Editor’s note: This is the 11th in a series of interviews with technology leaders in the Carolinas and Georgia about how companies can survive – or flourish – in the current “nuclear winter” economic downturn.

RALEIGH, N.C. — Even in the worst of economic times, successful businesses can be built, says Rich Lee. No brag. Just fact. Just a year ago, he sold Hosted Solutions to investment firm ABRY Partners of Boston for a whopping $140 million.

Not bad for a venture that Lee launched in 2001 as that “nuclear winter” in the wake of the dot-com crash opened opportunities in online hosting and other IT services.

“It’s a difficult market out there right now, but there’s tremendous opportunity for the savvy entrepreneur,” Lee, who remains CE0 of Hosted, told Local Tech Wire.

“The bubble had burst, capital markets were frozen and there was doom and gloom everywhere,” he added. “I studied the market carefully looking for opportunities, then took some risk and bought a business that was substantially undervalued at the time.”

Entrepreneurs can capitalize on similar opportunities today, he added. But patience is required.

“It’s never an easy road to build a business in a rough market, so you need a lot of perseverance and you’ve got to be smart along the way,” he said.

The Q&A with Rich Lee:

A “nuclear winter” appears to have descended upon us as a New Year begins. But in the last such "winter” the Internet and Web 2.0 emerged as entrepreneurs seized upon tough times to deliver innovation and to grow their businesses or start new ones, not just survive. What is your advice to fellow and would-be entrepreneurs entering the New Year – Conserve, cut or invest? None of these? Please explain.

It’s a difficult market out there right now, but there’s tremendous opportunity for the savvy entrepreneur.

Back in 2001, I started Hosted Solutions in a climate very similar to the one we’re in right now. The bubble had burst, capital markets were frozen and there was doom and gloom everywhere. I studied the market carefully, looking for opportunities, then took some risk and bought a business that was substantially undervalued at the time.

After that, we focused on the fundamentals – execution, service, operations – and grew the business in a very controlled, strategic way. We were careful not take on too much outside investment. There wasn’t time or money for a lot of distractions, so we remained heads-down and focused on hitting singles and doubles. In time, we grew the business to become a very strong, profitable, well-positioned company.

Entrepreneurs today can do the same thing – seek out opportunities in the midst of the storm. The valuations of many great companies today are significantly discounted. But don’t jump at just any company. Look for strong business models and sound fundamentals. It’s never an easy road to build a business in a rough market, so you need a lot of perseverance, and you’ve got to be smart along the way.

Who will be not just the survivors but the winners still standing when the recession ends sometime in 2009?

Companies still standing will be those that had a solid business plan and strong balance sheet coming into this. Mission-critical applications and services will continue to do well.

What is your biggest fear/concern entering the New Year?

My biggest concern for this year is the fallout that we’ll inevitably see in the market. With the tightening up of capital markets and the difficulty getting funding, many “would be great” businesses may go away.

Conversely, what are you most optimistic about?

I’m optimistic about the fact that there are so many opportunities for investment in a market like this. Valuations are down across the board. Now is the perfect time for a savvy, well-positioned entrepreneur or business to capitalize on that and do an acquisition that may have cost 10 times the price a year ago. My business was built by doing just that back in 2001.

In what areas do you see opportunities for growth in 2009 – Means to help companies become more efficient? Enabling technology to help people do more with mobile devices? Investments in clean technology? Further evolution of the Web? Tell us what you think.

Any company that enables other companies to survive this economy will do well. It’s all about improving efficiency, cutting costs and growing revenue. If you contribute to any of those areas, you’ll do well.

If the IPO markets remained closed, how can life-science, medical device and other capital-intensive startups best generate cash to keep investors onboard and the company doors open while pursing R&D?

It’s a tough proposition. Until the markets improve, it will be difficult for some of these companies to survive, particularly if they require outside funding. This is why it’s critical to manage your balance sheet on the front end so you can survive a downturn like this. Focus on the core business, operate conservatively, and don’t let your burn rate get out of hand.

What do you believe will be executives’ biggest challenges this year – Financing? Growing sales? Balancing the cutting of costs with need for R&D as well as consumer support?

The biggest challenge for many companies will be survival. It’s a tough balancing act. You need to continue to sell, but at the same time you have to make those difficult calls to shut down lines of business, cut funding for a product, lay off employees, etc. Those things make it difficult to remain focused on attracting new customers.

Will venture financing tighten, especially for startups, as recent surveys have indicated? If so, how do you (or) your clients (or) your portfolio companies adapt?

We’ve already seen venture funding tighten up. Strong companies will continue to get funding, but not nearly as many as we saw before. VCs will be scrutinizing business plans more carefully and valuations may change, but there will be still be opportunities for some VC funding.

Do you believe off-shoring of jobs will increase this year? Please explain.

We’ll continue to see some off-shoring, but many companies today are taking advantage of other options to reduce both cap-ex and op-ex. Things like managed services, applications to drive efficiency, divesting non-core business lines or products.

What advice would you offer to job-seekers in such a tough environment?

It may be time for some to re-evaluate the industry you’re in. I’d tell job-seekers to focus on businesses with strong, sustainable fundamentals. Profitability or a clear path to profitability is also key. Be wary of businesses that are too reliant on outside investment.