Vonage Completes $105 Million in Funding

Today, Vonage announces $105 million in funding led by several leading VC companies. This solidifies Vonage`s status as the leader in broadband phone industry enableling the company to grow and continue to redefine the way we communicate.



Leading Internet Phone Provider Continues to Redefine the Telecommunications Market

Edison, NJ, August 25, 2004 - Vonage, the leading provider of broadband phone service, today announced the closing of a $105 million series D financing round led by New Enterprise Associates (NEA) with strong participation from 3i, Meritech Capital Partners and existing investors. This latest round of financing brings total investment in the company to $208 million.

`This funding round validates Vonage`s leadership in the broadband telephony market and is clear evidence of its unwavering dedication to transforming the telecommunications market space,` said Jeffrey A. Citron, chairman and CEO of Vonage Holdings Corporation. `Moreover, the commitment Vonage has received from its investors to increase the value of their holdings illustrates Vonage`s effect on the telecommunications industry as it continues to redefine the way residents and small businesses communicate with its full -featured, cost -effective calling plans prompting hundreds of thousands to drop their traditional Bell service.`

`Voice delivery over the Internet has reached an inflection point and is rapidly displacing legacy phone service,` said Peter Barris, Managing General Partner of New Enterprise Associates. `Vonage has emerged as the clear market leader and we are thrilled to be able to support their future growth plans.`

Vonage`s latest round of financing will be used to accelerate the expansion of service both in the United States and abroad, including Canada, the UK, the Pacific Rim and Latin America and to support the development of new innovative offerings. Vonage senior management also participated in the round. `With the latest infusion of capital, Vonage is poised to achieve its goal of becoming a billion dollar business, leading the industry through its next phase of growth,` concluded Citron.

`Businesses and individuals need several factors to communicate effectively,` noted J. Sanford (Sandy) Miller, Managing Director with 3i US, `among them, portability, high quality, and cost effectiveness. Vonage has developed an intelligent strategy and a proven business model to support those requirements, and as an international venture capital firm we are excited about supporting the company`s global expansion,` added Miller, who also serves on the Board of Directors of Vonage.

`This is one of our largest investments in the fund`s history and it`s indicative of our commitment to Vonage,` said Mike Gordon, Managing Director, Meritech Capital Partners. `This follow -on investment reaffirms our belief in Jeffrey Citron and the stellar management team he has assembled to lead this company through its next phase of growth. We are very excited to be part of Vonage`s future.`

Deutsche Bank served as financial advisor to Vonage throughout the transaction; KMZ Rosenman served as legal advisor.

About Vonage®

Vonage is redefining communications by offering consumers and small businesses an affordable alternative to traditional telephone service. The fastest growing telephony company in North America, Vonage`s service area encompasses more than 1900 active rate centers in over 125 North American markets. Vonage is sold directly through www.vonage.com and retail partners such as Amazon.com, RadioShack, Best Buy, Circuit City, Staples and Office Depot. Wholesale partners such as EarthLink, ARMSTRONG®, Advanced Cable Communications and the Coldwater Board of Public Utilities resell the Vonage broadband phone service under their own unique brands. With more than 240,000 lines in service, Vonage continues to add more than 25,000 lines per month to its network. Over 5 million calls per week are made using Vonage, the easy -to -use, feature -rich, flat rate phone service. Vonage is headquartered in Edison, New Jersey. For more information about Vonage`s products and services, please visit www.vonage.com or call 1 -VONAGE -HELP. Vonage® is a trademark of Vonage Holdings Corp.

About NEA

New Enterprise Associates (NEA) is a leading venture capital firm investing in information technology and healthcare companies. Practicing classic venture capital for over 25 years, NEA focuses on early stage investments, playing an active role in assisting management to build companies of lasting value. With $6 billion under management, NEA`s experienced management team has invested in over 500 companies, of which more than 145 have gone public and more than 185 have been acquired. NEA has offices in Reston, Virginia, Menlo Park, California and Baltimore, Maryland. For additional information, visit www.nea.com.

About 3i

3i is a leading international venture capital company with U.S. offices in Menlo Park, CA and Waltham, MA. Operating since 1945, 3i has invested worldwide over $30 billion, including co -investment funds, with a total staff of 800 employees operating out of 30 offices in 14 countries. 3i leverages this worldwide presence to add value to its portfolio companies and investment partners. In the United States, 3i concentrates on early and late stage technology investments in companies with the potential to be leaders in their markets. Outside the USA, 3i invests broadly in buyouts, growth capital and venture capital.

Since opening its US businesses in 1999, 3i has become one of the most active early and late stage VCs in the US. Recent investments in early stage companies include TransMedics, NeoGuide Systems, DAFCA, SiGe Semiconductor, Bitfone, Sonim and OmniGuide. 3i has been equally active on the late stage, with recent investments in ImpactRx, Vonage, Skystream Networks, Merchant e -Solutions, Placeware, AppShop, Top Layer and SCP Global Technologies. Visit 3i and its portfolio at www.3ius.com.

About Meritech Capital Partners

Meritech Capital is a late -stage venture capital fund focused on investing in leading private technology companies in the communications, services, software, security and semiconductor sectors. Meritech is capitalized at $1.8 billion.


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