Merrill Lynch Launches New Internal Venture Capital Fund

Business Wire, Dec 5, 2000

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 5, 2000

Collaborates with Catalyst Firms to Help Focus

Technology Innovations Initiated by Employees

Merrill Lynch today announced the launch of the Internal Venture Capital Fund, an initiative designed to invest in and grow technology companies conceived by Merrill Lynch employees worldwide.

This venture will fund and support business plans created by Merrill Lynch employees that propose fundamental technology shifts in the financial-services industry including knowledge management, mobile technologies, e-finance infrastructure and communications.

To complement Merrill Lynch's global presence and industry expertise, the firm has created a network of select catalyst firms to help launch the development of these new businesses, including: Cap Gemini Ernst & Young, efinanceworks and Startupfactory. Together with Merrill Lynch professionals, these companies offer a complementary portfolio of sector expertise, investment strategies and wide geographic coverage that will help create, support and develop these early-stage businesses.

"Merrill Lynch's creation of the Internal Venture Capital Fund represents a significant change in the way that companies are conceived and created," said Madeline Weinstein, the head of corporate marketing for Merrill Lynch. "By combining Merrill Lynch's core strengths with the entrepreneurial focus of our partners, we can add value at every stage of a new business, from inception to maturity, and extend our corporate culture of innovation by tapping into our greatest resource - our employees."

In collaboration with business units across the Merrill Lynch enterprise, the Internal Venture Capital Fund will seed new companies whose ideas will increase the value the firm brings to its global client base. In addition to being a vehicle for corporate innovation, the fund is a means to attract and retain top-quality employees by encouraging key professionals to drive the technological development of Merrill Lynch, shape the future of financial markets and personally benefit from their ideas through direct ownership.

"We see a trend of global corporations increasingly tapping their internal assets - brand, customer base, intellectual capital - to create new enterprises together with external catalysts," said Alvi Abuaf, vice president and founder of the Center for Enterprise Creation at Cap Gemini Ernst & Young. "Merrill Lynch is one the leading innovators of this trend. We are excited to increase the speed to innovation with Merrill Lynch."

Doug Woodham, managing director at efinanceworks said: "As the first global company committed exclusively to the formation, support and development of technology-leveraged financial-services companies, efinanceworks is uniquely qualified to help Merrill Lynch develop and grow early-stage companies in this market. The companies that we build together will benefit from the combination of Merrill Lynch's management team, business expertise and capital investment with efinanceworks' focus, resources, business building expertise and network of relationships."

Merrill Lynch plans to invest in the new companies with the possibility of becoming the first client or strategic partner once the product comes to market.

The due diligence and investment efforts by the Internal Venture Capital Fund will be coordinated with and supported by Merrill Lynch's global private equity-activities representing more than $1 billion in committed capital. In the first phase of the program, the fund anticipates seeding three to four new companies by early next year.

"Merrill Lynch is once again demonstrating leadership by the creation of this new model for corporate incubation," said Staffan Helgesson, CEO, Startupfactory. "We believe that combining their financial expertise with our entrepreneurial focus, industry competence and experience in accelerating new companies will establish a new trend. "

Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 44 countries and total client assets of about $1.8 trillion. As an investment bank, it is the top global underwriter and market maker of debt and equity securities and a leading strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets. For future informative on the company visit www.ml.com.

Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world. The company offers business strategy, management and IT consulting services, systems integration, technology development, design, and outsourcing capabilities on a global scale. The Center for Enterprise Creation was founded in 1999 in New York to quickly and effectively develop and launch new businesses. The Center for Enterprise Creation leverages Cap Gemini Ernst & Young's proven capabilities, strong industry focus, and global reach, along with the newly established Value WebSM, a network of best of breed service providers, including legal, branding, recruiting, hosting, funding and other providers. The Center for Enterprise Creation has locations in New York and Chicago, a soon-to-be opened facility in Los Angeles, and has support capabilities in Europe. Cap Gemini Ernst & Young employs more than 58,000 people worldwide and reports global revenues of about 7.7 billion euros (1999 pro forma). More information about individual service lines, offices and research is available at www.cgey.com.