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Thomas Hoegh, one of Europe's go-to guys for spotting hot Internet companies and entrepreneurs, never wanted to be a venture capitalist. In fact, until four years ago, he didn't even know what venture capital was. Trained as a theater director, Hoegh had coordinated rock concerts and public events, such as the one-year-anniversary celebration of the 1993 Oslo peace accord between Israel and Palestine, and the opening and closing ceremonies of the 1994 Winter Olympics, in Lillehammer, Norway.

These days, Hoegh (pronounced "hoag"), 34, is working behind the scenes on another public spectacle: the startup-and-IPO boom. Shedding his all-black wardrobe and waist-length strawberry-blond hair, Hoegh has created a strategy for building Internet companies that is generating lots of attention -- and eye-popping returns -- in both Europe and the United States.

His firm, Arts Alliance Ltd., with offices in London and New York (and with a laboratory in San Francisco), has assembled an investment portfolio that includes three of Europe's hottest Net companies -- Chateau-Online, Interactive Investor, and lastminute.com -- as well as high-profile U.S. holdings that have been sold to Amazon.com and to America Online. Hoegh's secret: advocating for users the same way that a director advocates for an audience.

"In theater, there's a sense of immediacy and a closeness to the audience that is directly applicable to the Web," says Hoegh. "Both in the theater and on the Web, there's a strong correlation between connecting to the audience and creating a successful enterprise."

Hoegh, a lumbering, goateed Norwegian with a dry sense of humor, is a rare mix of business strategist, product developer, and community organizer. Founded in June 1997, Arts Alliance is neither as big nor as world-famous as Silicon Valley heavyweights such as Benchmark Capital and Kleiner Perkins Caufield & Byers, but there's no denying the firm's huge success. Hoegh and his nine-person team have already invested in 36 companies, which are evenly split in location between the United States and Europe. Remarkably, only two of those companies have folded. In the first fund (of three), 6 out of 16 companies, including U.S.-based launch.com, either have had successful initial public offerings or have been sold at premium valuations to major players in the Internet economy (which is what happened to AOL-acquired Spinner.com).

Talk about smart money. Measured in U.S. dollars, the aggregate return on investment in the first fund was 600%. The ROI on the first six exits alone was 911%. Indeed, Arts Alliance's performance record is so stellar that blue-chip companies such as Allen & Co., Intel, Sony Music Ventures, and France's PPR Interactive (the venture unit of the Pinault-Printemps-Redoute retail empire) are all eager investors or coinvestors.

Fred Ehrlich, 38, president of new technology and business development at Sony Music Entertainment Inc., considers Arts Alliance's stamp of approval to be one of the absolute best in the Internet business. "Arts Alliance doesn't just help us find a good investment," he says. "It also helps each company become a better business -- and that is really what's important."