Catena Networks Raises $45 Million in Second Round Financing.

Business Editors

REDWOOD SHORES, Ca.--(BUSINESS WIRE)--Jan. 18, 2000

Word Class Investment Team joins World Class Management Team to

Create New Access Architecture for the Converged Public Network

Catena Networks today announced the closing of its second round of financing. The $CAD45 million ($US30.2M) round was funded by a world class investment team lead by Menlo Ventures. Menlo joins Morgenthaler and Joe Costello, who led Catena's first round which was completed in December 1998.

Also participating in Catena's second round are Chase Capital Partners, Worldview Technology Partners, Bessemer Venture Partners, BCE (Bell Canada Enterprises) Capital and Stanford University.

"We are extremely fortunate to have assembled such a high quality investment team", said Bob Machlin, Catena's president and CEO. "While we have a very strong management team and outstanding development team, we are addressing a very large customer problem and market opportunity. This takes deep financial resources and a very experienced group of advisors. The breadth and depth of the combined investment, development and management teams will allow us capitalize on this large opportunity." [Note: see separate announcement on former Cascade & Ascend Executive joining as President & CEO]

According to Dave McCarthy, of BCE Capital, "Catena has a world-class team pursuing a major market opportunity with tremendous technology, and we are proud to be able to help them achieve their goals. They are truly a welcome addition to our North American communications portfolio."

Machlin continued: "Over the past 7 to 8 years there has been a major industry effort to replace the TDM-based backbone of the public telephone network with a new infrastructure based on packet technology. With growing demand for high-speed data access by businesses, technologies such as digital subscriber line access multiplexers (DSLAMs), were designed to connect users directly to this backbone packet network. While this has become a cost-effective solution for business applications, it is a very costly one for consumers and small businesses. And while there are many products and services today to address consumer and small business customers, all have evolved in tactical way and yielded a very expensive, non-scalable network architecture.

Catena Networks has been funded to address the combined consumer requirements of plain old telephone service (POTS) and broadband access to the Internet via ubiquitous twisted pair copper lines. The company is focused on creating the new access architecture for the converged public network. According to International Data Corp, there are approximately 880 million POTS lines installed worldwide with over 60M new lines installed each year. And while current DSL deployments are quite small at under 1 million lines, according to Telechoice, the market research firm that specializes in DSL, the market is expected to reach 7.7M lines by 2002. Catena's approach is a holistic one focused on the ubiquitous delivery of low cost, integrated POTS and broadband Internet access.

About Catena Networks (www.catenanet.com)

Catena is a venture financed company with headquarters in Redwood Shores, California and an R&D facility in Kanata, Ontario Canada. The company's vision is to Create the New Access Architecture for the Converged Public Network and in the process make broadband access as ubiquitous as plain old telephone service (POTS).

About Morgenthaler (www.morgenthaler.com )

Morgenthaler is a venture capital company dedicated to being a valued partner to world-class entrepreneurs building industry-leading enterprises. Morgenthaler has offices in Menlo Park and Cleveland. Since 1968, the firm has funded more than 150 companies, two-thirds of that are now public or part of public entities, and now manages $600 million in capital.

Morgenthaler investments include Aptis (now Nortel), Nextel (NXTL), Premisys (now Zhone), Synernetics (now 3COM), Tachion, Terawave, and Westwave.

About Menlo Ventures (www.menloventures.com)

Menlo Ventures is a private venture capital partnership providing long-term capital and management support to early stage and emerging growth companies. Over the past 23 years, Menlo has invested over $700 million in more than 200 companies which have a combined market value of over $100 billion. Menlo currently has $1 billion under management, including their most recent fund, Menlo Ventures VIII, a $500 million limited partnership.

Menlo Ventures' investments include Ascend (now Lucent), UUNet (now MCI Worldcom), Stratacom (now Cisco), Efficient, Kalpana (now Cisco), and Synoptics (now Nortel).

About Chase Capital Partners (www.chasecapital.com)

Chase Capital Partners (CCP) is a global private equity organization with offices in New York, San Francisco, Vail, London, Sao Paolo, Singapore and Hong Kong. CCP currently manages a $15.9 billion portfolio that includes over 450 investments. CCP's primary limited partner is The Chase Manhattan Corporation, one of the largest bank holding companies in the United States with assets totaling $357 billion.

Chase Capital Partners' investments include Nextel, Pluris, Geocities, TheStreet.com, and Digital Island.

About Worldview Technology Partners (www.worldview.com)

Worldview Technology Partners is a venture capital firm with a unique strength in their Asian infrastructure. Worldview's experienced business development professionals in Tokyo and Singapore along with their affiliates in Taiwan and Hong Kong help their portfolio companies establish successful alliances and operations throughout Asia. Since 1996 Worldview Technology Partners I has invested $107 million in 21 companies and Worldview Technology Partners II, a $165 million fund, closed in October 1998.

Worldview investments include PSINet, Cosine, Netcore (now Tellabs), Pluris, Redstone (now Siemens Unishpere), Tenor, TollBridge, and Synernetics (now 3Com).

About Bessemer Venture Partners (www.bvp.com)

Bessemer Venture Partners is a private venture capital firm and an autonomous entity of Bessemer Securities with offices in Menlo Park, California and Wellesley Hills, Massachusetts. BVP invests approximately $100 million each year, while other Bessemer entities manage more than $2 billion of investments in public and private non-venture capital assets.

BVP investments include Castle (now Siemens Unisphere), Sonus, Taqua, NBX (now 3COM), Cascade (now Lucent), Omnia (now Ciena), Aptis (now Nortel), Sahara (now Lucent), Ciena, Terawave, and Sirocco.

About BCE Capital (www.bcecapital.com)

BCE Capital is the venture capital arm of BCE Inc., a global communications holding company. Major BCE subsidiaries include Nortel Networks, Bell Canada (wired services), Bell Nexxia (broadband services), Bell Mobility (cellular/PCS), Bell Canada International (carriers in emerging markets), BCE Media (satellite), CGI (system integrator), and BCE Emergis (e-commerce).

BCE Capital investments include Sierra Wireless, Daleen, Amteva Technologies, EndGate and Cosine Communications Stanford University (www.stanford.edu)