The founder and former executive team of Ottawa-based Tehama Inc. have restructured and bought the startup out of bankruptcy, and renamed it Tehama Technologies Inc.
The assets of Tehama Inc., which provided a cloud-based software solution for remote teams, went on the market after going through insolvency proceedings in late January before entering into full-on bankruptcy in April. Accounting firm Deloitte oversaw Tehama’s insolvency and bankruptcy.
“Management undertook a pretty risky plan to acquire the debt to save the company.”
The sale of Tehama Inc. was completed on March 31, but made public today. A term sheet from Deloitte set the purchase price at approximately $2.9 million, which founder and CEO Paul Vallée confirmed to BetaKit.
The new owners of Tehama Technologies are all previous executives from the original Tehama: Vallée; Rob White, CFO; Kevin Haaland, CTO; and Mick Miralis, CRO. As well, two other undisclosed investors have helped fund the new Tehama Technologies.
In an interview with BetaKit, Vallée said, “Management undertook a pretty risky plan to acquire the debt to save the company and then led an effort to restructure it and acquire it, and now we’re pretty chuffed.”
Under its ‘new’ ownership, Tehama Technologies is focused on the same offering it previously had. The startup will continue to enable hybrid and remote work by providing organizations including public sector, financial services, health care and telecommunications, and others with the ability to securely access data and applications.
Tehama claimed that difficult competition in the market and inhospitable fundraising conditions drove the startup into insolvency. Court filings indicated that the insolvency application was triggered by a debt agreement between Tehama and CIBC falling through, at the same time as the company also lost some key customer contracts.
According to Vallée, Tehama Technologies acquired Tehama Inc. in an open bidding process. He said other creditors and businesses could bid on the acquisition as well. “We went through that entire process, and our bid was the winning bid for the business,” Vallée noted.
Founded in 2019 as a spin-off from Ottawa-based Pythian, Tehama Inc. was created out of a need to improve the software available to connect a remote workforce, and protect company information from the threat of security breaches. Pythian is a global IT services company that Vallée founded in 1997.
In early 2020, Tehama Inc. raised a $14-million CAD Series A round just as the COVID-19 stay-at-home orders got underway. The round, which was led by OMERS Ventures and included BDC Capital, was Tehama Inc.’s first external fundraise.
Vallée noted the capital raised in 2020 was deployed into Tehama Inc.’s product, and aimed at an opportunity to sell to the federal government. “The product investments are still here,” he said. “The opportunity to sell into the federal government is alive and well and in fact we’re in the middle of a meaningful security audit that will validate our platform as suitable to carry government work.”
Currently, Tehama Technologies has 25 employees, all of whom came from the previous incarnation of the startup. Tehama Inc. previously carried out a round of layoffs in late 2022 that saw half of its workforce eliminated.
“The goal right now is to absolutely minimize the amount of costs that we take on so we can race to break even, so that we never need to raise external capital again,” Vallée said.