Exits – Orchestream exit by IPO

Orchestream, the software development company started in 1996 by the then 20-year old Charles Muirhead, planned to make an initial public offering on the techMARK at the London Stock Exchange on June 28 – as EVCJ went to press. The offer by the venture backed company was priced in pre-marketing at 185p per share which should raise the company GBP77.7 million (EURO116.53 million). This is at the upper end of the expected per share pricing band of 150p to 190p. This listing will give Orchestream a market capitalisation of GBP214.2 million. The offer will be a global non-retail listing.

Orchestream originally received a $3.5 million round of funding in June 1998 that was led by Quester Venture Partners. Newbury Ventures also participated. Previous investors Celtic House International and Providence Investment also participated as did some of the business angels that originally provided Orchestream with seed capital.

In November of that same year, a further round totalling $8.2 million was led by Atlas Venture and supported by Amadeus Venture Partners, Kennet Capital, Quester Venture Partners, and Reuters.

In a third round of funding led by Deutsche Bank and Reuters and supported by existing investors, Orchestream raised a further $16.4 million. The money raised was used to fund market penetration of Orchestream’s products into the North American, Asian and European markets.

Then in late December 1999 Intel made a strategic investment for a minority stake in Orchestream.

The proceeds of Orchestream’s IPO will be used for working capital, sales and marketing and brand development and general corporate purposes, including acquisitions of complementary software technology. It may also support the formation of strategic alliances should attractive opportunities arise over the next 24 months.

Quester Venture Partners, which led the first round of funding in Orchestream, and Atlas Venture, which led the second round of funding and took an 11 per cent stake in the firm to become the largest single shareholder, both retain non-executive directorships on the board of Orchestream. Atlas Venture is represented by Gerry Montanus and Quester Venture Partners by Simon Acland.

Orchestream’s business aim is to solve the problem of overcrowded Internet Protocol (IP) networks. Simply put, this means that Orchestream has developed a solution whereby network managers can categorise which traffic on their bandwidth – from video conferencing to low priority email – gets priority. Without this solution all traffic is treated with the same importance, which means network managers generally have overspent their budgets in order to ensure timely delivery of all traffic rather than risk slow delivery of high priority items. Consequently the Orchestream solution allows control over priority and, as a result, enables effective and realistic budget planning by network managers.