IronNet, a cybersecurity company founded by former Pentagon leaders, announced it will furlough most of its workers and explore options including bankruptcy reorganization or liquidation.
The company made the announcement in a Tuesday (Sept. 5) regulatory filing to the Securities and Exchange Commission (SEC), saying that its board of directors authorized these moves “as a result of the liquidity position of IronNet” and that the company’s business operations will be substantially curtailed “until such time that the company has sufficient operating liquidity to rehire a portion of the furloughed employees and resume business operations.”
IronNet was founded in 2014 by former National Security Agency (NSA) Director and retired Army Gen. Keith Alexander, The Wall Street Journal (WSJ) reported Wednesday (Sept. 6). The company provides cybersecurity products to businesses and governments, leveraging the federal experience of its leadership in the NSA, U.S. Cyber Command, and other arms of the Department of Defense.
However, the company has faced financial challenges, posting losses in its last two fiscal years — $111 million for the year that ended in January and $242.6 million the previous year, according to the report.
According to the SEC filing, IronNet’s furlough and halt in business operations constituted a default event on its debt. The company owes over $33 million to various creditors. As a result, IronNet is exploring options such as bankruptcy protection, which could involve a court-organized sale or liquidation.
The challenges faced by IronNet are not unique in the cybersecurity industry, according to the report. Many cyber companies have struggled to navigate an uncertain economy and tighter technology budgets, even as cyberattacks have become a significant business risk. Layoffs, delistings from exchanges and canceled plans for initial public offerings (IPOs) have become common. Startups, in particular, have faced difficulties, with some experiencing reduced valuations and struggles to secure funding.
Despite these challenges, some cybersecurity companies have managed to secure significant investment rounds, the report said.
Resilience, for example, completed a $100 million Series D equity financing round Aug. 7 to expand its enterprise-level cyber-risk platform. The firm said at the time that it will use this latest fundraise to help accelerate the adoption of the platform and further its global growth.