One of Ireland's hottest visual content delivery start-ups reveals its exit strategy. IAN CAMPBELLreports
INTUNE NETWORKS will be sold or go for an initial public offering (IPO) within three years, according to company chief executive Tim Fritzley.
He outlined his plan as the firm prepares to enter the commercial marketplace following what Fritzley describes as “one of the world’s most complex telecom development projects”.
Coming from the US with a CV that includes a stint heading up Microsoft’s internet protocol television (IPTV) business, Fritzley is well-acquainted with telecoms providers and is bullish enough to namecheck potential buyers.
“Cisco buys mature technologies so that is one exit strategy. But Ericsson, Alcatel, and all the other companies need to refresh their portfolios. They are about five to six years away from next-generation technology and need to buy it.”
Back in 2006, when Fritzley first pitched venture capitalists to fund Intune, he told them the telecoms industry was cyclical and they would see a healthy return on their investment.
“That was the bet I made. I told them at a point in time, when the pendulum swings back, we’ll have a product ready to go and somebody will buy us.”
He said the company mindset is focused on an IPO in 2012 or 2013, but investors may favour a sale if the right offer comes along.
“From a personal standpoint, the executives and founders would like to see an IPO. Ireland doesn’t have an anchor technology company and InTune could be it.”
Founded in 1999 by two UCD graduates, John Dunne and Tom Farrell, Intune Networks has developed advanced optical networking products that give carriers and internet service providers the capacity to meet growing demands for bandwidth. An explosion in video content and emerging models for cloud-based services have put a strain on networks that is only likely to get worse.
Bottlenecks will be alleviated by what Fritzley calls the “holy grail of networking”. For 30 years, laboratories and universities had identified optical packet switching technology as the way forward but it took Dunne and Farrell to come up with a clever piece of IP that made it commercial and scalable.
In 2006, Fritzley joined as chief executive and calculated that the company would need five years and €70 million to commercialise its products. Early investors were found in Britain and the US, as their Irish counterparts opted for property over technology.
“A well-known Irish investor laughed at me,” recalls Fritzley. “He said he could go across the street and buy a €5 million lot and turn it around for €30 million the next week.”
Enterprise Ireland and Invest Northern Ireland did come on board.
An R&D division run out of Belfast has been crucial in bringing the products to market, drawing on 20 years of telecoms experience in the region. Nortel and then Flextronics had built up an RD capability, some of which has now passed to InTune. Just as well, because Fritzley was close to going to the US for the skills after being unable to find what he needed in the South.
“Eighteen months ago, we wanted to move forward with the commercialisation, which is incredibly expensive and complex because big carriers have very specific requirements. In Dublin, there isn’t a culture of developing this type of equipment, but we found it in Belfast,” he said.
The upshot is that Intune now promotes itself to the world as an all-Ireland company. In the South, its ties go even deeper with the Government having invested €10 million in funding the build of the Exemplar Network using Intune technology.
“In September 2008, they came to me and asked how they could keep the technology in Ireland and build an ecosystem around it,” said Fritzley. “They came up with the idea of an open facility that could generate jobs and inward investment into Ireland around next-generation network technology.”
More than 30 companies and institutions have signed up to use the testbed, including BT, Imagine, EMC, UCC Tyndall, NUI Galway, UCD and DCU.
If Intune sells up, investors may get a good return but what happens to the Government’s ambitions to create a core competency? Fritzley says that if there is a solid technology core that employs 200-250 people, a company like Cisco would leave it where it was. InTune currently employs about 135 people but expects to grow further.
As the company begins to market its products, Fritzley has some sobering words for Irish start-ups that never get to market.
“Most failures fail at commercialisation. In Ireland, I hear Irish entrepreneurs repeatedly say they are going to ‘bootstrap’ their way along, not take cash, and fund it out of services. Ten to 15 years later, they have no products, just services. It turns into a quality-of-life company that has to support its founders.”
Running from December 4-7th, the Other Voices music festival in Dingle will use Intune’s technology to stream live footage to visitors unable to get tickets to the gigs.
Acts that include Jarvis Cocker and Laura Marling will have their shows screened simultaneously in pubs on HD TVs and on phones and laptops via Wi-Fi.
