Founder and CEO Paul Vallée confirmed that he and former Tehama executives Rob White, Kevin Haaland and Mick Miralis led a successful $2.9-million bid to buy the firm’s assets under a court-supervised auction process.
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Tehama’s management team has launched a new company after purchasing the assets of the Ottawa-based cybersecurity startup out of creditor protection with the aim of challenging multinational competitors like Amazon.
Founder and CEO Paul Vallée confirmed that he and former Tehama executives Rob White, Kevin Haaland and Mick Miralis led a successful $2.9-million bid to buy the firm’s assets under a court-supervised auction process. The deal officially closed on March 31.
Now-defunct Tehama has been reborn as a new corporate entity named Tehama Technologies, which will continue to produce the same software platform as its predecessor. Its ownership group also includes most of the previous firm’s 25 employees, who are transferring to the new company, as well as outside investors.
Tehama was spun off from Pythian, an Ottawa-based IT consulting firm that Vallée previously headed, in 2019. Its cloud-based technology lets remote workers securely access data and software applications on their laptops and other devices.
After raising millions of dollars in venture capital as demand for its platform soared early in the pandemic, Tehama fell on hard times last year when a deal to raise additional capital fell through.
In January, the firm applied for insolvency under the Companies’ Creditors Arrangement Act, with assets valued at about US$6.9 million and liabilities totalling about US$10.2 million.
“It was a very stressful time where we went from everything is great, we’re about to announce a brand new investment deal, to everything has gone to hell,” Vallée said in an interview on Wednesday. “I won’t pretend it was an easy chapter to write. But it did work out.”
Vallée, who now leads Tehama Technologies, is confident the new venture will succeed under a leaner business model than its predecessor.
“We believe we can break even by the end of the year,” he said. “Right now, that goal is absolutely within reach and we have (the sales) pipeline to defend that goal.”
In court filings earlier this year, White said Tehama had recently signed two new customers and was in “active negotiations” with other potential clients, “demonstrating the value that the company’s platform continues to have in the marketplace.”
Vallée said customer interest in the rebranded Tehama Technologies continues to be strong.
The company is in the midst of a security audit that could clear the way for it to bid on federal government contracts before 2023 is out, he said. A green light to sell to the feds would also give the platform more credibility with other public-sector organizations and help the firm “bring a more convincing message” to private companies as well, Vallée added.
“We’re just gently starting to grow again,” he said.
Vallée conceded that management’s decision to acquire Tehama’s debt and enter a formal restructuring process was a “risky effort” because it opened the door to other bidders who could have killed the platform had they poneyed up more money than his group.
“They would have been able to buy it and shut it down just to take a competitor out of the mix,” he explained. “It would have devastated me, but it wouldn’t have surprised me … if Amazon had bought it and shut it down.
“But they didn’t, which is good because now I’m going to stick it to ’em.”
Vallée said his ultimate goal is to turn Tehama Technologies into a profitable enterprise that doesn’t require any additional outside funding.
“The market for capital is not great,” he said. “Our plan is not to need new cash. Our plan is to make the business break even and then grow from there, and then if we do raise new cash, it will come from having achieved our goals and milestones, and therefore being able to do it from a position of strength, not a position of weakness.”
“If we ever do raise capital again, it will be because we want to, not because of necessity.”
