fob.com Secures $44.5 Million in Venture Capital Round; Funding to Finance Aggressive Expansion into Target Verticals

Business Wire, Feb 9, 2000

Business Editors

CHICAGO--(BUSINESS WIRE)--Feb. 9, 2000

fob.com Inc., pioneer of the Internet-based vertical purchasing hub model, has secured $44.5 million in venture capital funding. Leading the equity financing is Wayne, Pa.-based Safeguard Scientifics Inc. (NYSE: SFE). Foundation Capital, LLC, of Menlo Park, Calif., is a major investor. Chicago-based William Blair &Company, LLC and private investors complete the round. This transaction represents one of the largest equity investments to date made in a Chicago-based Internet company.

fob.com's vertical purchasing hubs, or &uot;P-Hubs,&uot; provide industrial buyers with a single source for manufacturing inputs. fobchemicals.com, launched November 2, 1999, has already experienced tremendous success with more than 4,000 registered users and sales in excess of $1.5 million. fobpaper.com has received orders exceeding $100,000 in anticipation of its launch in early March. With $44.5 million in backing, fobplastics.com's summer launch is assured - additional P-Hubs serving markets like food ingredients, textiles and metals will follow.

&uot;We've found the next killer application in the growing $1.3 trillion B2B e-commerce market and now have the capital to aggressively execute against this tremendous opportunity,&uot; said Patrick Blake fob.com CEO and co-founder. &uot;Our purchasing hubs aggregate demand and turn pallet buyers into truckload buyers and truckload buyers into contract buyers - thereby providing true market pricing for all purchasers. Unlike other B2B sites, fob.com focuses on systematic direct materials purchasing, which accounts for more than 90 percent of the $1.5 trillion chemicals and $360 billion paper markets,&uot; he said.

In addition to launching new purchasing hubs and staffing key internal positions in sales, marketing and corporate services, fob.com intends to use the capital to accelerate two strategic initiatives: deploying technology infrastructure; and attracting an affiliate network of distribution partners.

Building off its Centralized Aggregate Purchasing System (CAPS ) database platform, fob.com is identifying key technology and integration partners who specialize in procurement, supply chain, ERP and logistics. fob.com will deploy a full-service e-commerce platform that seamlessly links to distribution partners' order management systems as well as customers' ERP systems - for fully automated Internet procurement.

fob.com also will offer a full suite of services to affiliated distribution partners, including electronic funds transfer, credit and logistics.

&uot;Unlike other B2B models, which are based on full disintermediation, fob.com's approach is unique with its focus on systematic purchases and adding value to all participants in the value chain,&uot; said Michael Forgash, vice president of e-commerce software at Safeguard Scientifics. &uot;The two main value-creating dimensions of the vertical purchasing hub model - reducing transaction costs by outsourcing the procurement function and aggregating the buying power of a fragmented buying population - allows fob.com to sit squarely in the sweet spot of the B2B space.&uot;

&uot;fob.com is already generating business with its vertical purchasing hub model and this significant round of financing will help the company continue to execute aggressively and establish a leadership position in the B2B e-commerce space,&uot; said Paul Koontz, Foundation Capital general partner. &uot;People will come to the active marketplace, creating momentum that will be hard for competitors to interrupt. We're seeing that already at fob.com.&uot;

About Safeguard Scientifics

Safeguard is a business-to-business Internet-centric holding and operating company, which incubates, acquires, operates and manages B2B companies engaged in e-commerce, e-communications, and e-business software and services. Safeguard also participates in several private equity funds, which help to expand the Safeguard network to over 250 Internet-related companies. Safeguard generally acquires ownership interests in companies that allow it to have a significant influence over their direction and management over the long-term. Safeguard's partner network encompasses 40 directly held partner companies, including Internet Capital Group, US Interactive, Pac-West Telecomm, eMerge Interactive, 4anything.com, Opus360, iMedium, Sanchez, DocuCorp, USDATA, OAO Technology Solutions, CompuCom, Tangram and ChromaVision among others, and 210 indirectly held partner companies through its private equity funds, creating one of the largest support networks available to both entrepreneurs and companies.

About Foundation Capital

Foundation Capital is a premier venture capital firm committed to providing exceptional service to entrepreneurs to help build truly great companies. The firm takes a hands-on approach, partnering with start-ups in their formative stages and helping them establish relationships with industry leaders and attract key individuals to their management teams. The only established venture firm with more years of operating experience than venture experience among the partners, Foundation Capital offers unequaled value to entrepreneurs in the areas of e-commerce, telecommunications and Internet technologies. Current successful portfolio companies include Commerce One, Financial Engines, idealab!, Interwoven, NetFlix.com, NetZero and Onyx Software. Foundation Capital can be accessed via the Internet at www.foundationcapital.com.