IronNet CEO Gen. Keith Alexander Out Amid Take-Private DealTenable Director Linda Zecher Tapped as CEO as C5 Preps to Take Control of IronNet
Retired four-star Gen. Keith Alexander resigned as IronNet's CEO as part of a deal with C5 Capital to take the beleaguered threat detection firm private.
The Washington, D.C.-based venture capital firm extended IronNet a financial lifeline in exchange for Alexander, 71, giving up day-to-day management of the company he founded nine years ago. Stepping in for Alexander as IronNet's CEO will be Linda Zecher, 70, who today sits on the board of vulnerability management vendor Tenable and previously served as CEO of publisher Houghton Mifflin Harcourt (see: C5 Looks to Take IronNet Private, Oust Gen. Keith Alexander).
"Ms. Zecher's experience in leading the transformations of businesses in the digital space, her expertise and skill in driving technological innovation and her expertise in financial markets, financial investment [and] financial restructuring qualify Ms. Zecher to serve on the board," IronNet wrote in a filing with the U.S. Securities and Exchange Commission on Wednesday.
IronNet's stock is down $0.01 - or 3.63% - to $0.21 per share midday Wednesday. That's a far cry from August 2021, when the firm went public through a merger with a special purpose acquisition company at a $1.2 billion valuation and stock price of $13.44 per share. IronNet didn't respond to Information Security Media Group's request for additional comment.
Executive Reshuffling Underway at IronNet
C5's offer is contingent on IronNet reducing the size of its board to seven members, three of whom would be nominated in consultation with the venture capital firm. Alexander will continue to serve as chair of IronNet's board, while Zecher will become a director. She spent eight years leading Microsoft's worldwide public sector efforts before becoming CEO of HMH and currently serves as chairman of C5 (see: IronNet Headed for Crash Amid Layoffs and Co-CEO Exit).
"Linda is an exceptional leader with a background in cybersecurity and other industries who will help us drive IronNet's Collective Defense Platform forward," Alexander said in a statement. Alexander - a former NSA director and U.S. Cyber Command chief - is expected to enter into a separation agreement with IronNet providing certain severance benefits.
As part of the executive reshuffle, Cameron Pforr, 58, will become IronNet's president and will continue to serve as the company's chief financial officer. He was president of Fidelis Cybersecurity before becoming IronNet's CFO in September 2022. Former Comcast Vice President John O'Hara will take on added responsibilities as part of a promotion that will have him working with IronNet's engineering team.
"It will continue to require tenacity, resolve and a deep understanding of capability and needs on all parts to ensure the right solutions are available for government and commercial customers, especially in the national security space, and that tremendous value can be created," C5 Capital Managing Partner Kurt Scherer wrote on LinkedIn on Wednesday.
C5 Capital has kept cash-strapped IronNet afloat for months. It has extended $13.2 million in convertible debt notes since December as the two sides negotiated the terms of a take-private transaction, IronNet disclosed last month. The two sides agreed to a proposal Wednesday that includes up to $15.48 million prior to the deal closing and up to $51 million post-closing, including repayment of the pre-closing notes (see: IronNet Nearly Insolvent; Board to Probe Claims of Deception).
"The company will use the proceeds of the pre-closing note issued on July 11, 2023, to satisfy certain of its current liabilities," IronNet wrote. "However…in the absence of additional sources of liquidity, the company’s existing cash and cash equivalents and anticipated cash flows from operations will not be sufficient to meet the company’s operating and liquidity needs beyond the end of July 2023."
Turning Over a New Leaf
IronNet drastically reduced the size of its workforce to get its financial house in order, 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 2022 and November 2022, when IronNet axed 111 employees - or 44% of its workforce - to achieve approximately $20 million in annualized cost savings, according to SEC filings (see: IronNet Lays Off 17% of Staff 10 Months After Going Public).
"Linda is an exceptional leader with a background in cybersecurity."
– Gen. Keith Alexander, founder and former CEO, IronNet
These cost-cutting efforts have paid dividends. The company's net loss for the fiscal quarter ended April 30 plummeted to $8.1 million, a 75.7% improvement over its $33.2 million net loss in the fiscal quarter ended April 30, 2022. But in the most recent fiscal quarter, IronNet's revenue sank to $6.3 million, down 6% from $6.7 million a year earlier.
"I look forward to collaborating with this talented team at IronNet to drive sustainable growth and value creation in the company, and to deliver for our customers," Zecher said in a statement.
Under the agreement, C5 will ascertain how much funding to extend based on weekly reports generated by IronNet detailing its receivables, payables, financial needs and operating requirements. Until IronNet becomes cash-flow positive, the company has agreed to give C5 projections of the amount of money needed to fund the company's operations on a month-by-month basis.
Before the take-private deal closes, C5 said IronNet would need to appoint new management and board members, restructure its debt and become current on all Securities and Exchange Commission filings. Once C5 finishes taking IronNet private, the agreement states IronNet would need to come within 5% of its quarterly sales targets and maintain customer retention above 65% to gain access to more C5 funds.