Q: Our publicly listed company is looking for an investment consultant to help us identify U.S. Internet-based companies to invest in, to evaluate the income potential of their sites, and to possibly monitor our Web site portfolio. We want to diversify our bets and are not keen on paying exaggerated premiums -- by this, I mean we have written off investing via the stock market, as the market is overpriced. We are likewise aware of the existence of major-league venture capitalists that are basically after the same thing and have (almost) unlimited resources. Admittedly, we are not in the same league. But we believe that with the right consultant, we will be able to accomplish our goals. Due to the dynamism of information technology, the consultant we envision would not just be an ordinary business adviser but would also have a technical appreciation of Web hosting and the Internet. How can we find a consultant qualified to take this task?
-- R.P., Manila, The Philippines

A: Investing in Web sites is a very new, very volatile concept where there are no real benchmarks or established guidelines, says Neil Finestone, of Tow, Finestone & Associates LLC, a financial advisory firm in Sherman Oaks, Calif. "Very few people really have the expertise to advise companies on which Web sites to invest in," he says. "And very few Web sites are wildly successful at this point -- though many have the potential to be successful in the future."

At this point, investing in a Web site is like investing in a startup company, Finestone says. He advises that you evaluate the investment potential of a site from three angles: First, look at the company and the product itself: Is it viable? Is it unique enough to fill a niche? Is it marketed well? Do the principals have the management expertise to make this company successful, or are they willing to hire someone who does?

Second, evaluate the site: Is the design and content compelling? Is it accessible? Is it listed in the major search engines? Can it adapt to change frequently, if needed? Is it managed by a capable expert? And third, find out how will you invest in this site. If it's already doing well, is the company willing to sell equity? Do the owners have plans for an initial public offering? Will they take on partners to fund an expansion or a related site? "Everyone wants to invest in the Net, but it's such an area of specialization and it's changing so frequently that you really need to be cautious and do your homework ahead of time," Finestone says.

A savvy investment adviser can certainly help you sort the wheat from the chaff. Start off just as you would when searching for any kind of consultant -- call your present financial advisers, investment counselors, CPAs, and attorneys, and ask for their recommendations. If you don't already have these kinds of professionals working for you, get referrals from other business owners or investment groups. Personal references are key, as are professional credentials. Depending on exactly what you want this consultant to do, look for the designations "certified financial planner," "chartered financial consultant," or "certified financial analyst."

When you're investing, nothing can take the place of doing your own research. Read trade magazines that specialize in investing and the Internet. See which people are being quoted as experts, then contact them and ask if they offer consultation services. Again, make sure you get references and check their credentials before you hire them or act on their investment advice. Talk to analysts at the leading investment banking firms. Be on the lookout for products that seem particularly viable, and then check out the Web sites where they are offered for sale. Surf the Web to locate sites that you feel are particularly compelling, offer good products, and are flexible and easy to use. Then contact the Webmasters who run those sites and start asking questions.

You can even trawl the Internet for an investment consultant. Log on to AltaVista (www.altavista.digital.com) and search on the term "Internet stocks," making sure to include the quotation marks in your search string. Click on responses that mention registered investment advisers to get some specific listings. You might also seek advice from the Association of Internet Professionals (AIP), a five-year-old group with 8,000 members who all work in the Web arena. You can locate the AIP at www.association.org, or call 800 564-6247.

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