IronNet Ceases Operations, Terminates All Remaining StaffersEnd Comes Just 25 Months After Threat Detection Firm Went Public at $1.2B Valuation
The network detection and response company founded by retired four-star Army Gen. Keith Alexander and once valued at $1.2 billion has officially turned off the lights.
Washington, D.C.-area IronNet on Friday ceased all business activities and operations and terminated its remaining employees after considering strategic alternatives and finding additional sources of liquidity to be unavailable. IronNet's board directed the company to file a voluntary petition for bankruptcy protection as expeditiously as possible.
"The company does not have the ability to satisfy its debts and related obligations," President and Chief Financial Officer Cameron Pforr wrote in a regulatory filing Friday. "The related actual and potential effects on the company and its subsidiaries will be material and adverse."
IronNet doesn't anticipate it will be able to pursue reorganization under Chapter 11 of the bankruptcy code, in which case the company will instead need to file for liquidation under Chapter 7. The company expects that no distributions would be available for stockholders in Chapter 7 and that distributions to stakeholders in the event of liquidation would be significantly smaller than those via reorganization.
Financial Lifelines Fail to Keep IronNet Afloat
The move to shut down completely comes nearly four weeks after the board authorized IronNet to furlough nearly all its workers and substantially curtail business operations. IronNet retained several workers to ensure remaining customers didn't experience service interruption. At that time, C5 Capital said it had provided IronNet's board with a term sheet to fund more restructuring (see: IronNet Furloughs Almost All Employees, Curtails Operations).
IronNet is the second publicly traded cybersecurity company to end operations this year, following in the footsteps of Washington, D.C.-area email security and threat detection vendor Cyren, which shut down in February 2023 after failing to sell assets or raise more capital. Neither IronNet nor C5 Capital immediately responded to Information Security Media Group's requests for additional comment.
The Washington, D.C.-based venture capital firm said it had given IronNet $15.2 million of financing since January as the company's sole funder, and in July it agreed to take IronNet private in exchange for Alexander, 71, giving up day-to-day management of the company he founded nine years ago. Former Houghton Mifflin Harcourt CEO Linda Zecher, 70, has served as IronNet's chief executive since July 2023 (see: IronNet CEO Gen. Keith Alexander Out Amid Take-Private Deal).
The remaining members of IronNet's executive team at the time of closure are: Pforr, 58, who joined IronNet from Fidelis Cybersecurity in September 2022 as CFO and added the president role in July; Fernando Maymi, who joined IronNet in April 2019 and has served as its CISO since February 2022; and John O'Hara, who joined in 2021 as senior vice president of corporate development and partnerships.
"The company currently does not have the ability to satisfy its debts."
– Cameron Pforr, president and CFO, IronNet
IronNet's board is stacked with ex-military officials including Alexander - who chairs the board - as well as ex-NSA Director Mike McConnell, ex-Army Vice Chief of Staff Jack Keane, and ex-Director of Naval Intelligence Jan Tighe. Members of the board with civilian backgrounds include Higgins, Kleiner Perkins Managing Partner Ted Schlein and ForgePoint Capital co-founder and Managing Partner Don Dixon.
From Unicorn to No More
IronNet's high point came in August 2021, when the firm went public through a merger with a special purpose acquisition corporation at a $1.2 billion valuation. Signs of trouble started to emerge in June 2022, when the company went through multiple rounds of layoffs, executive removals and warnings that the pace of new business was insufficient to sustain operations in the back half of last year.
The company drastically reduced the size of its workforce starting in early 2022, going from 316 employees as of Jan. 31, 2022, to just 104 employees a year later. The most significant job cuts took place between September and November 2022, when IronNet axed 11 employees - or 44% of its workforce - to achieve approximately $20 million in annualized cost savings, according to SEC filings.
These cost-cutting efforts paid dividends, and IronNet's net loss for the fiscal year ended Jan. 31, 2023, plummeted to $111 million, a 54.3% improvement over its $242.6 million net loss in the fiscal year ended Jan. 31, 2022. But the company's revenue sank to $27.3 million, down 1% from $27.5 million a year earlier, while the number of recurring software customers fell from 88 to 66 due to liquidity issues.
As revenue flatlined, IronNet's debt continued to mount. In addition to the $15.2 million received from C5 Capital, private equity firm 3i said on Aug. 23 that IronNet was in default on a $7.5 million convertible note and demanded prompt payment. IronNet also has $8.5 million outstanding on promissory notes from members of the company's board as well as $500,000 outstanding on a note for Korr Acquisitions.
As of midday Friday, IronNet had yet to officially file for bankruptcy, according to federal court records.