been on the radar for a while, and they are ready to take on significant capital.

What about high-tech?

We're seeing a lot of the investments made in things that are going to change industries. They are less in software but more in convergence technologies such as new chips and sensors.

Where should I go for startup money?

First, go after grants and loans from North Carolina Biotechnology Center, NC IDEA--a seed-capital fund for technology startups--or federal-government sources because you don't give up any equity. Federal Small Business Innovation Research grants are particularly attractive because North Carolina has such a strong matching program. Second, you should talk to angel investors, individuals who invest in startups or business concepts. CED can help identify matches, but lawyers and accountants are also good referrals to angel groups or other high-net-worth individuals. If you're in a research-based industry, you probably need to go to venture capitalists next.

What do investors look for?

Proven management, early benchmarks, a sizable market and/or evidence of secured intellectual property.

Why are most of the VC deals in RTP?

Most of the people who are starting these companies and getting the money have their roots here. They've worked in RTP companies or nearby research universities.

North Carolina ranked eighth in venture capital raised. What does that mean?

It means we're not screwing up. It's highly competitive, and...