Rally Secures $8 Million In Series B Financing From Mobius Venture Capital, Boulder Ventures and Vista Ventures

Rally’s proven business model and success in driving Agile software development draws new and existing investors

BOULDER, CO., June 14, 2006 – Rally Software Development Corp., the leading on-demand provider of Agile Application Lifecycle Management (ALM), today announced it has closed an $8 million Series B round of financing. Vista Ventures led the round with existing backers Mobius Venture Capital and Boulder Ventures both increasing their investment.

Proceeds from the funding will help fuel Rally’s continued success and leadership in helping software-driven organizations adopt and scale Agile software development – one of the fastest growing trends in the technology industry. The company has experienced rapid growth as an increasing number of software organizations are turning to Agile practices to shorten release cycles, increase responsiveness to customer needs and gain a stronger competitive advantage. Rally’s Agile lifecycle management solutions are delivered through a highly secure, software-as-a-service model and recently received the prestigious Jolt Product Excellence Award by Software Development Magazine.

“This fundraising will dramatically accelerate our growth,” said Tim Miller, Rally’s CEO. “I couldn’t be happier to have such a strong syndicate of committed, value added investors that are actively supporting Rally beyond just a financial investment.”

“The Rally team constantly exceeds our expectations,” said Brad Feld, managing director of Mobius Venture Capital. “We see first-hand the positive impact Rally has on software-driven companies and have no doubt they will continue to play a major role in shaping how the world develops software.”

“We’ve been staunch supporters of Rally for years and are pleased to step up and help the company realize its goal of being the leading software-as-a-service player in the ALM space,” said Craig Hanson, principal at Vista Ventures. “Rally is well capitalized and positioned to build on the tremendous momentum it has quickly built as it moves to the next level of growth.”

About Vista Ventures

Vista Ventures invests in early and growth stage technology companies in the Rocky Mountain region. The firm focuses on companies in IT, communications, media and data services which have the potential to become market leaders. Vista Ventures has offices in Boulder and Fort Collins, CO. For more information, visit www.vistavc.com

About Boulder Ventures

Boulder Ventures, Ltd. invests in start-up, early-stage and emerging-growth companies and focuses on companies in communications software and services, network infrastructure and optics, and Internet software and services. Corporate offices are located in Owings Mills, MD and Boulder, CO. For more information, visit www.boulderventures.com

About Mobius Venture Capital

With offices in Palo Alto, California and Superior, Colorado, Mobius Venture Capital is a $2 billion U.S.-based private equity venture capital firm managed by an unparalleled team of former CEOs and entrepreneurs, technology pioneers, senior executives from major technology corporations, and leaders in the investment banking community. Mobius Venture Capital combines its technology expertise and broad financial assets with the industry's best entrepreneurs to create a powerhouse portfolio of over 100 of the world's leading high technology companies. For more information on the fund's investment team, technology vision and portfolio companies, please visit www.mobiusvc.com

About Rally Software Development, Corp.

Based in Boulder, Colo., Rally is helping change the way companies around the globe define, develop and deliver software. Rally’s family of on-demand solutions for Agile software lifecycle management support the mainstream adoption of Agile development practices, a fast-growing trend that helps software organizations speed value delivery with fixed resources and schedules. The company’s customers include thousands of subscribers from leading software vendors, Internet companies and corporate development teams that are committed to delivering high-value software that adapts quickly to new business realities. Rally’s world-renown coaches and expert partners complement its on-demand applications with training, mentoring and consulting services for creating the Agile organization. The company is privately held and backed by Mobius Venture Capital, Boulder Ventures and Vista Ventures. For more information about Rally, visit the company's Web site at www.rallydev.com

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