Exanet is coming back from the grave, just two weeks after its founder and board chairman, Dr. Giora Yaron, said it was closing down. This comes after a Tel Aviv court ordered the injection of extra funds.
It is a bizarre last minute rescue twist to the story of NAS start-up Exanet, whose history is overviewed here. Our account of what's happened comes from a person close to events and from the Israeli Globes media outlet.
On December 5, Yaron and the other two board members decided that the company was running out of money and couldn't pay its suppliers, and so had to be closed down. CEO Mark Weiner told the 80 or so employees that Exanet would cease operations on December 7. After that, some fifty of the 62 employees in Israel banded together, apparently with the company's agreement, and applied to the Tel Aviv district court to have a temporary liquidator or receiver appointed.
Kreos Capital, which was owed $10m by Exanet, also petitioned the court for a receiver to be appointed, and Adv. Erez Haber became the Exanet temporary liquidator.
The back story here is that there was a boardroom split over an Exanet future involving a partnership with Dell, brokered by Weiner, in which Dell would co-develop and sell Exanet products under an OEM basis, as well as joining together with Microdent Technologies to inject $20m of capital into the company.
Microdent, led by Eiten Wertheimer, owns 40 per cent of Exanet and has an Exanet board representative, Danny Goldman. Yaron owns 13 per cent and Evergreen Venture Partners, led by managing partner Boaz Dinte, owns 25 per cent. The story is that two of the three Exanet board members, Yaron and Dinte, blocked the Weiner-Microdent-Dell deal because it would dilute their shareholdings.
Mark Weiner became CEO in November 2008 after the two previous CEOs, Rami Schwartz and then Arnon Gat, had failed to grow the company enough. Our contact said: "Mark Weiner... knew what he had to do and focussed on technology and sales... There was a fantastic fourth quarter. Exanet did great at nuclear energy supplier EDF in France with a petabyte single file system mirrored to another. There was a huge deal at Merck in New Jersey with four systems. The company broke into media in California. It started to sell in Israel, for the first time ever."
Exanet had concentrated on direct sales in the past, but this was not enough: "Weiner understood that Exanet couldn't just rely on direct sales. So he focussed on setting up an OEM channel. Fujitsu Siemens Computers (FSC) came on board but the deal went in the freezer when Siemens got out of that JV. There was a second OEM opportunity with Dell which also involved co-development of the product to enable competition against NetApp... Dell and Microdent would inject $20m into Exanet. Two other investors, Yaron and Evergreen refused the deal. There was a lot of fighting in the board. It was hilarious, like a Franz Kafka novel."
On December 10 the Tel Aviv court ordered the investors to put more funds into the company so it could continue operations. They ponied up $450,000 on December 22 and Haber, the liquidator, said he would keep the company going while he looked for a buyer. He was already in touch with several potential acquirers.