IronNet, a cybersecurity startup, had promised it would combat hackers using a unique blend of expertise and software. Helmed by a former director of the National Security Agency, the firm went public in 2021, and its value shot past $3 billion. Then it collapsed.
FILE - Lt. Gen. Keith Alexander, director of the National Security Agency, speaks at the RSA Conference in San Francisco on April 21, 2009. FILE - IronNet co-CEOs William Welch, center left, and Keith Alexander, center right, ring the opening bell of the New York Stock Exchange, to celebrate their company’s listing, Thursday, Sept. 9, 2021. Partially obscured behind Alexander is Andre Pienaar. FILE - National Security Agency Director Gen.
Alexander, who retired from the government in 2014, remains a prominent voice on cybersecurity and intelligence matters and sits on the board of the tech giant Amazon. Alexander did not respond to requests for comment., the former Republican chairman of the House Intelligence Committee who is running for the U.S. Senate in Michigan. One of IronNet’s first presidents and co-founders was Matt Olsen, who left the company in 2018 and leads the Justice Department’s National Security Division.
Prior to going into venture capital, Pienaar was a private investigator and started a firm called G3 Good Governance Group whose clients included blue chip companies, wealthy individuals and the British royal family. Pienaar also worked at the time to help Russian oligarch Viktor Vekselberg cement relationships with London’s rich and famous, according to William Lofgren, a former CIA officer and G3 co-founder.
Alexander and others at IronNet either did not know the details of Pienaar’s relationships with Vekselberg or did not find them troubling: A month after Vekselberg was first sanctioned in 2018, Pienaar joined IronNet’s board and C5 announced it was putting in a $35 million investment. Top officials were prohibited from unloading their stock for several months, but Alexander was allowed to sell a small amount of his shares. He made about $5 million in early stock sales and bought a Florida mansion worth the same amount.
Stiennon, the cybersecurity investing expert, said IronNet’s ideas about gathering threat data from multiple clients were not unique and the company’s biggest draw was Alexander’s “aura” as a former NSA director. Another sign that things were not well: IronNet and C5 were engaging in a questionable business practice in an apparent effort to juice the cybersecurity firm’s revenues, according to C5 records and interviews with former employees at both firms.
“That’s an inflated number,” said Eddie Potter, a former top sales executive at IronNet, when told by the AP of the size of C5’s contracts with IronNet. He added there was “no way” that C5 required services “worth $5 million.” Pienaar’s charity never registered with the IRS, as one of Pienaar’s companies claimed in U.K. business filings, and former C5 and IronNet officials said they did not see it do any substantive work.Pienaar’s attorneys said his charity was successful but there was “insufficient time” for it to register with the IRS.
It didn’t work. IronNet’s stock went into a prolonged skid and the company underwent multiple rounds of layoffs.
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