Red Hat, Inc. Announces Red Hat Ventures Investment Unit

Research Triangle Park

United States, May 9, 2000

New Investment Division Will Create Strategic Relationships with Next Generation of Linux and Open Source Related Internet Infrastructure Startups

Red Hat, Inc. (NASDAQ: RHAT), the market leader in open source Internet infrastructure solutions, today announced the formation of Red Hat Ventures, a new division of Red Hat devoted to supporting Open Source and Internet infrastructure startups through a combination of direct venture funding and strategic business relationships with Red Hat. Red Hat Ventures' objective is to leverage Red Hat's leadership in the Open Source & Linux market to accelerate the breadth of tools, services and technologies available to customers, and deliver on the promise of making Linux and other Open Source technologies the platform of choice for deploying and extending Internet infrastructure.

Red Hat has already taken stakes in a number of key Open Source-related startups, including Sendmail Inc., Rackspace.com, ZoneTrader.com, techies.com and e-smith. Red Hat Ventures will be accelerating its investment activity, taking stakes of $500,000-$2,000,000 in exciting new companies while simultaneously establishing significant business relationships with those companies. Rackspace.com and Zonetrader.com are key partners in the recently launched redhat.com Marketplace (www.redhat.com/marketplace).

"It was important to us that Red Hat Ventures be much more than a source of financing for these companies," said Matthew Szulik, President and CEO of Red Hat. "As the leading provider of Linux-based Internet infrastructure solutions, we see huge opportunities in creating true partnerships with these companies: we accelerate their ability to reach the global Linux market and they enhance our ability to offer the broadest range of Internet solutions to enterprise customers."

Red Hat Ventures will be jointly managed by Matthew Szulik, Harold Covert, Chief Financial Officer and Howard Jacobson, Director of Corporate Development.

"Red Hat Ventures is a natural extension of the overall Red Hat business plan," said Covert. "For our customers, Red Hat Ventures scales our ability to bring together the elements of the full Open Source ecosystem for Internet infrastructure. For Red Hat, these investments will enhance revenue streams, expand our customer base, and increase the variety of products and services offered through redhat.com."

Companies that wish to participate in the program should visit Red Hat on the Web at www.redhat.com/ventures.

About Red Hat, Inc.

Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. The most trusted name in open source, CIOs and other senior-level IT executives have ranked Red Hat as the industry's most valued vendor for two consecutive years in the CIO Insight Magazine Vendor Value study. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com

Forward-Looking Statements

Forward-looking statements in this press release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations, and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, reliance upon strategic relationships, management of growth, the possibility of undetected software errors, the risks of economic downturns generally, and in Red Hat's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov.

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