(FORTUNE Magazine) – Calling VerticalNet a cool company may be a stretch. This new-media venture, in tiny Horsham, Pa., has brought the world such Websites as Water Online, Pollution Online, Public Works Online, and Solid Waste Online--"Where the Solid Waste Industry Clicks." Says CEO Mark Walsh: "It's decidedly unsexy." Revenues this year at VerticalNet will total less than $6 million. The audience generated by its 15 Websites is dwarfed by those of more glamorous sites like Time Warner's Pathfinder or ESPN SportsZone.

But VerticalNet is growing fast, and unlike many online publishers, it has a clear path to profitability. Each site is designed to deliver a well-defined audience--say, engineers at wastewater treatment plants--to advertisers willing to pay to reach them. "I know who my readers are, and I know people who will pay meaningful money for access to their eyeballs," Walsh says. Four of VerticalNet's Websites, led by its flagship Water Online, make money, albeit not much. (The company charges as little as $5,000 for a year of advertising; Walsh says the low price is meant to get ad buyers in the door, and claims that the typical buyer is already spending more.) VerticalNet also has willing investors: Its majority owner, a venture fund called Internet Capital Group whose backers include Compaq and Comcast, just added to its stake.

VerticalNet began modestly. A few years ago Michael Hagan and Michael McNulty, buddies since college, were looking for a new way to make money. McNulty was working at Merrill Lynch; Hagan was selling ads for Water World (the trade magazine, not the movie). Borrowing from family, the Small Business Administration, and their credit card lines, they launched Water Online in 1995, hiring top editors and salespeople from print but otherwise keeping costs low. The company now employs 75 people. Its sites all have a narrow, business-to-business focus. Food Online, for example, carries articles about food processing with titles like "Air Products' Tunnel Freezer Enhances Interbake Dairy Ingredients Ice Cream Sandwich System." Yum.

To attract investors and raise VerticalNet's profile, Hagan and McNulty, both 34, last year brought in Walsh, 43, a former head of GE's Genie online service and executive at AOL. They plan to double the number of sites next year and eventually to include an online marketplace for buyers and sellers. Of course, VerticalNet has competitors, notably big trade publishers like Reed Elsevier Business Information. But it also has satisfied customers like George Raftis II, president of the Red Valve Co. of Pittsburgh, who says his ads on Water Online generate "very focused requests from all over the world about our products." Now, that's pretty cool.

--Marc Gunther