Lancope Raises $5 Million in Second Round of Funding H.I.G. Ventures, GMG Capital Partners and Council Ventures Invest in Series B

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Lancope Inc. has raised $5 million in private equity financing. New investor, Council Ventures, and Atlanta-based Lancope's Series A investors, H.I.G. Ventures and GMG Capital Partners, participated in the Series B financing, bringing the total cash investment in Lancope to $12 million. Lancope will use the capital to finance new product development initiatives, enhance the current product line and expand sales and marketing functions in response to demand for the company's behavior-based StealthWatch Intrusion Detection Systems. Lancope provides advanced threat protection products for enterprise networks.

ATLANTA, Ga., March 11, 2003 – Lancope, Inc. today announced that it has raised an additional $5 million of private equity financing. New investor, Council Ventures, and the Company’s Series A investors, H.I.G. Ventures and GMG Capital Partners, participated in the Series B financing, bringing the total cash investment in Lancope to $12 million. Lancope also announced that Dennis C. Bottorff, chairman of Council Ventures, has joined Lancope’s board of directors.

Lancope will use the infusion of capital to finance new product development initiatives, enhance the current product line, and expand sales and marketing functions in response to growing demand for the Company’s award-winning, behavior-based StealthWatch™ Intrusion Detection Systems.

“Lancope is a leader in the enterprise security landscape. We are excited about joining the team and pleased to welcome Lancope to Council Ventures’ portfolio of companies,” said Bottorff. “Lancope’s innovative technology protects networks against internal and external attacks, overcoming limitations associated with other commercially available Intrusion Detection Systems and simultaneously enabling network performance optimization. We look forward to contributing to Lancope’s rapid growth and future success.”

David A. Kettler, managing director of H.I.G. Ventures, and Joe Gfoeller, managing partner of GMG Capital Partners, jointly stated, “Our continuing commitment and additional financial investment reflect our enthusiasm for the market opportunity that Lancope is addressing, confidence in the superiority of Lancope’s StealthWatch solution, and full support of the Lancope team. Recognized as a provider of mission critical solutions for network security, Lancope will continue to expand the capabilities of its award-winning technology and build upon its significant and rapidly growing customer base.”

“This investment endorses Lancope’s position as a pioneer in the enterprise network security market,” said Harland LaVigne, president and CEO of Lancope. “With the combined resources of our investors, the tremendous customer response to our technology and our early market leadership, Lancope will fully capitalize on the momentum that we have created in the market.”

Lancope is the leading provider of Advanced Threat Protection solutions for enterprise networks. The Lancope product line includes the StealthWatch appliance for behavior-based intrusion detection and the StealthWatch Management Console for centralized, graphical web-based management of multiple StealthWatch appliances.

About Council Ventures

Council Ventures is a venture capital firm founded in July 2000 and headquartered in Nashville, TN. In working towards its mission of creating great returns, Council Ventures and the Council Ventures’ CEO Council provide a balanced mix of traditional venture capital experience needed to analyze opportunities and structure deals and, with the Council Ventures CEO Council, senior executive operating experience needed to help portfolio companies to grow. For more information, visit http://www.councilventures.com and http://www.councilventures.com/ceocouncil.html.

About H.I.G. Ventures

H.I.G. Ventures is one of the largest and most successful venture capital firms in the Southeast United States and focuses on early stage, high growth technology companies in communications, data networking/Internet, information technology, and enterprise software. H.I.G.'s most recent venture capital fund has total capital of over $250 million from a distinguished list of strategic partners and financial institutions. For more information, visit http://www.higventures.com.

About GMG Capital Partners

GMG Capital Partners is an early-stage venture capital firm based in New York, with additional offices in Salt Lake City, Portland and Atlanta. With over $140 million in assets under management, GMG Capital Partners' investment focus is on high-growth enterprise and Internet infrastructure companies, with specific interest in network security, network storage and network access technologies. GMG's investment model places heavy emphasis on operational involvement, partnering with founders and entrepreneurs to build enterprises of lasting value. For more information, visit http://www.gmgpartners.net.

About Lancope

Lancope is the creator of Advanced Threat Protection solutions designed to combat today’s advanced hacking exploits and corporate network misuse on enterprise networks. StealthWatch, the company’s flagship product, is a behavior-based Intrusion Detection System that enables intelligent alarming, provides advanced network surveillance, operates at gigabit-speeds, recognizes unknown threats and creates a forensic trail of network activity. StealthWatch received the Innovation In Infrastructure Award (i3) in the security category from the editors of eWeek Magazine and PC Magazine at Spring NetWorld+Interop 2002 and was named “Most Impressive” by eWeek in 2001. Installed on the networks of Fortune 1000 organizations and government entities, StealthWatch protects the critical assets of today’s sophisticated enterprises. For more information, visit http://www.lancope.com.

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Jody Ma Kissling
Lancope
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