Optical/IP Networks

IronBridge Over Troubled Water

Paul Lazay, president and chief executive officer of IronBridge Networks Inc., quit yesterday, the company confirmed this afternoon. Steve Bielagus, senior vice president of engineering and operations, is taking over as CEO, the terabit router startup says.

This is the second blow in a short space of time for IronBridge. The company admits that it’s now having trouble finding a lead investor for its $100 million fourth round of financing.

“Our lead investor pulled out three or four weeks ago,” says Doug Antaya, VP of marketing for IronBridge. “So we’re looking for someone else to take the lead. We’ve got a few folks who have expressed interest, and we’re doing due-diligence on them.”

Antaya says that the investor, which he wouldn’t name, cited concern over the recent stock market downturn as its reason for bailing out.

Last month, Alcatel SA (NYSE: ALA: Paris: CGEP:PA), another investor in the company through its acquisition of Newbridge, indicated that it also was not interested in going another round (see Ironbridge: Showing Some Rust?).

Observers think that all this bad news will inevitably take its toll on IronBridge.

“They’re going to fold like an origami chicken,” says one poetic VC source, who requested anonymity.

Light Reading’s email inbox -- and message boards -- have been filling up with similar messages of doom and gloom about IronBridge all week. Example:

“Word has it that they are on life support and have 2 weeks to clean up their act in order to get some capital relief from VCs. Otherwise, they will be going out of business with a bang in 2001."

The irony is that IronBridge has what could be a hot product. It’s one of only a handful of companies that can implement a potentially highly profitable new application called router wholesaleing, which allows service providers to quickly and easily resell capacity to each other (see Allegro Holds a House Party ).

IronBridge spokespeople deny that the company's in any danger of having to shut up shop. “We’ve got money in the bank,” says Antaya. “And our current investors are pleased with our progress, and they’ve indicated that they will continue to fund us.”

Antaya also claims that IronBridge is getting ready to deploy a product into a third beta site, and that its products should be shipping for revenue in the second quarter 2001.

He accuses a competitor of starting the rumor that the company is on life support, although he declines to say which one he thinks is responsible.

-- Stephen Saunders, US editor, and Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com

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KPSmells 12/4/2012 | 9:00:16 PM
re: IronBridge Over Troubled Water If the story is true then i hope the founders and employees of Ironbridge villify the lead vulture capitalist on these message boards and in media. It is this vulture capitalist culture that has killed the optical sector and historically other sectors in the past DOTCOM, Software,......

Read the latest issue of UPSIDE magazine to learn how the veteran VC's are complaining about the new age vulture capitalists. Moral of the story: Do not take any money from any VC who has joined the VC business within the last 5 years. These punks have no clue what they are doing. Read the rest of the article to learn more....
Steve Saunders 12/4/2012 | 9:00:14 PM
re: IronBridge Over Troubled Water what does this news mean for other terabit router startups?

heavyreading 12/4/2012 | 9:00:14 PM
re: IronBridge Over Troubled Water I disagree. It takes lot of money, years of work, and patience to build a company and a business. Building one product does not make a business. Impatient VC's are called vulture capitalists.
Crossthread 12/4/2012 | 9:00:14 PM
re: IronBridge Over Troubled Water you can't totally blame the VC's here, company execution counts for something - they are looking for a 4th round after all...
x1797 12/4/2012 | 9:00:12 PM
re: IronBridge Over Troubled Water That is not the way things have been going in the new economy. They just took too long and needed more money - bottom line. Not every company that gets money from VCs are guaranteed success. The VCs lose a lot of money on companies that are failures too. I think that the VCs are being more cautious and selective with the way things are relative to the current market conditions. The weak will be weeded, and the strong will survive. Would you fund a 4th round???
realdeal 12/4/2012 | 9:00:11 PM
re: IronBridge Over Troubled Water Why are people putting down the VC's? Other than the Canadian Teachers Pension Fund, who gave money to Ironbridge? To my knowledge, VC's did not provide funding on the previous 3 rounds. Maybe if VC's had funded the company, IBNETS would not be in the trouble they are in today.
lurker 12/4/2012 | 9:00:11 PM
re: IronBridge Over Troubled Water I wonder what competitor Antaya believes is responsible for starting a rumor that the company is on trouble.

For the other startups? It means increased recruiting efforts, for a start!
Shareholdervalue 12/4/2012 | 9:00:10 PM
re: IronBridge Over Troubled Water I'd be interested in knowing what the root problem was at Ironbridge. They seemed to be on the right track in the beginning.
mu-law 12/4/2012 | 9:00:07 PM
re: IronBridge Over Troubled Water "I wonder what competitor Antaya believes is responsible for starting a rumor that the company is on trouble."

I wonder why Antaya thinks we are stupid enough to believe that this is simply a rumor? This has been in the cards for some time.

"For the other startups?"

Less crowding, and fewer distractions. Ironbridge wasn't a big mindshare stealer though, because they couldn't produce anything.
reoptic 12/4/2012 | 9:00:05 PM
re: IronBridge Over Troubled Water No product, no revenue, no routing stack that works, no announced customers, no deployment, no CEO.

So let's blame the VCs for not funding us and the competitors for noticing.

Isn't this the point in the movie where the ship arches toward the sky, splits in half, and sinks into the freezing ocean. Oh, so that is why the CEO jumped off...
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