Lancope, which has developed the behavior-based network security system known as StealthWatch, closed on a second round of financing totaling $5 million, the company announced this morning.

Council Ventures joined existing Lancope investors H.I.G. Ventures and GMG Capital Partners in the round. Lancope has raised $12 million in venture capital.

As part of the latest deal, Dennis Bottorff, chairman of Council Ventures, will join the Lancope board.

“This investment endorses Lancope’s position as a pioneer in the enterprise network security market,” said Harland LaVigne, Lancope’s president and chief executive officer, in a statement. “With the combined resources of our investors, the tremendous customer response to our technology and our early market leadership, Lancope will fully capitalize on the momentum we have created in the market.”

Lancope will use the funds for new product development, enhancement of current products as well as expansion of sales and marketing efforts.

Dr. John Copeland, founder of Lancope, is involved with the National Security Agency on a new project called “Therminator.” In a recent interview with LTW, Copeland said the threat of cyber attacks should not be underestimated.

“Cyber-attacks have already been seen in response to international incidents such as the spy-plane collision near China, the U.S. bombing of Yugoslavia, and the Israeli-Palestine conflict,” he said. “A major conflict or terrorism initiative could include much more serious attacks (cyber-warfare) that could affect major areas of the U.S. economy, not just web e-commerce and e-mail, but basic infrastructure automated systems critical to transportation, power, water, sewage, health care, etc.”

Council Ventures, which is based in Nashville, TN, was founded in 2000.