GlassHouse Technologies Receives $20 Million in D Round Financing

Paladin Capital Group takes lead to fuel continued growth of the leading storage services company

Framingham, MA – GlassHouse Technologies, the leading global provider of independent storage services and consulting, today announced it has received $20 million in a Series D round of funding led by Washington, D.C. based Paladin Capital Group. Lt. General (Ret.) USAF Kenneth A. Minihan, a Paladin principal and former director of the National Security Agency, also will join the GlassHouse Board of Directors. The funds, from Paladin’s Homeland Security Fund, L.P., will be used to support GlassHouse's international growth and to advance its expansion into the U.S. federal government and public sector market.

"GlassHouse, with its focus on developing and implementing high-value services that enable organizations to store and protect their vital data, exemplifies the type of company Paladin seeks to support with strategic investments," said Lt. General Minihan. "GlassHouse has expanded its presence in Fortune 1000 companies and is poised to make significant inroads delivering data management and protection services to U.S. government agencies. The company's data protection, storage and security solutions position it for significant future growth, especially in the public sector."

GlassHouse has achieved recognition as the leading independent provider of storage services, securing contracts with companies such as Biogen; Research in Motion (RIM); Autodesk; State Street Global Advisors; Virgin Atlantic; Virgin Mobile; and numerous other businesses that add to the company's roster of well over 500 clients in the financial services, health care, bio-pharmaceutical and technology market sectors.

"We see great growth in the public sector and its initiatives to protect data assets," said Mark Shirman, president and CEO, GlassHouse Technologies.  "This investment gives us the opportunity to move aggressively into this market to offer our comprehensive set of data protection and storage services to public sector organizations under pressure to secure their data and comply with regulations while making the most of existing investments in IT. We believe the opportunity to partner with Paladin, a firm known for its investment expertise and focus on homeland security issues, validates our market approach and brings a significant depth of experience to our board."

Returning investors include Kodiak Venture Partners, Sigma Partners, GrandBanks Capital and Globespan Capital Partners (formerly Jafco Ventures).

The investment also will be used to fund the company's continued momentum as it builds presence in the U.S. and Europe, Middle East, Asia (EMEA) regions and continues to develop and deliver service methodologies, tools, IP and outsourced service offerings to complement its existing services and consulting business. The company also plans to acquire services and consulting companies in developing markets and geographies as it broadens its ability to serve clients worldwide.

Notable 2004 Company Achievements

• The April 2004 announcement of the GlassHouse Storage Management Lifecycle (SML), the company's core consulting and services methodology. Mapped to international standards frameworks, including ITIL, COSO, CobiT and ISO 17799, GlassHouse's SML is used as a best-practices framework in more than 50 percent of client engagements.

• The launch of the Customer Support Services business, which provides a full suite of support services to end user clients, as well as services that enable established and emerging technology vendors to rapidly launch best-in-class support for their end user clients. More than 10 such customers signed agreements with GlassHouse in 2004.

Significant Acquisitions

• CycleBridge Technologies, a Framingham-based consultancy providing data management and integration expertise to technology and health care organizations.

• Source Consulting and Sagitta Performance Systems (UK), marking the expansion of GlassHouse's global capacity to respond to clients, especially in the UK and, eventually, in EMEA. This acquisition doubled the size of the company, bringing more that 80 talented storage experts to GlassHouse.

• The Storage Group, led by W. Curtis Preston, author of industry-leading books such as UNIX Backup & Restore (O'Reilly Books).

• Fortified Technologies, a Boston-based provider of storage services and implementation.

New Offices

• The January 2004 opening of a Washington DC federal sales office and subsequent status as a vendor with the U.S. government under GSA contract G5-357-0588P.

• The opening of offices in London, England; San Diego, CA; Houston, TX; and Hartford, CT.

About Paladin Capital Group

Headquartered in Washington, DC, The Paladin Capital Group is a premier private equity firm that provides expansion capital for growing companies. The Homeland Security Fund invests in enterprises whose principal business centers on products and services that address homeland security issues and needs. Importantly, the fund’s leadership is comprised of individuals with a proven track record of financial expertise, national security experience and specialized competence. For more information, visit www.paladincapgroup.com.

About Kodiak Venture Partners

Kodiak Venture Partners was formed to pursue a disciplined investment approach and leverage the success of a focused investment strategy, one that aims to build local technology companies into industry market leaders.

Founded in 1999, Kodiak manages three funds totaling $676 million. Kodiak targets companies in eastern North America and work with entrepreneurs at the earliest formations of their ventures to create business strategies, build the management teams, develop critical alliances and customer relationships, and recruit additional financial partners through all the stages of investment and growth.

With over 180 years of collective experience as entrepreneurs, executives, founders and investors, Kodiak's nine partners have an extensive record delivering successful, venture-backed startups to the market. For more information, visit www.kodiakvp.com.

About Sigma Partners
Sigma Partners is a high tech venture capital firm with over $1 billion dollars under management. The Sigma team has previous experience as successful CEOs, entrepreneurs and technologists. With this deep operating and technical background Sigma builds teams and strategies that produce sustainable value and successful outcomes. Because of the firm's extensive knowledge and experience in the fields of computers, electronics, software, and communications, Sigma invests primarily in technology-based companies. Sigma tends towards early stage investments because of the value that the firm can bring to the process of building teams, strategies and markets. Sigma was an early investor in companies such as Cascade, Vignette, Internet Security Systems, Vermeer Technologies (creators of FrontPage) and Tradex. For more information, visit Sigma's web site at www.sigmapartners.com.

About GrandBanks Capital
GrandBanks Capital (GBC) works with entrepreneurs to build world-class companies that can become dominant market leaders. GBC's focus is to lead early-stage investments in the eastern part of the United States in the fastest growing sectors of Internet infrastructure, software and software services, security and storage applications, media technologies and services, financial technologies and services, and wireless technologies and services. GBC's mission is to partner with entrepreneurs to create and build large, successful companies utilizing our unique experience set, operating expertise, extensive top-level industry relationships, and access to our founding limited partners at SOFTBANK Corp. For more information visit www.grandbankscapital.com.

About Globespan Capital Partners
Globespan Capital Partners is a leading global venture capital firm investing in information technology companies. Globespan is focused on a balanced investment strategy across all segments of the IT sector. With offices in Boston and Palo Alto, as well as a business development office in Tokyo, Globespan is uniquely positioned in the US venture capital industry to provide portfolio companies access to global markets, customers and partners. Globespan manages several funds, including JAFCO America Technology Fund III and Globespan Capital Partners IV. Some of the firm's investments include Aptis, Argon, Avanex, Brocade, Digital Island , edocs, Monterey Networks, Net Perceptions, Obsidian, Ocular, Pirus, Sentient Networks and Silknet Software. For more information, visit www.globespancapital.com.

About GlassHouse Technologies
GlassHouse Technologies is the leading provider of services that help organizations solve the business problems of enterprise storage. From strategy through implementation, operations and customer support, GlassHouse partners with clients to achieve predictability and manageability in storage and backup operations. GlassHouse enables clients with consistent process and procedures, facilitating cost management, risk mitigation, and enhanced IT -client satisfaction. GlassHouse clients include Biogen Idec, Inc., and Autodesk. More information about GlassHouse is available at www.glasshouse.com.

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