Online Financing Exchange to Launch

FRAMINGHAM (03/31/2000) - CapitalStream, a Seattle provider of software for leasing brokers, will launch on Monday what the company claims is the first online exchange for matching businesses looking to finance equipment purchases with brokers, lenders and leasing companies.

The new exchange, called CapitalStream.com, is an open, standards-based platform that plugs into e-commerce sites run by equipment manufacturers, financing companies and other business-to-business exchanges. CapitalStream.com targets business equipment purchases worth less than US$250,000.

"The Internet industry understands credit card purchasing, but not financing," says Michael Pinckney, vice president of business development at CapitalStream.

"As more business equipment is sold online, we need to bring financing to the point of sale."

Formerly named System 1 Software, five-year-old CapitalStream provides credit-processing software and counts Mellon Bank, Trinity Capital and Admiralty Leasing among its 570 customers. About 18 months ago, the company switched its focus and decided to host a service for the financing market.

Since then, the company has recruited a new management team and rounded up $20.5 million in venture capital.

Now the company is launching CapitalStream.com to link borrowers and lenders.

The exchange allows borrowers to fill out credit applications, provides up-to-the-minutes rates and offers customized quotes. For lenders, it analyzes credit risks, handles workflow and generates documents. The exchange puts the entire financial transaction online, replacing today's telephone- and fax-intensive process.

CapitalStream officials say no one else is building an end-to-end financing exchange. Competitors include SierraCities.com, equipmentleasing.com, LiveCapital.com, eCredit.com and ifront.com.

"We believe we're the only company to automate the entire financial supply chain online," Pinckney says.

The opportunity for taking business financing online is huge. In the United States alone, companies borrow $3 trillion a year from 146,000 different sources, with the largest being GE Capital. Today's paper-oriented loan and leasing processes are people intensive, time consuming and costly. Moving this process to the Internet offers the potential of significant cost savings, improved efficiencies and sizable transaction fees.

CapitalStream.com is not planning to take transaction fees in the beginning.

Instead, the company will charge monthly subscription fees ranging from several hundred to several thousand dollars, depending on usage. The company also will offer a private label version of the service for lenders called Virtual Private Market and a streamlined service for manufacturers and retailers called FinanceItNow.

In beta test since December, CapitalStream.com has 43 customers, most of which also use its System 1 CenterPoint software. Ablenet, a Beaverton, Oregon, lease brokerage, plans to use CapitalStream's Virtual Private Market to create its own Web-based service for the equipment manufacturers it supports.

"We see CapitalStream.com as an Internet-based value-added service that we can bring to the table in terms of working with our vendors," says Paul Bob, chief executive officer of Ablenet. "What we're attempting to do is to get them to integrate the financing of the product at the sale. It will be significantly easier to do that when we have a Web-based vehicle to give them access to our pricing and (services) as well as information about the status of transactions in process."

CapitalStream.com is built on Microsoft's Windows NT, Internet Information Server and SQL Server. It supports the XML standard.

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