ProtoDel Poops Out
The company has made its entire staff redundant and will probably go into administration soon, say sources close to the situation. Administration, also known as receivership, is a U.K. insolvency process designed to protect the creditors of a company, rather than the company itself.
Phones rang unanswered yesterday at ProtoDel's HQ in Hackbridge, Surrey -- as one might expect if there was nobody there.
By chance, someone claiming to be "the only person available to answer the phone" did pick up this morning, and he said the startup "would go into receivership tomorrow". The final course of action has not been decided, he added; a statement will be issued on Monday.
Rumor has it that ProtoDel had been busily preparing itself for a second round of investment that failed to materialize. Only last week, its CFO, Sitkow Yeung, told Light Reading that the startup was expecting to secure a new round of funding within the next three months.
The round was to have been furnished by ProtoDel's existing investor, U.K. venture capitalist MTI, say sources. MTI did not wish to confirm, deny, or comment in any way on what has happened or will happen to ProtoDel, says Gareth Jones, the executive responsible for MTI's investments in optical companies. However, MTI did confirm that it would not be making any additional investment in ProtoDel.
A few weeks ago, when MTI was apparently considering investing in the startup, it reportedly pushed through several changes as a condition of its investment, including filling the post of CFO and removing the startup's founder and CEO, Ian Giles. Eight manufacturing staff were also made redundant last week, possibly as part of an MTI-inspired reorganization.
It's tough to see why MTI would have done this, so there may be more to the story than meets the eye. "It seems particulary baffling that a VC would make a company make so many painful changes to satisfy investment, and then pull out at the last minute," says one source, who only spoke on condition of anonymity.
Coincidently, MTI was probably the company that pulled the rug from under Optical Micro Devices Inc. (OMD), another U.K. optical startup, earlier this month (see UK Components Foundry for Sale). OMD's founder and CEO, Kevin Ford, was ousted about six weeks prior to that because he wasn't liked by a prospective investor, sources say.
— Pauline Rigby, Senior Editor, Light Reading