Nov
30
2018
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DoJ charges Autonomy founder with fraud over $11BN sale to HP

U.K. entrepreneur turned billionaire investor Mike Lynch has been charged with fraud in the U.S. over the 2011 sale of his enterprise software company.

Lynch sold Autonomy, the big data company he founded back in 1996, to computer giant HP for around $11 billion some seven years ago.

But within a year around three-quarters of the value of the business had been written off, with HP accusing Autonomy’s management of accounting misrepresentations and disclosure failures.

Lynch has always rejected the allegations, and after HP sought to sue him in U.K. courts he countersued in 2015.

Meanwhile, the U.K.’s own Serious Fraud Office dropped an investigation into the Autonomy sale in 2015 — finding “insufficient evidence for a realistic prospect of conviction.”

But now the DoJ has filed charges in a San Francisco court, accusing Lynch and other senior Autonomy executives of making false statements that inflated the value of the company.

They face 14 counts of conspiracy and fraud, according to Reuters — a charge that carries a maximum penalty of 20 years in prison.

We’ve reached out to Lynch’s fund, Invoke Capital, for comment on the latest development.

The BBC has obtained a statement from his lawyers, Chris Morvillo of Clifford Chance and Reid Weingarten of Steptoe & Johnson, which describes the indictment as “a travesty of justice,”

The statement also claims Lynch is being made a scapegoat for HP’s failures, framing the allegations as a business dispute over the application of U.K. accounting standards. 

Two years ago we interviewed Lynch onstage at TechCrunch Disrupt London and he mocked the morass of allegations still swirling around the acquisition as “spin and bullshit.”

Following the latest developments, the BBC reports that Lynch has stepped down as a scientific adviser to the U.K. government.

“Dr. Lynch has decided to resign his membership of the CST [Council for Science and Technology] with immediate effect. We appreciate the valuable contribution he has made to the CST in recent years,” a government spokesperson told it.

Sep
05
2018
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Elastic’s IPO filing is here

Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, has unveiled its IPO filing after confidentially submitting paperwork to the SEC in June. The company will be the latest in a line of enterprise SaaS businesses to hit the public markets in 2018.

Headquartered in Mountain View, Elastic plans to raise $100 million in its NYSE listing, though that’s likely a placeholder amount. The timing of the filing suggests the company will transition to the public markets this fall; we’ve reached out to the company for more details. 

Elastic will trade under the symbol ESTC.

The business is known for its core product, an open-source search tool called ElasticSearch. It also offers a range of analytics and visualization tools meant to help businesses organize large data sets, competing directly with companies like Splunk and even Amazon — a name it mentions 14 times in the filing.

Amazon offers some of our open source features as part of its Amazon Web Services offering. As such, Amazon competes with us for potential customers, and while Amazon cannot provide our proprietary software, the pricing of Amazon’s offerings may limit our ability to adjust,” the company wrote in the filing, which also lists Endeca, FAST, Autonomy and several others as key competitors.

This is our first look at Elastic’s financials. The company brought in $159.9 million in revenue in the 12 months ended July 30, 2018, up roughly 100 percent from $88.1 million the year prior. Losses are growing at about the same rate. Elastic reported a net loss of $18.5 million in the second quarter of 2018. That’s an increase from $9.9 million in the same period in 2017.

Founded in 2012, the company has raised about $100 million in venture capital funding, garnering a $700 million valuation the last time it raised VC, which was all the way back in 2014. Its investors include Benchmark, NEA and Future Fund, which each retain a 17.8 percent, 10.2 percent and 8.2 percent pre-IPO stake, respectively.

A flurry of business software companies have opted to go public this year. Domo, a business analytics company based in Utah, went public in June raising $193 million in the process. On top of that, subscription biller Zuora had a positive debut in April in what was a “clear sign post on the road to SaaS maturation,” according to TechCrunch’s Ron Miller. DocuSign and Smartsheet are also recent examples of both high-profile and successful SaaS IPOs.

Apr
01
2015
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Ain’t No Joke As War Between HP, Ex-Autonomy Execs Enters Lawsuit Phase

HP log carved with exacto knife. It may be April Fool’s Day, but I’m sure former Autonomy CEO Mike Lynch and HP execs aren’t laughing. HP filed suit in London this week against Lynch and former Autonomy CFO Sushovan Hussain over alleged accounting improprieties to the tune of $5.1B. Lynch and company’s response? Counter-sue, as a war that’s been going on for almost four years, continues… Read More

Jan
19
2015
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British Authorities Drop Autonomy Accounting Inquiry, US Investigation Continues

Doing the books with computer, paper ledger and iPhone. The British Serious Fraud Office today dropped its investigation into accusations of accounting improprieties at Autonomy, citing insufficient evidence to continue the investigation, but it made clear that the US investigation would continue. “In respect of some aspects of the allegations, the SFO has concluded that, on the information available to it, there is insufficient evidence for… Read More

Jul
01
2014
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HP, Shareholder Settlement Is Latest Chapter In Autonomy Saga

Pelicans fight over a dead fish. Today, HP announced it had reached a settlement with its shareholders over its handling of the purchase of Autonomy for $10B back in 2011, but it’s far from the end of the story as the fight over the Autonomy purchase will very likely head to court, this time with HP and its shareholders at one table and Autonomy’s former executives at the other. Apparently, HP shareholders decided… Read More

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