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Racing down 101 South in a silver Mustang convertible en route from San Francisco to Palo Alto, Javelin Technologies CEO George Kledaras seems worried about only one thing: "I hope the sun comes out so we can put the top down," he says. It's the idealist in Kledaras clamoring for more headroom.

Not that he doesn't have plenty to occupy his mind already. Kledaras and his CFO of two months, Michael Chaladoff, are due in the offices of venture-capital firm Summit Partners at 10:30. It's now 10:15. The two executives have already met twice with Michael Balmuth, director of Summit Accelerator Fund, first in Boston, then in New York. This meeting with the West Coast partners is supposed to be the final hurdle before Summit presents a term sheet offering a $10 million investment -- the company's first, and it hopes only, round of venture funding.

It's the golden milestone. The funds to keep the dream alive and set the stage for bigger things to come. Kledaras is determined to keep all that at bay on the ride. He's cracking jokes and telling customer stories. Javelin's product -- a software package that enables high-speed securities trading by financial-services firms -- puts Kledaras in the flow of Wall Street brokers and dealmakers, a colorful lot.

CAPITAL EVERYWHERE. But when the car turns into the quiet residential neighborhood near Summit's swank office complex, the atmosphere suddenly grows serious. "Remember, this is not a done deal," Chaladoff reminds his new boss. "I know that," Kledaras says, putting on his suit jacket.

These days, it seems that all it takes to score venture capital is an idea and a name that ends in dot-com. Venture capital investment grew by 150% in 1999, to $35.6 billion. The number of companies receiving funding rose by 41%, according to a PricewaterhouseCoopers' annual survey. Technology companies, including Internet-related businesses, got 90% of that money. Still, only about 1,800 Net-related companies inked deals -- out of the hundreds of thousands that proffered their business plans.

And in a funding climate where venture capitalists often seem focused on how fast they can "flip," or sell, companies, it's harder than ever for entrepreneurs like Kledaras to get long-term financial backing. The Javelin team is looking for what entrepreneurs fondly refer to as "smart money" -- funding that comes with the right roster of contacts, headhunting help, and relevant business experience. If all goes well, they hope to take Javelin public in less than 18 months.

But to take the company to the next level, Javelin needs guidance and an influx of about $10 million -- a sum that Kledaras won't accept from just anyone. "We work with Wall Street, so I can get all the money I want, but not the contacts," says Kledaras. "And talent is very expensive right now." Javelin has already turned down four term sheets from two VC firms. "The offers were just obscene," says Chaladoff, the CFO. "The terms and the valuations were more like vulture capital than venture capital."

Javelin's quest for smart money took Kledaras and his team to San Francisco at the beginning of March to attend the third annual "Alley to the Valley" conference. The company had been chosen as one of New York's 28 hottest high-tech startups by the Mayor's Economic Development Corp. and AlleyCat News, a local magazine. Unlike most of the companies at the two-day networking event that brings New York City startups to Silicon Valley in search of venture money, Javelin isn't a new media or an E-commerce company. The four-year-old outfit isn't even a pure Net play. It's already profitable, though.

FIXED ON FIX. Truth was, very few Silicon Valley venture capitalists had shown up to check out this year's crop of New York contenders. Most of the people milling about between company presentations and speeches were from New York. Kledaras had lined up some appointments with potential funders and partners outside the conference, including the meeting with Summit in Palo Alto.

Kledaras started the company in the summer of 1996 in his one-bedroom Manhattan apartment. His idea for a suite of software products to enable broker-dealers and money managers to communicate using a standard electronic protocol known as financial information exchange or FIX caught on quickly, and Javelin soon established itself as the leader in a niche market. With more than 70 customers, including Fidelity Investments, Morgan Stanley Dean Witter Online, Advent Software, Depository Trust Co., MarketXT, and Instinet, Javelin is installed on about half of the servers that run the FIX protocol.

The company says it had 1999 revenues of $3.6 million with a 34% profit margin. In 2000, it expects revenues to grow to $11.3 million, reaching $25 million by 2001. Javelin wants to hire 100 more people before yearend, bringing the total to 150 employees. Another key goal in the next 18 months is to establish new offices in the world's financial centers -- Hong Kong, Japan, Singapore, Frankfurt, and Chicago as well as Boston. The company already has satellite offices in San Francisco and London. Kledaras also plans on hiring a president and key executives in sales and marketing.

By the time Kledaras and Chaladoff leave Summit's offices, the sun is peeking out from behind the clouds. The two executives are quiet as they unhook the latches holding the convertible roof to its frame. How did the meeting go? "It was fine," Kledaras says vaguely. "But it wasn't exactly what I expected." He admits later that he had been led to believe the meeting was going to be some sort of formality that would almost certainly result in a term sheet. Instead, he found himself in the middle of another pitch.

Summit's Kip Sheeline and his partners, with Balmuth on the phone in Boston, were most concerned about the execution of Javelin's business plan, a point that didn't become clear until the the end of the meeting. Before they would fund Javelin, the Summit partners wanted more certainty about the growth prospects for Javelin's revenues. If the company succeeded in establishing its software, what was the plan for expanding its revenue base?

WAITING GAME. The Summit partners had no trouble believing Javelin would reach $25 million in revenues, they said. But how -- and when -- was it going to get to $100 million? Before his time was up, Kledaras spent five minutes outlining future business models, which remain unproven, involving a Web-based subscription service and revenue sharing with other financial firms' networks.

As they drive through Palo Alto's residential neighborhoods, Chaladoff says Balmuth will call with a decision later today or tomorrow. Until then, it's a waiting game. Chaladoff is positive and upbeat. Kledaras admires the houses and says the questioning didn't rattle him. On the way to lunch, however, Chaladoff pauses in the middle of a phone conversation with a sales rep in New York. "Hold on," he says into the receiver, turning to his left. "George, you're driving on the wrong side of the road," he says, putting the cell phone back to his ear without missing a beat.

The call comes the next day as Chaladoff and COO Bruce Frank are walking to the hotel where the second and final day of Alley to the Valley is being held. Chaladoff relays the good news to Kledaras and the rest of the team: The meeting went well, and a term sheet looks likely. The Summit team suggests that Kledaras make dinner plans for next week as part of a celebration after signing the term sheet.

When Kledaras returns to New York the day after the conference ended, he gets a call from Summit's Balmuth and Sheeline, who had flown in from Palo Alto, asking him to dinner. But he's held up by conversations with customers visiting from out of town. Kledaras calls it "a defining moment, because I was stuck between the two. At that point I thought, 'You know, customers are a lot more important than the venture capitalists.'"

When Kledaras walks into his favorite Greek restaurant half an hour late, he's expecting casual conversation. Instead, he's grilled again by the Summit partners. "I really thought at that point they were going to get serious and finally hit me with, 'O.K., here's the valuation, everybody's happy,'" says Kledaras. Instead, he says, they asked him why he was diverting time and energy by taking Japanese lessons. Summit executives did not return phone calls seeking comment.

"They asked if my taking Japanese was an intellectual exercise," says Kledaras. "The reason I take Japanese is because Japan has the second largest economy in the world, it's the richest country in the world, and it's got the second biggest stock market in the world. And I want to go there and make money. They just couldn't understand that."

"TOO MANY QUESTIONS." Tired, Kledaras is caught off guard. "I believe what they were trying to figure out was, 'Should we trust you to run this business, or do we need to get another CEO?' But it felt as if they didn't ask enough questions up front." What he expected to be a celebratory dinner scheduled for the following week in Boston was canceled. "There were still too many questions," Kledaras says.

Instead, he and COO Frank go to Boston to address three remaining concerns: Javelin's revenue model, its product suite, and its execution. Kledaras and Frank return to New York with the promise they would have an answer on the following Tuesday. By this time, "I was disenchanted with the whole process," Kledaras says. "I thought we weren't going to get any money from these guys and this is a total waste of time."

On Tuesday, as he waits for a call from Balmuth, the mood turns gloomy. "I don't think we're going to get what we want," he remarks. "I don't have a good feeling." His hunch proves correct. When the call comes, Balmuth quickly gets to the point: Summit has decided not to fund Javelin. The VCs didn't see a viable business yet. As a company, Balmuth said, Javelin exists more in the hearts and minds of broker-dealers, money managers, and middle-management technology developers than in the hearts and minds of CEOs and CTOs, whose job it is to come up with company strategy.

"They don't feel our product is strategic enough to put a company that doesn't use it out of business," Kledaras says. As Balmuth put it: "FIX is more tactical, and we're looking for something more strategic. It would help if CEOs and CTOs were saying they needed it." Even Javelin's references admitted they weren't sure whether Javelin's business could scale with the growth of the FIX protocol software market, despite their praise for Kledaras and his software. The company needed more customers and a proven revenue model that could grow quickly, Balmuth says.

What lies ahead now for Kledaras is the true test of an entrepreneur. The country may be awash in venture capital, but Javelin has yet to lay claim to the piece it needs. And while the company might be able to percolate along with its current customer base, Javelin is going nowhere unless it can show the heady growth in its business that investors have come to expect these days.

A BIG DREAMER? Plan B is to look for cash from big customers who are interested in seeing the FIX protocol take off. Chaladoff says Javelin has lined up four customers to become strategic partners. In early March, Javelin also accepted an initial $1 million angel investment that gave the company a valuation approximately two and a half times that of the rejected offers. Kledaras concedes, however, that lack of venture funding right now slows things down at a critical time in the company's development. And the question remains whether Kledaras has the wherewithal to figure out how to get the $100 million in revenues he needs to build the company.

The disappointment of being dropped by Summit is still fresh for Kledaras. At one point, Balmuth told him bluntly that "everyone [at Summit] thinks you're too much of a dreamer." It's a comment that Kledaras takes in stride. After all, he says, what are entrepreneurs if not dreamers?

These days, though, a successful entrepreneur must be more than that. The search for "smart money" has become an obstacle course that tests the stamina and the vision of entrepreneurs daily. For Kledaras and Javelin, the struggle has just begun.