Lycos Unveils Strategic Investment Fund; Worldwide Partners Include Paul Allen's Vulcan Ventures, Sumitomo and Bear Stearns

Business Wire, July 20, 1999

WALTHAM, Mass.--(BUSINESS WIRE)--July 20, 1999--

Approximately $70 Million to be Invested in Companies Providing

Strategic Value to the Lycos Network; Fund Augments Lycos' Existing

Portfolio of 11 Investments

Lycos, Inc. (Nasdaq:LCOS), the fastest growing Internet portal and the world's largest online community, today announced as a matter of record the formation of Lycos Ventures, L.P., a venture capital fund created by Lycos, Inc. with a world-class group of limited partners to provide capital to Internet start-ups that offer potential strategic benefit to the Lycos Network.

The fund leverages Lycos' ability to create value for early stage Internet companies through technology, content and commerce agreements. With nearly 50 percent of Internet users visiting the Lycos Network each month, the company has been able to provide exceptional visibility, distribution and branding for certain of its suppliers and partners. The fund allows Lycos to extend this value equation by providing capital to these businesses while at the same time extending its sphere of influence and participating in the economic upside as these businesses grow.

Joining Lycos, Inc. in the approximately $70 million fund are Bear Stearns, Mellon Ventures, Inc., Mirae Corporation, Sumitomo Corporation, Vulcan Ventures and others. Lycos, Inc. will be providing $10 million of the total funding.

Lycos Ventures will seek to make early-stage investments in companies that are involved with electronic commerce, online media, or the development or utilization of Internet technology, content or services. The fund, through its close relationship with Lycos, Inc., will be uniquely positioned to target and invest in the most promising emerging companies. Additionally, the unique ability of Lycos to provide industry expertise to, and distribution outlets for, emerging Internet companies could result in accelerated growth opportunities for the fund's portfolio companies.

"A key component of our growth has always been our acquisitions and investments. Lycos Ventures represents a major boost to this effort," said Bob Davis, president and CEO for Lycos. "The fund gives us the leverage to increase our investment position in a balanced, risk-managed fashion with select partners. This is the classic win - win. Younger businesses get funding and with it distribution on the Lycos Network, the investment risk and reward is shared by Lycos and our partners and, finally, Lycos puts itself in a position of strategic influence with many of the companies that are developing next generation offerings even though the outlay of our capital is minimal."

Dennis Ciccone, formerly CEO of WiseWire, a company Lycos acquired in April of 1998, and most recently vice president of mergers and acquisitions for Lycos, Inc., will be managing director of the fund. The fund's advisory board will include Bob Davis; Ted Philip, CFO and COO of Lycos, Inc.; Rob Frasca, vice president and general manager of Lycos.com; Nicholas Negroponte, co-founder and director of the MIT Media Lab; Raj Reddy, Herbert Simon Professor and former dean of the school of computer science at Carnegie Mellon University and other representatives to be appointed at a later date. The general partner of the fund will be Lycos Triangle Partners, LLC, a Delaware limited liability company formed by Lycos and Triangle Capital Corporation. Triangle, with its experience and success in creating and starting technology-based businesses and in venture financing, will provide operational and administrative support.

"We have created this partnership to focus on the strategic needs of Lycos while providing a growth platform for emerging Internet companies," said Dennis Ciccone, managing director of the fund. "We have taken the next step in offering Internet-startup companies not only venture capital, but also an open door to forming strategic alliances with the Lycos Network."

The fund extends Lycos' existing investment strategy, which currently includes ownership and warrants in 11 Internet companies. Investments include: -0-

--   Mail.com -- Internet-based e-mail
--   Fairmarket -- online auction infrastructure technology
--   Amazon.com (PlanetAll) -- online commerce
--   Valent -- online clubs infrastructure - powers Lycos Clubs
--   NeoPlanet -- a customizable desktop portal
--   SmartAge -- e-commerce/Web services including Web's largest banner
     exchange
--   AdOne, LLC -- aggregator of newspaper classified ads on the Web
--   Wit Capital Group, Inc. -- the first online investment banking
     firm

Lycos' strategic investments in these early stage Internet companies have yielded significant return for the company to date. For example, its $4 million investment in Mail.com (formerly iName) in October 1997 today is worth more than $40 million. Its investment in Amazon's PlanetAll in April 1998 yielded a more than 300 percent return for the company in just seven months. No assurance can be made that similar results can be achieved through future investments. In addition to the strategic benefits of the fund, Lycos will receive a carried interest in the net gains generated by the fund.