So Close, Yet... It may seem like the Internet is everyone's formula for success, but are minorities being left out of the equation?

The Internet has been hyped as the great equalizer for minorityentrepreneurs, and in one respect, that's true: Anyone can setup shop in cyberspace and, as long as the product does what itshould, buyers don't care what ethnicity the seller is.

But when it comes to growing an Internet business, the picturegets murkier. Are ethnic minority entrepreneurs tasting some of thedot.com pie?

Some are; some aren't. ShopNow.com, a cybermall created by AfricanAmerican entrepreneur Dwayne Walker has obtained $95 million inventure and private financing. NetNoir Inc., an African Americanportal co-founded by E. David Ellington, raised more than $10million in venture capital; and BET.com closed $35 million in equityinvestments for a planned Afro-centric portal.

And StarMedia, under the leadership of founder and CEO FernandoEspuelas and president Jack Chen, secured $80 million in privateequity financing. But these companies seem to be exceptions ratherthan the rule.

"The key to getting a foothold on the Internet is capital.But the process of getting capital is the problem," explainsCharles A. Sheffield, who is a co-founder of Carthage Partners, atech-focused venture fund in New York City.

Michael Batie, founder of SuccessNet, an African American-owned ISP inLos Angeles, knows. "I go out and talk to people in the[African American] community about money and they say they'renot making any," explains the Los Angeles entrepreneur."I go to other folks, and I don't know why they're notgiving me money," says Batie, adding that his office mate,Latino ISP AztecaNet, is having similar problems.

Derrick Collins, a partner of Chicago-based Polestar CapitalPartners, puts it this way: "The larger community understandsthere's money to be made in ethnic communities, but noteveryone understands there are certain segments within thosecommunities you can target."

Darien Dash of DME Media Interactive Holdings, a New York Cityadvanced technology provider, went to three major venturecapitalists looking for $9 million in 1998. But he didn't likewhat he heard.

"Some wanted to finance it as debt and some wanted to takea majority equity position," recalls Dash, who decided suchrequests didn't fit his long-term vision. Instead, he took overan existing public company in a reverse merger and raised funds byselling stock.

One problem is that, many times, securing venture capital is allabout tapping connections. "A tremendous number of minoritiesstart Internet companies, but do they understand the [venturecapital] game? We invest in people, the management team,"explains Fritz Jordan, co-founder of VCapitol.com. "Minorities[often] don't have the backgrounds VCs look for."

Availability of funds is another part of the problem, says DuaneMcKnight, a principal with Syncom Funds. Minorities control aminiscule percentage of available capital; consequently, minorityfirms get less than 1 percent of venture investments.

But Latino techpreneurs are beginning to change that picture."U.S. Hispanics are being recognized as a potent purchasingsegment," points out Sandro Trosso of the Latino venture fundExplorador.net. "This market has $340 billion purchasingpower, second only to Portugal." When combined with theentirety of Latin America's 500 million potential users, thepie has become simply too sweet to resist.

Bottom line, those minorities who succeed will have to bedetermined and creative enough to do so despite the investmentcommunity's benign neglect.