Counterpane Internet Security Receives $27 Million in New Funding; Second Round of Financing Will Support Rapid Growth and International Expansion.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--May 15, 2000

Counterpane Internet Security, Inc., the innovative developer of Managed Security Monitoring, today announced the completion of its second round of financing totaling $27 million. New investors -- The Goldman Sachs Group, Inc. and Morgan Stanley Dean Witter Private Equity -- participated in the second round. They joined first round investors Accel Partners and Bessemer Venture Partners who both invested further in this round, bringing the total capital raised by Counterpane to $34 million.

Counterpane launched its unique service on April 3, 2000, and has announced several partnerships with key product and service providers since then. This new round of funding will allow the company to extend its marketing and sales efforts globally, and to build and staff Secure Operations Centers in international markets.

"This funding will support our growth as we continue to add the resources needed to fully realize our market potential," said Tom Rowley, president and chief executive officer of Counterpane. "Because Counterpane will have a worldwide presence, we consciously solicited the financial and strategic support of global investors who have substantial experience and have been successful in the e-business and security space."

According to Peter Chung of Morgan Stanley Dean Witter Private Equity, "Counterpane is the right company at the right time. They offer the first scalable security business model that broadly leverages unparalleled security expertise to all businesses. I can't think of a better team to solve the problem of securing e-business."

Original investors Bessemer Venture Partners and Accel Partners have successful track records with security companies and have invested in companies with similar business models. "Because of their deep understanding of the issues of building companies in the security and service market spaces, we believed they would add the most value as participatory investors," stated Rowley. "They have been instrumental in our staffing, introductions to early customers, and in this current funding activity."

"We originally invested in Counterpane because we see explosive demand among our portfolio e-commerce companies for active help in defending themselves against security threats," stated David Cowan, managing general partner of Bessemer Venture Partners in Menlo Park, Calif. "We are very involved in the data security industry, and right now there is no other company that has the capability that Counterpane does. I would bet on the unique brain trust of Counterpane against any other company out there," said Cowan.

Art Patterson, general partner and founder of Accel Partners said of the new investors, "Morgan Stanley and Goldman Sachs are ideal investors for Counterpane. They are successful investors, they bring many resources to the venture, and they themselves typify the types of companies who seek the security services offered by Counterpane."

"Because Counterpane provides a service that protects their clients' information assets from exposure to security threats, they provide an enormous competitive advantage for their customers," said Randall Blumenthal, managing director of Goldman Sachs. "Counterpane contributes an important element to the Internet infrastructure."

About Counterpane Internet Security, Inc.

Counterpane Internet Security, Inc. was established in 1999 by security technologist and author Bruce Schneier and entrepreneurial expert Tom Rowley to address the critical need for increased levels of security services. Centered around a network of sophisticated Secure Operations Centers, staffed by expert security analysts, the Company provides 24x7 monitoring, as well as penetration prevention, detection, and response. Counterpane's Managed Security Monitoring services enable e-business to be conducted safely. The company is headquartered at 3031 Tisch Way, 100 Plaza East in San Jose, CA, USA. Phone: [phone], Fax: [phone], Website: www.counterpane.com.

About Accel Partners

Established in 1984, Accel Partners has a history of excellence and innovation in the venture capital business. With more than $1.4 billion under management, Accel has a long legacy of helping entrepreneurs build world class Internet companies including RealNetworks and UUNet and has recently led venture investments in BrassRing.com, a spin-out of the Washington Post Co., and Wal-Mart.com.

About Bessemer Venture Partners

Bessemer Venture Partners, with offices in Menlo Park, Boston and New York, is the leading national venture capital firm focused on early-stage e-commerce and communications investments. Bessemer Venture Partners manages more than $1 billion of venture funds, carrying on a tradition of hands-on, active venture investing that has continued since 1911. Many of the most trusted Internet infrastructure companies, such as VeriSign, Ciena, Mindspring, eToys, Keynote, Register.com, Flycast, Tumbleweed, e-Steel, Telocity, Verio, Hotjobs, Veritas and SciQuest, have chosen BVP as their venture partner during the companies' early stage of development.

About Goldman Sachs

Goldman Sachs is a leading global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. Goldman Sachs is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

About Morgan Stanley Dean Witter Private Equity

Morgan Stanley Dean Witter Private Equity is the private equity business of Morgan Stanley Dean Witter (NYSE:MWD), a preeminent global financial services firm. Since its founding 15 years ago, funds managed by Private Equity have invested in excess of $5 billion of capital. Morgan Stanley Dean Witter Private Equity's investments include Internet infrastructure companies such Internap Network Services, RealNames and SendMail; e-commerce companies such as CommerceOne, Buzzsaw and Respond.com; and data communications companies such as CopperCom, Luminous and Advanced Switching Communications.

Note to Editors: Counterpane is a trademark of Counterpane Internet Security, Inc. All other companies, brands names, trademarks or products belong to their respective holders.