GroundWork Closes $8.5 Million in Series B Financing led by Mayfield

Business Wire, March 30, 2005

EMERYVILLE, Calif. -- Blue-chip venture backing and growing customer base underscore GroundWork's momentum in open source IT management

GroundWork Open Source Solutions, Inc., a leader in open source-based IT management solutions, announced it has secured $8.5 million in its second round of venture capital financing. The Series B financing, which was led by Mayfield, includes Series A lead investor Canaan Partners. This latest investment will be used to expand GroundWork's product and service offerings and build out its marketing and sales programs.

GroundWork provides open source products that enable enterprises to monitor their network and application infrastructures at a fraction of the cost of commercial software alternatives. The company has signed over 40 customers from industries including financial services, biotech, manufacturing, entertainment and government. GroundWork Monitor, the company's flagship product, transforms open source software into an enterprise IT management solution by adding functional enhancements as well as deployment services and technical support.

Robin Vasan, managing director of Mayfield, will join GroundWork's board of directors. Prior to joining Mayfield in 1998, Vasan was a founder and/or key member of several successful software startups, including C-ATS Software and Infinity Financial Technology (acquired by SunGard), and has served on numerous boards, including webMethods and Aether Systems.

"GroundWork has already demonstrated strong customer traction in the market, offering a very viable and compelling open source alternative to commercial IT management solutions," said Vasan. "As enterprises continue to embrace open source for more mission-critical applications, we believe GroundWork has the potential to capture a significant portion of the $7 billion worldwide IT management market," he added.

Open source IT management solutions provide significant cost benefits over commercial software solutions, according to Skip Glass, partner at Canaan Partners and also a GroundWork board member. "Open source IT management solutions offer the promise not just of lower acquisition costs but of lower deployment and management costs," said Glass.

The venture community has come around to recognizing the huge market potential of open source-based businesses, according to Robert Fanini, CEO of GroundWork, particularly given estimates that Linux will power more than 20 percent of corporate servers world-wide within the next three years. "The challenge until recently has been monetizing open source. We believe the market is now ready for companies like GroundWork that take unsupported open source components and integrate them into cost effective, enterprise-ready applications that include enhancements, support and services."

About GroundWork

GroundWork Open Source Solutions, Inc. (www.itgroundwork.com) integrates and enhances leading open source software to deliver comprehensive open source IT monitoring solutions. With GroundWork solutions, enterprises leverage the flexibility and low cost of open source tools to achieve enterprise-level availability, performance and operational efficiency at a fraction of the cost of commercial software. Based in Emeryville, CA, GroundWork investors include Mayfield and Canaan Partners.

About Mayfield

Mayfield provides "Venture Capital with Impact" and shows leadership in early-stage venture investing by teaming with exceptional individuals to create industry-leading companies. With $2.2 billion in capital under management, Mayfield has deep domain expertise in Internet services, enterprise software, networking and communications technology. Since Mayfield's founding in 1969, the firm has invested in more than 400 companies, completed hundreds of mergers and acquisitions and taken 100 companies public. Mayfield's portfolio of companies includes those that represent the foundation of today's technology economy as well as companies striving to set the technology paradigms of the future. For more information: www.mayfield.com.

About Canaan Partners

Canaan Partners (http://www.canaan.com) is a national venture capital investment firm formed in 1987. Canaan specializes in startup and emerging-growth companies in information technology and services, as well as life sciences and medical technology. Canaan Partners was an early backer in Acme Packet, AdvancePCS (ADVP), Capstone Turbine (CPST), CommerceOne (CMRC), Concord Communications (CCRD), Copper Mountain Networks (CMTN), Esperion (ESPR), Genaissance Pharmaceuticals (GNSC), International Network Services (INSS), IntraWare (ITRA), Interact Commerce (IACT), Network Engines (NENG), ONI Systems (ONIS), Orapharma (OPHM), Pozen (POZN) and Praecis Pharmaceuticals Inc. (PRCS), Qovia Inc., along with dozens of other market-leading companies.