Heavyweights to help startups

Trying to win the hearts, minds, and wallets of promising dot-coms, IBM and Compaq Computer last week launched comprehensive programs to bundle their respective hardware, software, and services to help push fledgling companies off to a running start.

The two announcements, which follow similar efforts from rivals such as Hewlett-Packard and Sun Microsystems, are hardly altruistic endeavours for the technically and financially undernourished.

Both companies hope their programs, along with some equity investments they are making, will help them gain market share for their products and services among some potentially influential startups.

Compaq's program is essentially a $US190 million investment program that gives startups products, services, and -- in some cases -- cash in return for equity stakes and loyalty to the Houston-based company's brands. Officials at a recent announcement said they expect to be dealing with as many as 10,000 startups by the end of next year.

In response, IBM's Net Generation Business Unit introduced its Quick Launch for E-business Ventures, a program that provides dot-coms with hardware, software, services, training, and financing. IBM also introduced its Incubator Series, which offers startups a single point of contact to investigate and buy into a variety of hardware and software products and services.

Some dot-coms last week expressed relief that these computer giants are stepping in to support them at a time when some venture capitalists are showing signs of becoming more conservative.

"Not only is (IBM's and Compaq's) money and technology a welcome sight, more important is their renewed commitment to struggling companies with good ideas," said John Donovan, CTO and co-founder of a Boston area-based financial services website.

By some accounts, dot-coms need financial and technical help more than ever. A recent report by Price & Cooke, based on interviews with international consultants, found that only 50 per cent of dot-coms have enough financing for the next two months, with another 25 per cent having only enough to last them until the end of the year.

The study adds that most dot-coms will suffer from a lack of cash within 15 months. In large part this is due to rising startup costs and increased competition from bricks-and-mortar companies.

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