Vonage® Raises $40 Million Financing Round Led by 3i and Co-Led by Meritech Capi

Leading Internet Phone Provider Offers Consumers Low-Cost, Feature-Rich Service

Edison, NJ, February 6, 2004 – Vonage, the leading provider of broadband phone service, today announced the closing of a $40.0 million series C financing round led by 3i and co-led by Meritech Capital Partners, bringing total investment in the company over the past three months to $75 million. J. Sanford (Sandy) Miller, managing director with 3i, will join Vonage’s Board of Directors.

“Vonage is very excited to bring on two more top-tier investors, 3i and Meritech. As trusted partners and advisors, these firms offer excellent consumer marketing and telecommunications expertise,” stated Jeffrey A. Citron, chairman & CEO, Vonage. “Our rapid subscriber growth and the depth of our financial backing is clear evidence that there is a revolution underway that is changing the way we communicate. Consumers are ready for a low-cost, yet feature-rich alternative to traditional phone service – and the rising use of broadband technology is making that possible. Vonage’s Board of Directors welcomes Sandy Miller’s vision and leadership and looks forward to working with 3i, Meritech and NEA to steer Vonage’s global expansion.”

“Vonage was able to gain venture funding in a very difficult environment for several reasons: the company has an excellent business model and a powerful consumer proposition,” said Sandy Miller, who oversees 3i’s late stage investing. “With the ability to pass on huge cost savings and increased functionality to consumers, we expect to witness continued growth for Vonage.”

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, and Switzerland and to support the development of new innovative offerings. Existing investors New Enterprise Associates (NEA) and Vonage senior management also participated in the round; bringing the capital raised to $103.0 million.

Principia Capital Group served as financial advisor to Vonage throughout the transaction; KMZ Rosenman served as legal advisor.

How does Voip work?

Voip technology works by turning voice calls into data packets and sending them over the Internet. When the data packs approach their destination, they are reassembled, and delivered in the form of a traditional call. Vonage customers require only a high-speed Internet connection and a regular home telephone to utilize the service.

The company offers rate plans, ranging from $14.99 for residential customers to $49.99 for small businesses. All rate plans include a full set of features, including caller ID, call waiting, voicemail, call forwarding, and emergency calling service.

In addition, Vonage offers a number of enhanced voicemail and code selection features:

Voicemail: Vonage offers three options for checking voicemail: you can dial into a menu and listen over the phone; listen to voicemail online, or listen to voicemail in your email box (a .wav file will be sent to your account)

Area Code Selection: Vonage customers can choose any area code, regardless of location.

Vonage’s technology offers substantial benefits to customers, including:

Huge cost savings
Increased functionality
Improved call quality
Free calls to other Vonage subscribers
Improvements in employee productivity and mobility
Service portability, wherever broadband is available

The company continues to enhance its service and features.

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 the US, Vonage's service area encompasses more than 1900 active rate centers in over 113 US markets. Vonage is sold directly through www.vonage.com and retail partners such as Amazon.com. 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 100,000 lines in service, Vonage continues to add more than 15,000 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®, Vonage Digital Voice^TM, Toll Free Plus^SM and Virtual Phone Number^SM are trademarks of Vonage Holdings Corp.

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 $26 billion, including co-investment funds, with a total staff of 800 employees operating out of over 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 Neoguide Systems, DAFCA, SiGe Semiconductors, Cometa Networks, Bitfone, Knowmadic, Sonim and OmniGuide. 3i has been equally active on the late stage, with recent investments in 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 that was co-founded and sponsored by five leading venture firms: Accel Partners, Brentwood Venture Capital, Oak Investment Partners, Redpoint Ventures and Worldview Technology Partners. Meritech is capitalized at $1.8 billion.