A startup called Plumgrid sold its technology and IP to VMware and is shutting down, co-founder Pere Monclus announced in the blog post.
Some, but not all, of its employees will be joining VMware, too.
The terms were not disclosed but the farewell blog post was so sad and final, that this appears to be a fire sale, not a healthy, big return on investment.
“Our technology and IP have been acquired, and many of our employees have joined a new team,” Monclus wrote in that post. “We thank our founders, Awais, Pere, and Sushil … We also want to extend a warm thank you to our customers and partners who supported PLUMgrid throughout the years. Your support has meant the world to us, and your feedback always made us a better company.”
Word on the street among the network startup community was that Plumgrid had been looking for a buyer for a while.
Plumgrid had raised about $29 million in venture investment since it was founded in 2011. Its last equity round from venture investors was just over $16 million, back in July 2014, according to PitchBook.
If you remember, 2014 was at the height of unicorn madness. Startups were raising lots of cash and many were encouraged to burn through that cash fast, to grow themselves as fast as they could. But by the fall of 2015, sanity returned. Money was harder to come by. Cash flow and business models were back in vogue.
In mid 2015, founder/CEO Awais Nemat was replaced by a new CEO, Larry Lang, who had cut his teeth at Cisco back in the day. In 2013, he was CEO of a security startup called Quorum. He’s also a board member for a number of startups, including the ill-fated Violin Memory, a storage startup that just filed for Chapter 11.
In August of that year, the company took on a $2.45 million bridge loan.
Plumgrid was promising when it launched. It was founded by a group of former Cisco engineers who worked on some of the network giant’s most important technologies.
Back in 2011, it was part of a market taking on Cisco loaded with hot startups being acquired as soon as they had a product, a market called software-defined networking (SDN). Since then, Cisco released its SDN competitor and the market is largely a Coke and Pepsi battle between VMware and Cisco. A few standalone startups that etched out a successful niche for themselves are still doing well.
Those, like Plumgrid, that didn’t get bought during the early frenzy, were left to figure things out. Plumgrid then banked on another hot technology in 2011, the cloud operating system that competed with Amazon Web Services, OpenStack. Amazon has since boomed and OpenStack didn’t make a dent in that. And many OpenStack startups struggled, too.
Still, Plumgrid’s technology did make an impact. Its claim to fame is a networking technology is called IO Visor, which helps IT professionals manage a company’s software-based computer networks.
IO Visor was added to the main Linux operating system kernel and has become an open-source project under the Linux Foundation.
VMware is a good home for Plumgrid’s technology and the employees who were offered jobs. It’s a leader in the SDN world and is also involved with OpenStack – a technology it, too, once considered to be a competitor.
Plumgrid could not be immediately reached for comment.