Zirra Post-Mortem: Why Was Hexatier Acquired for $40 million?

Zirra Post-Mortem: Why Was Hexatier Acquired for $40 million?

Chinese communication behemoth Huawei acquired Israeli start-up Hexatier (formerly Green SQL), whose technology secures databases in the cloud, for about $35-$40 million. Zirra learned from sources close to the deal that founders and investors would get in return a few million in cash soon, but the biggest bulk will be paid over time as a retention plan, as Hexatier will prove it is meeting goals. The deal was first reported on Calcalist and then appeared on Reuters after the news outlet confirmed the information from sources in both China and Israel.

Hexatier will become an R&D center for database in the cloud for Huawei, making it the second company acquired by the Chinese giant in 2016. Earlier this year Toga Networks , an R&D center that had already served Huawei exclusively, was entirely bought by it.

Hexatier raised $14 million from Israeli VCs such as JVP, Rhodium and Magma and was probably trying to raise new fund. Zirra had learned that some of the first investors didn’t want to join or lead the round, and that has led to the buyout. $35-$40 million will cover the expanses the VCs put in the company, but it can take years until Hexatier will reach the entire goals originally promised when signing the deal.

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Raising Red Flags

Those who read the news on Hexatier earlier this year, were thinking that the company is on track of growth and prosperity. The company re-branded itself from Green SQL to Hexatier focusing on securing cloud environment, a high growing market, and pointed to the fact that most companies have not yet moved critical systems to the cloud. Hexatier hired a new CEO and recruited few high-profile executives. On January 2016 Hexatier announced the addition of Dan Dinnar as the new CEO, after leaving CyberArk Software, a growing public cyber company that had managed a successful IPO.

But a report released by Zirra already two months ago hinted that Hexatier is suffering from a few challenges. Some indicators were mentioned in a list of red flags, automatically identified by Zirra’s AI and machine learning technology to analyzing private companies based on public data.

  • None of the founders still hold executive positions within Hexatier: Previous CEO Amir Sadeh was replaced with Dan Dinnar. VP Sales and marketing Hadar Eshel left the company before it was re-branded and David Maman is managing a new cyber startup since July.
  • Total headcount didn’t grow much for two years
  • There are many existing companies already in the market space. HexaTier must display a strong differentiating factor in order to surpass the clutter.
  • Hexatier’s fundraising may be insufficient either in volume or in frequency. This may point to a decline in interest from investors.

For Zirra’s full analysis on Hexatier published at October 2016 click here.

 

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