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October 2012 Investor Presentation

Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

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Why Own Safeguard? - Full Value Yet to be Realized - Ownership Stakes in Exciting Partner Companies - Top Performance of Proven Team - Financial Strength, Flexibility and Liquidity - Strong Alignment of Interests Forward-Looking Statements Statements contained in this presentation that are not historical facts are forward looking statements which involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, our ability to execute our strategy, the uncertainty of the future performance of our partner companies, acquisitions and dispositions of additional partner companies, the inability to manage growth, government regulation and legal liabilities and the effect of economic conditions in the business sectors in which our partner companies operate, negative media coverage and other uncertainties as described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. Safeguard does not assume any obligation to update any forward looking statements or other information contained in this presentation.

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Page 1: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

October 2012Investor Presentation

Page 2: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Forward Looking Statements

Statements contained in this presentation that are not historical facts are forward looking statements which involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, our ability to execute our strategy, the uncertainty of the future performance of our partner companies, acquisitions and dispositions of additional partner companies, the inability to manage growth, government regulation and legal liabilities and the effect of economic conditions in the business sectors in which our partner companies operate, negative media coverage and other uncertainties as described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

Safeguard does not assume any obligation to update any forward looking statements or other information contained in this presentation.

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Page 3: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

The Safeguard Difference (NYSE:SFE)

SIGNIFICANTLY UNDERVALUED

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Page 4: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Why Own Safeguard?

• Full Value Yet to be Realized

• Ownership Stakes in Exciting Partner Companies

• Top Performance of Proven Team

• Financial Strength, Flexibility and Liquidity

• Strong Alignment of Interests

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Page 5: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Experienced Team

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Page 7: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Safeguard Today

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Page 8: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Safeguard Positioning

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Page 9: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Go To Market Strategy

> Growth Financing> Typically Deploy Up to $25M> Generally Primary Shareholder> Realize Value

GROWTH DRIVERS CRITERIA

•Maturity•Migration•Convergence•Compliance•Cost Containment

•Management•Market•Model•Momentum•Moat

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Page 10: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Attractive Sectors

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Page 11: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Recent Success Stories

Acquired By Proceeds*Cash-on-Cash

Return

$38M 4x

$138M 13x

$41M 3x

$208M** 3x

* Does not include unearned milestones / earnouts, or amounts remaining in escrow, where applicable.** Proceeds include $61M from sale of CLRT shares during Q3’09.

*** Based on achievement of difficult earnout provisions.

Return Potential Could Approach 8x***

Market Cap Increased 5x

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Page 12: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Revenue Stages

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Page 13: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Case Study: SFE Stake 25%

• Medical Technology Company

• Developed and is Commercializing emPower!

• emPower! Most Significant Change in Eyeglasses Since Bifocal in 1784

• 100M Bifocals and Progressive Lenses Sold Per Year

• Every 1% Penetration = $400M in Revenue

• 1000+ Eye Care Professionals Signed On

• SFE Deployed $31.7M since April 2011

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Page 14: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Case Study: SFE Stake 40%

Market for AHS' Services Approx. $4B - $8B1

1 Billing and Practice Management Service Market (Falcon Capital): $8.0B; Total RCM Market (Wallingford Capital/HBMA, 2007): $4.75 B; Top 10 Billing cos.: $1.0B

• Top 10 Provider of Medical Billing and Practice Management Services

• U.S. Market Opportunity Exceeds $4B Annually

• <20% Physician Practices Outsource Billing and Practice Management

• Gaining Meaningful Scale via Organic Growth and Strategic Acquisitions

• Completed Seven Acquisitions since 2007

• 2011 Revenue Increased 40% YoY to ~$40M

• Inc. 5000 Four Consecutive Years; Ranked #10 Fastest Growing Co. in NJ

• SFE Deployed $15.3M since November 2006

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Page 15: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Case Study: SFE Stake 22%

• Provides Enterprise-Class Technology and Services to Advertisers/Agencies

• ‘Bloomberg’ Terminal: Media Buying Platform

• Named #1 Demand-Side Platform Vendor by Forrester Research

• Strong Growth Continues; Ranked on Inc. 500 in 2012

• Expanding Domestic, International Operations

• Strong Client Roster – All Agency Groups, Dozens of Fortune 500

• SFE Deployed $18.5M since July 2009

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Page 16: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Safeguard Partner Companies

•16 Partner Companies Today

•26 Board Seats Across 16 Companies

•15 Companies Generating Revenue

•Deployed $188.3M in Current Partner Companies as of September 30, 2012

•Realized $646M Since January 2006

* Aggregate revenue guidance for 2012 and prior years, presented above, reflects revenue on a net basis. Revenue figures utilized for certain companies pertain to periods prior to Safeguard’s involvement with said companies and based solely on information provided to Safeguard by such companies. Safeguard reports the revenue of its equity method and cost method partner companies on a one-quarter lag basis.

NYSE:SFE

Page 17: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Financial Highlights

• Net Cash, Cash Equivalents and Marketable Securities• $183.1M at 9/30/12 vs. $211.9M at 12/31/11

• Q3 Primary Use of Cash = $16.4M

• 2012 Projected Use of Cash between $65M to $85M• Capital Deployment into New Partner Companies

• Follow-on Funding for Current Partner Companies

• Follow-on Funding for Penn Mezzanine Participations

• Corporate Expenses

• Platform Expansion

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Page 18: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Strategy for Growth

• Build Value in Current Holdings

• Realize Some Valuable Exits

• Replenish The Holdings with Winners

• Expand the Platform

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Page 19: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

Why Own Safeguard?

• Full Value Yet to be Realized

• Ownership Stakes in Exciting Partner Companies

• Top Performance of Proven Team

• Financial Strength, Flexibility and Liquidity

• Strong Alignment of Interests

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Page 20: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

The Safeguard Difference (NYSE:SFE)

SIGNIFICANTLY UNDERVALUED

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Page 21: Safeguard Scientifics (NYSE: SFE) Investor Relations Presentation - October 2012

John E. Shave IIIVICE PRESIDENT,BUSINESS DEVELOPMENT &CORPORATE COMMUNICATIONS

[email protected]

P 610.975.4952E [email protected]

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