Funding for startups

Ironbridge 'Sold for Parts'

The remains of IronBridge Networks Inc. could be sold to the highest bidder.

Former employees of the company, which recently closed its doors and laid off employees in what seems a last-ditch effort to save the business (see IronBridge Has Fallen Down), say that two companies are bidding for the company's intellectual property. That includes a portfolio of about 34 patents and a "very good switching and routing software stack."

"When the story broke that we were in trouble, people started coming around. About one or two companies who'd been direct competitors have bid on the assets," said one ex-employee, who asked not to be named. "The software could save a startup a significant amount of time and money." Ironbridge could not be reached for comment on the alleged bidding.

Experts say there's no way to tell how much the assets could fetch. "There is no answer to the question of how to price intellectual property," says Judith Mayer O'Brien, attorney with the firm of Wilson Sonsini Goodrich & Rossati.

O'Brien, who specializes in helping technology companies with corporate issues and has worked with Avanex Corp. (Nasdaq: AVNX), Brightlink Networks Inc., and Juniper Networks Inc. (Nasdaq: JNPR), says there's no norm. "It depends on the value of the patents, who's willing to bid on them. In some cases, the value of a company's intellectual property after bankruptcy goes down to very little. In others, four or five companies bid and raise the price. There's just no answer to this question."

Meantime, Ironbridge's other assets have been less tough to value. As the laid-off workers exited the Ironbridge offices, a recruiter from Équipe Communications Corp. was waiting in the parking lot with a banner, in hopes of gaining some new blood (see IronBridge's Loss is Équipe's Gain).

Equipe wasn't alone. Turin Networks Inc., a startup developing an optical edge product, says it had hired a key senior software engineer (name withheld by Turin) from Ironbridge to head up the Turin Boston office some weeks before Ironbridge's troubles came to a head. In the weeks that followed, more engineers joined him as the hatch opened up at Ironbridge.

Turin won't say just how many folk it hired, but admits that it's now staffed its Boston office with Ironbridge refugees. And company spokespeople say they're proud that they didn't have to run over there with a banner. "Our approach was more passive," says a spokesman.

What's happened to the Ironbridge assets isn't unique. As market pressures put a host of other startups into deep waters (see Shutdowns Send Dark Message), it looks like a scenario that's going to get increasingly common.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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obiwan 12/4/2012 | 8:52:16 PM
re: Ironbridge 'Sold for Parts' If you think Caspian will follow in the same footsteps, think again. Say what you will about VCs, but they have some of the industry's leading investors, which can't be said of others.

Best of luck to you.
fk 12/4/2012 | 8:52:16 PM
re: Ironbridge 'Sold for Parts' Sounds to me like the "key senior SW engineer" was able to read the writing on the wall. Are we to criticize those that fail to go down with the ship? Let's be realistic. This person has a family to feed, that's loyalty #1. His (her?) own fiduciary comes before blind loyalty to the company. Don't pretend you'd be any different.

The fact of the matter is that Ironbridge's troubles were not much of a surprise to people outside the company, so they could hardly have been shocking to those inside. Yes, there was hope that they could find funding, but that's what it was: hope. It's totally bogus to criticize people for leaving a company that's in the death spiral, whether it's Wang, Digital, Lucent or Ironbridge.
Indigo 12/4/2012 | 8:52:15 PM
re: Ironbridge 'Sold for Parts' Can you lead and advise two competing companies racing to release a terabit router at the same time? Terry Matthews tried...

IronBridge's Chairman of the Board, Terry Matthews (former CEO of Newbridge and probably now a significant shareholder of Alcatel stock), is also on Alcatel's "Chairman's Council" advisory group!

From Alcatel's July 2000 press release: "The mission of the Alcatel Chairman's Council is to advise Alcatel's Chairman and CEO in the definition of the Group's strategy, anticipating trends related to the New Economy and to the fast changing global environment."

And then there's the following article: http://www.totaltele.com/view....

The collapse of terabit router developer Ironbridge Networks on 31 January may not have been down to poor market conditions after all, and could have been a deliberate step by 40% stakeholder Alcatel to pull the plug.

According to at least one competitor, however, Alcatel wanted to further its own products by ceasing funding for Ironbridge.

""Alcatel nixed the deal, it's as simple as that," said Joe Kennedy, chief executive of Silicon Valley-based terabit router manufacturer Pluris, speaking to Total Telecom from the second annual Terabit Networking conference in London. "It didn't want to turn loose a competing product [on to the market]. At the end of the day, this meant Ironbridge's quality of funding was bad," he said.

In other words, Alcatel withdrew its funding for Ironbridge's SwiftCOR router because it didn't want a more successful product on the market than its own. At present, Alcatel makes the 7770 Routing Core Platform, which it claims scales to 10 terabits per second."

Other articles for background info:
From Light Reading - Nov 8th
SAN JOSE, Calif. -- Alcatel (Paris: CGEP.PA and NYSE: ALA) today announced the introduction of the Alcatel 7770 Routing Core Platform (RCP), a multi-terabit IP core router.

And from Light Reading article IronBridge Showing Some Rust? on 12/15:
"But Alcatel SA (NYSE: ALA: Paris: CGEP:PA), which inherited its stake in the companyGÇÖs second and third round through Newbridge Networks, will not continue its investment, according to several sources."

"In fact, the three other investors in the company, Celtic House, the Ontario Teachers Pension Plan, and the Capital Communications CDPQ, a subsidiary of Canadian Pension Fund, were all introduced to Ironbridge through its connection with Canada-based Newbridge."
realdeal 12/4/2012 | 8:52:15 PM
re: Ironbridge 'Sold for Parts' Thanks- I thought I remembered seeing something like that on LR.

Based on your response, I take it the remote site thing did not work out.

I am curious to find out if having a remote site would benefit a start up???

I find it interesting that Ennovate, based in Boxboro (MA), would open a west coast design center in order to build the company and Turin, a west coast company, would open a Boxboro (MA) design center to attract people.

Maybe the two companies could have put their heads together and merged :)

But on a more serious note, why do you think the Ennovate remote site failed? And, in your opinion, can this be pulled off?
terrarooter 12/4/2012 | 8:52:12 PM
re: Ironbridge 'Sold for Parts'
Sounds to me like the "key senior SW
engineer" was able to read the writing
on the wall. Are we to criticize those
that fail to go down with the ship? Let's
be realistic. This person has a family to feed, that's loyalty #1. His (her?) own fiduciary comes before blind loyalty
to the company. Don't pretend you'd be
any different.

Well, maybe this key senior SW engineer had influence over the rest of the SW engineers, that is, maybe he was their manager? It was no secret that funding was precarious, but hardly anyone else left. No, everyone WAS different. It wasn't blind loyalty, it was open loyalty blindsided by ulterior motives not in the company's best interest. Everyone stayed because they knew that the company was only worth anything because of the people there. Most people also knew that the job market was good enough that they would not have to suffer pennyless for very long. The employees had a lot of time, sweat, and money invested in a working product.
exIBNETer 12/4/2012 | 8:09:36 PM
re: Ironbridge 'Sold for Parts' I would be nice to know the outcome of the IP auction. Were there multiple "winners" or did just one company get it all.
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