'Hottest' Irish start up rescued by Desmond
The struggling company once feted as the country's hottest start-up and potentially 'Ireland's Nokia' has secured its survival - for now.
Dermot Desmond's IIU and Kernel Capital have committed "substantial funding" for Intune Networks to continue for up to a year while a buyer or new investors are sought.
A key source within the company said that new US-led investment with "reasonable terms" for existing investors was declined in December.
"The preferred route of the board being the appointment of a receiver," the source said.
However, the company said that it had received "no offer to invest that was capable of being executed".
Therefore, the board and all major shareholders unanimously agreed to the appointment of a receiver, it said.
"Last year, the company initiated a further funding round, in order to bring its new system to market and expand its global operations. However, a number of the company's shareholders advised they were not in a position to invest further," the company told the Sunday Independent.
"The company is working with a US investment bank to find a strategic investor and/ or a trade buyer while continuing as a going concern."
The pre-Christmas receivership resulted in 70 job losses.
Several people with close knowledge of the company believe that Intune's remaining value now lies in its red-hot patented laser technology, which could be sold off to an international giant like Cisco.
As well as Kernel and IIU, the €75m behind Intune came from Bebo backer Balderton Capital and prestigious US funds Amadeus and Twitter investor Spark, all of whom are reported to have written off their investments, but did not respond or comment when contacted last week.
Balderton is believed to have ceased investing in Intune last summer, taking the view that the company was not going to be the high-growth success story hoped for, with any value remaining lying in its unique intellectual property.
Intune's IP was invented by Trinity PhD tech wunderkinder John Dunne and Tom Farrell and is said to have ideal applications for cloud computing.
Bigged up by Bono, showcased by Snow Patrol and financed by powerful figures like Desmond and gold mining Vodafone board member Sam Jonah, its gamechanging innovation promises to finally solve the big internet problem -- speed, with a solution that's massively faster than existing broadband.
"The technology is as good or better than anything else out there, no question," said one investor.
So what went wrong?
"The company's prospects are still great, but more than likely a US tech multinational will reap all the rewards," the same investor said.
Tim Fritzley, the Californian ex-US military engineer and Microsoft TV vice-president who led Intune until a 2011 restructure, points to the downturn, funding and distance from Silicon Valley.
"Intune took on too complex of a product development in a remote location where there was not an indigenous community of experienced engineers for developing massively scalable switching," is his analysis.
"It was a very expensive and high-risk endeavour, usually requiring well over $100m. By the time the initial prototypes were ready in late 2008 the global economy had melted and no large operator -- no big telco or cable player -- would commit to launching a new technology into their networks in an unstable and unpredictable recession.
"From there it was too little, to late -- always scrambling for financing and to get the network operators to re-engage," he added.
"Developing and launching disruptive technology and products is very difficult in the best of circumstances, even from established technology centres such as Boston or the Silicon Valley.
"It was probably more than a bridge too far trying to do it in Ireland as the entire infrastructure had to be developed from scratch."
The State, through Enterprise Ireland, invested €2.5m and ESB's alternative investment fund put in €5.5m.
The Department of Communications paid Intune €10m to develop a test network called Exemplar.
In recent months, Intune achieved what it says is "a major milestone" completing a successful, revenue generating field deployment in partnership with one of the world's leading telecoms companies.
It is now poised to enter further trials for a new generation of cloud computing networks.
"The explosive demand for networking remains as strong as ever and the move to cloud computing is putting new strains on network infrastructure that Intune's technology is uniquely placed to solve," said the company's receiver-appointed chief executive, Andrew Smith.
Fritzley praised the team and the innovation involved.
"The technology is still world-class, with nothing else like it in the world even today.
"It would be sad to see it all lay fallow. I very much hope some company sees the value and continues to bring it forward."