Triangle companies as diverse as Red Hat, Quintiles Transnational and Inspire Pharmaceuticals can trace their early growth to financing provided by venture capitalists.

Venture capital firms typically invest in emerging companies with high-growth potential. They supply the money that the companies need to develop new products or expand in exchange for an ownership stake. It's a long-term investment that, if all goes well, reaps head-spinning returns if the business is sold or has a Wall Street debut. If it goes sour, the venture capitalists lose most or all of their investment.

For the second year, the Council for Entrepreneurial Development, a local support group for entrepreneurs, has invited Mark Heesen to deliver a speech on "The State of Venture Capital." Heesen, president of the National Venture Capital Association, will speak 4 p.m.Tuesday at Raleigh's Brier Creek Country Club. The speech is free to the public.

Staff writer David Ranii talked to Heesen and Monica Doss, CED's president. Here are some highlights:

On the money flow

Venture capitalists raised about $90 billion for the three-year period that ended in 2007, compared with $200 billion in the three-year span that ended in 2001 at the height of the dot-com explosion.

HEESEN: Many venture capital firms have actually turned money away. We've learned from the past that we can't deploy $200 billion effectively. We're much more effective as a smaller industry deploying targeted dollars.

Are there fewer entrepreneurs that are going to be funded? Yes, but our belief is that the success rate of the companies that we fund will be higher.

DOSS: We're also seeing, on the technology side, the IT and Web side, more companies that are self-funding, especially if you have a repeat entrepreneur who has made some money and knows how to do it.

On the stock and merger markets

HEESEN: 2007 actually was a good year -- not a very good year, but a good year -- when it comes to IPOs [initial public offerings of common stock]. We saw 86 venture-backed IPOs in 2007. That was the highest since 2004.

On the ... [merger and acquisition] side, we've seen quality M&As being done. We've not seen the number of M&A transactions that we've seen in the past.

The cloud that's on the horizon in 2008 -- and frankly I'm a bit more reticent today than I was even a month and a half ago -- is the state of our markets in general. ... In light of a stock market that goes up 200 points one day and goes down 100 the next and [then] up 400, as erratic as it is, will IPOs be accepted in this environment?

And then with the entire subprime issue and the talk of recession, will companies continue to buy companies? Will we have willing buyers and sellers in 2008?

DOSS: What we saw when the tech slump really hit hard is that companies stopped buying technology. That pushes it all the way through the cycle, and nobody's going to make any money anywhere.

On the rush to clean tech

Venture capital firms are pouring money into clean-tech companies, which offer a broad range of products or services that are environmentally friendly or "green."

HEESEN: [There's] an awful lot of talk about clean tech and whether there's a bubble there. ... I don't think we're going to see a repeat of the huge Internet bubble of 1999 and 2000. ... At this point, I still think there's room to grow. Right now, we're not seeing [the equivalent]... of 14 petstore.coms being funded. You can have three or four of them being funded.

DOSS: On the science side, there is a little more rigor on the due diligence side around the technologies. That helps a lot. With the dot-com stuff, you didn't have true technology [innovation]. You had marketing plays on fairly ubiquitous technology.

On biotechnology

HEESEN: In 2007, we saw more companies than ever funded in the medical-device and biotechnology arenas. ... I think that's very important from a North Carolina perspective.

When we're looking at numbers, basically 30 percent of all financing from a national perspective is in the life-science category. Over the last eight quarters in North Carolina, it's 47 percent of all venture dollars going into the life-science space.

On the Triangle's role

HEESEN: When people talk about clusters around the country, you naturally talk about Silicon Valley, Boston. The natural next three -- off the tip of many people's tongues -- are Seattle, Austin and Research Triangle Park.

I think the RTP area continues to be a very strong area. It is the beacon in the South.

DOSS: Geeky people is all we've got here. That's our only resource. We don't have the distraction of having a fabulous commercial center like Charlotte or even Atlanta. So you tend to focus and put a lot of energy on what you have ... science and technology and education.