Safeguard Scientifics Leads $2.5M Series A Financing for Lumesis

Posted February 22, 2012

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WAYNE, Pa. -- Safeguard Scientifics, Inc. (NYSE: SFE) invested $2.2 million of a $2.5 million Series A financing for Lumesis, Inc., a Stamford, CT-based financial technology company focused on delivering data and analytical tools for the fixed income marketplace. NextStage Capital, L.P., an early stage investor in Mid-Atlantic-based technology companies, and angel investor Jim Ashton, Managing Partner, JA3Partners, LLC, also participated in the round. Proceeds will be used for product development and commercialization, as well as sales and marketing.

"Prior to the recent financial crisis, the muni bond market was widely considered to be the safest and least in need of detailed analysis beyond a bond's rating," said Peter J. Boni, President and CEO of Safeguard. "Declining tax bases, opaque pension obligations, shifting bond rating criteria, and a decrease in insured bonds-from 50% to less than 5% today-have changed the dynamics in this marketplace. Additionally, increased scrutiny is revealing a variety of compliance and risk management issues. Lumesis, an initial revenue stage company-as categorized by Safeguard's revenue stages-and its products are specifically addressing these risk and compliance demands faced by muni bond credit analysts, portfolio managers, registered investment advisors (RIAs), issuers and underwriters."

Lumesis brings together over 130 data sets and brings to market the first platform of economic and demographic data to help municipal fixed income professionals identify risks in their portfolio, recognize opportunities in the market, and significantly enhance decision-making. Through its product DIVER (Demographic Information Visualization for Economic Research) and its unique CDM (Continuing Disclosure Management) service, Lumesis offers clients an interactive, web-based research tool that offers visualization, analytics and notifications. This technology allows users to evaluate their portfolios or a single CUSIP (Committee on Uniform Securities Identification Procedures) number against an aggregated database of demographic and economic indicators providing clients meaningful insights into the underlying financial health of an issuer. Ultimately, DIVER does the heavy data lifting so credit analysts, portfolio managers, RIAs and issuers/underwriters can spend their time producing superior results for their constituents.

"The past few years have fundamentally changed the dynamics of the municipal market and the needs of its participants," said Gregg Bienstock, Co-Founder and CEO of Lumesis. "Credit and research analysts, risk managers and others are under significant pressure to perform more in-depth analysis, more frequently, in response to investors' heightened sensitivity to credit risk, and an increased demand for yield in a market suffering from declining supply and declining returns. This change is occurring as market participants continue to adapt to an environment that faces a decline in the availably of bond insurance, the fiscal reality that tax receipts have become more volatile, and the prospect of waning support for municipalities from the Federal government."

"The fundamental changes that have taken place in the municipal bond market, coupled with a challenging economy and evolving regulatory environment, support the need for new products and services that respond to these changes," said Tim Stevens, Co-Founder, President and COO of Lumesis. "The financial and operational support from Safeguard and our other investors will enable us to deliver exciting new enhancements to DIVER, as well as provide the marketplace with a unique and focused service to help clients meet their compliance obligations."

"The municipal bond market is rapidly moving to treat muni bonds like all other credits," said Philip D. Moyer, Managing Director in the Technology Group at Safeguard, who joined Lumesis' Board of Directors. "However, today, there are simply no commercial fundamental economic analysis or compliance tools in the market-it's like the 1980s in the equity markets. Safeguard has been actively looking for a company that fills this void. We are excited to partner with Lumesis. They bring to the muni market a single, powerful and scalable tool that dramatically improves the analysis and communication of risks and opportunities for everyone in the market-portfolio managers, RIAs, issuers, and underwriters."

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Safeguard Scientifics, Inc.