NORTH CASTLE, N.Y. – International Business Machines Corp. (IBM) recently set aside $500 million to assist business-to-business e-commerce companies in need of capital to lease and finance computer hardware and software products, said William Doscas, vice president of financial products and sales for IBM’s Global Financing division.
The computer giant will provide its own equipment through a rent-to-own program, which allows Internet companies to secure as much as $750,000 worth of equipment for up to 30 months, with an option to return the products after 15 months with no penalty. Alternatively, IBM has established a financing and leasing plan that provides up to $5 million worth of equipment in debt financing.
IBM plans to benefit from the relationship it forms with start-up companies by keeping its hand in the market, with access to deal flow among early-stage companies. As the companies grow, IBM will have direct access to early-stage investments.
At press time, IBM was working with seven venture firms that will connect IBM with start-up companies in need of computer equipment. Examples include Wayne, Pa.-based Internet Capital Group and Kleiner, Perkins, Caufield & Byers’ Java Fund, based in Menlo Park, Calif., Doscas said. He added that the number of venture firms IBM will partner with is expected to grow.
The idea to create the leasing program follows other successful IBM offers that have supplied “Net Generation” companies with various kinds of support. IBM’s $200 million corporate venture fund, which was launched in 1999, invests in venture firms that back communication technology, Internet software and services, and pervasive computing companies. The company’s incubator facility, launched in November 1999, works with Internet start-ups in the Silicon Valley area. IBM also acquired 17 companies within the last year.
The number of companies that ultimately will benefit from the leasing program is still unclear, but IBM seeks to reach start-ups worldwide. The rate at which the capital will be deployed is also unknown.