Incubator Inks $50 Million Deals with IBM, Compaq

NEW YORK (05/02/2000) - Safeguard Scientifics Inc., an incubator and operating company that specializes in Internet infrastructure technologies, has formed strategic alliances with IBM Corp. and Compaq Computer Corp. and received $50 million investments from both computing giants. The deals were announced at a Safeguard's conference on the digital economy being held this week.

Internet incubators take startups to market quickly by providing office space, information systems, funding and management expertise in exchange for equity positions. Safeguard and rival CMGI are among the largest and most successful incubators in the country.

The IBM and Compaq deals will allow Safeguard to acquire more companies in such areas as voice over IP, broadband access, wireless, security, enterprise integration and application hosting, according to Harry Wallaesa, president and chief operating officer of Safeguard.

"We've acquired 13 companies in the last six months," Wallaesa says, adding that Safeguard has plans to expand internationally. "We've raised over half a billion dollars through our secondary offering and strategic investments."

Jerry Johnson, executive vice president of Safeguard and leader of its communications area, says IBM is already contributing expertise in mobile computing to some of its start-ups, and Compaq is helping develop application service provider strategies.

"You will see us use IBM Global Services to partner with our companies, and you'll see us use Compaq's distribution channel," Johnson says. "These relationships will be very collaborative."

Safeguard's deals with IBM and Compaq come on the heels of a $100 million investment from Textron, a diversified manufacturing company that is using its alliance with Safeguard to jump start its internal e-commerce plans and to train top executives on the Internet's potential. Textron CEO Lewis Campbell says Safeguard is helping his management team figure out how to leverage the Internet in businesses that range from Cessna Aircraft to Bell Helicopter and E-Z-Go golf carts.

In the incubation business for nearly 20 years, Safeguard holds ownership positions in 40 Internet companies and has indirect holdings in another 200 communications, software and services firms. In April, Safeguard announced that it would focus exclusively on Internet infrastructure companies. Safeguard also has a significant holding in Internet Capital Group, a leading investor in business-to-business e-commerce software and services companies.

Safeguard is at www.safeguard.com

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