DFJ, Intel Capital invest in market disruptor bringing game-changing technology and distribution to the $25B global telephony market

LOS ANGELES – September 4, 2008 – Fonality®, a leading provider of open source telephony and communications systems for growing businesses, has secured a $12 million financing round led by Draper Fisher Jurvetson Growth Fund with participation from existing investor Intel Capital. Fonality, which has driven 16 successive quarters of record growth, makes open source Internet-based telephony and unified communications solutions that enable market-leading capabilities for growing enterprises, including globally-distributed operations, home-based workers and highly mobile workforces. The company will use this additional capital to continue expanding its share of the $7B domestic telephony market and take a position in the $25B global telephony market, with a special focus on affordability and mobility for businesses with 5 – 500 people per location.

“Fonality’s model has always been to free people from the prison of their cubicles, and to do so affordably,” said Fonality CEO Chris Lyman. “But, with the rising price of gas and the increased adoption of high quality broadband, our vision of ‘your office is the world’ is nearly upon us. This investment by DFJ and Intel Capital, two top-tier investment firms, gives us the freedom to further accelerate our growth and acquisition strategy.”

Fonality’s open source technology ties together all forms of business communication—instant message, landline calling, mobile calling, chat, voicemail, customer relationship management (CRM), e-mail and more—into one unified desktop software application. The company’s phone systems are sold direct to businesses at fonality.com, through a global network of resellers, and by Dell.

Randy Glein, managing director of DFJ Growth Fund, has joined Fonality’s board of directors. “Fonality is the right solution at the right time,” said Glein. “The company has developed a powerful, affordable communications platform for small and medium-sized businesses, allowing Fonality-enabled businesses to compete more effectively in the global economy. Fonality combines the benefits of open source development, rich proprietary features, and professional support to help its 5,000 customers take advantage of the latest communications innovations very affordably. Fonality supports workers wherever they are and lets them communicate inside and outside their organizations with easy-to-use software available everywhere, on any device.”

The company’s focus on building affordable, easy-to-use, and full-featured products enables it to compete directly with Cisco, Microsoft, Nortel and Avaya while creating an entirely new market for affordable professional call centers for companies with five to 500 employees. ”Before Fonality, a 50-person office with a seven-person in-house sales group could never afford these technologies,” said Lyman. “You could never tell your best salesperson: ‘work from home or the road today and take sales calls as if you were in the office.’ This used to be a $100,000 expense. Fonality’s open source technology gives growing businesses a big-time presence that fits within their budgets.”

Fonality redefined the business phone system, and over 5,000 companies worldwide depend on its products for affordable, easy-to-use, Internet-powered communications. More than 7,000 computer consultants, vendors and resellers augment Fonality’s direct sales organization. Earlier this year, the company launched a relationship with Dell to sell Fonality products online at Dell.com and via Dell telephone sales. Fonality currently has 140 employees, offices in three countries, and operates four global data centers.

About Fonality

Fonality, www.fonality.com, is a leader in open source phone systems and contact center solutions for small and medium-sized businesses. Used by more than 5,000 companies and 125,000 end users in more than 100 countries, Fonality’s award winning IP-PBX VoIP phone systems have connected more than 350,000,000 mission critical phone calls. The PBXtra and trixbox® Pro product lines are based on Fonality’s patent-pending Anywhere Management™ Hybrid-Hosted™ architecture, and deliver the advanced capabilities of an enterprise-class phone system for 40 to 80 percent less than traditional offerings. Fonality’s fully free and open source telephony platform, trixbox CE (www.trixbox.org), is home to one of the world’s largest and fastest growing communities of open source telephony users, with more than 200,000 live deployments and 125,000 new downloads each month. Fonality’s headquarters are in Los Angeles with additional offices in Australia and Argentina. Company investors include Draper Fisher Jurvetson Growth Fund, Intel Capital, and Azure Capital Partners.

Fonality, PBXtra, and trixbox are registered trademarks and Hybrid-Hosted and Anywhere Management are trademarks of Fonality. Other trademarks are the property of their respective holders.

About Draper Fisher Jurvetson Growth Fund

Draper Fisher Jurvetson Growth Fund invests in revenue-stage technology companies that are expanding rapidly in large markets and are well-positioned to be category leaders. Draper Fisher Jurvetson is a leading venture capital firm with global presence through the DFJ Global Network of funds. DFJ’s mission is to identify, serve and provide capital for extraordinary entrepreneurs anywhere who are determined to change the world. The DFJ Network has grown to encompass over 150 venture capital professionals in more than 30 cities around the world, more than 600 portfolio companies funded, and over $6 billion of capital under management. Together, the DFJ Network funds have been the most active venture capital investors in the world in 2006 and 2007. The DFJ Network has produced such notable, industry changing companies as Athenahealth (ATHN), Baidu (BIDU), Skype (acquired by eBay), Focus Media (FMCN), DivX (DIVX), Mobile 365 (acquired by Sybase), Massive (acquired by Microsoft), EnerNOC (ENOC), Feedburner (acquired by Google), Four11 (acquired by Yahoo), xFire (acquired by Viacom/MTV Networks), Mozy (acquired by EMC), Myfamily.com (acquired by Spectrum Equity Investors), Overture (acquired by Yahoo), Parametric (PMTC), TicketsNow (acquired by TicketMaster), and buy.at (acquired by AOL). www.dfjgrowth.com and www.dfj.com

About Intel Capital

Intel Capital, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing, and cleantech. Since 1991, Intel Capital has invested more than US$7.5 billion in approximately 1,000 companies in 45 countries. In that timeframe, 168 portfolio companies have gone public on various exchanges around the world and 212 were acquired or participated in a merger. In 2007, Intel Capital invested about US$639 million in 166 deals with approximately 37 percent of funds invested outside the United States. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.

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Fonality Contact:

Mara Ritti
Spark PR for Fonality
415-321-1888
mara@sparkpr.com