 |
The story about scientist and technology entrepreneur Mike Lynch starting his first company with a stg. £2,000 loan from a rock band manager he met in a pub has often been repeated. It says a lot about Lynch, the risk-taking scientist who, 10 years ago, had enough faith in his research to borrow from an unknown business angel.
Lynch used the money to set up his first company, Neurodynamics. Ten years later, Lynch's main business interest, the Neurodynamics spin-off, Autonomy, is listed on three international markets and has annual revenues of around stg£60 million. Lynch founded Autonomy in 1996 with $15 million in funding from heavy-hitting investors including Apax Venture Capital, Durlacher and the English National Investment Company (ENIC).
"At that time, that kind of money for a British startup was almost unheard of," said a banker involved in Autonomy's initial public offering (IPO) on the European exchange, the Easdaq, in July 1998.
The flotation capitalised the company at $165 million, and its shares rose quickly from $15 in October 1999 to $120 in March 2000. This valued the company at over $5 billion and made Lynch Britain's first internet billionaire. The British press took to calling him the 'billion-dollar brain' and he basked in the publicity.
The share price high and rising US sales led to a second flotation on the Nasdaq last May and a follow-up flotation on the London Stock Exchange in November. Along the way Lynch picked up the 1999 Entrepreneur of the Year award from the Confederation of British Industry, and Technology Pioneer Award at the World Economic Forum last year.
The rapid growth of Autonomy, which has enjoyed quarterly compound sales growth of more than 50 per cent, has boosted international demand for Lynch as a conference speaker. Industry magazines profile him alongside household technology names, such as Bill Gates and Larry Ellison.
Lynch's extraordinary journey started when an acquaintance set up a pub meeting with the business angel, whose £2,000 allowed Neurodynamics to be set up in the back room of a college house. The company initially specialised in pattern-recognition technology, such as the identification of fingerprints and handwriting, and sold its products to police forces.
Its first design, a machine to match fingerprints, was used to solve murders from years earlier and the firm thrived. However, Lynch was already thinking of bigger things. "We had an immediate need to generate money, so we did work that paid, while getting on with the research the rest of the time." The research, again based on Bayes' theorems, led to the creation of Autonomy, which was spun out of Neurodynamics in 1996.
The company developed software that used Bayes' probability theories to plough through text in search of concepts instead of keywords. It was perfectly placed to take advantage of the opportunities created by the internet as the software could organise information, categorise e-mails and create links between related articles on websites.
Today the company's 430-strong customer base includes the US State Department, News Corporation, Reuters, Lucent and Merrill Lynch. It has over 140 staff in 15 offices. However, the technology slowdown has hit Autonomy, and the company has lost more than half its value since listing in London at the end of October.
Neurodynamics is thriving as an incubator for new ideas, and last year Lynch founded a third company, NCorp, to focus on the e-commerce market. He is also a board member of Talkcast, a unified messaging company, and has a stake in SoftSound, a speech recognition firm which Autonomy acquired a year ago, and a directorship of Neurodynamics.
He has invested his personal wealth, which now stands at over £250 million, in internet infrastructure companies, which he sees as robust and stable. He is critical of "flimsy" dotcoms, and blames an "excess of hype and hot air" for their rise. 
The days of running an internet business on hope and pizza are gone," he said. "At the moment, we're ahead of the field, so we aim to be in almost every piece of software in three years." - It's almost an 'Intel inside' strategy.
UPDATE: April 12th 2010; Autonomy Corporation plc announced that a major global bank based out of the U.S. has placed a multi-million dollar order for Autonomy compliance solutions. The agreement has an initial value of approximately $10 million, and an expected future value of approximately $25 million over the next few years.
UPDATE: April 14th 2010; Mike Lynch's Autonomy today announced its second big contract this week as it sold its Intelligent Data Operating Layer software to the United States taxman. The “seven-figure” deal with the Internal Revenue Service is likely to lead to many follow-up orders as tax lawyers and accountants seek to use the same weapons in the tax battle as the IRS. The software enables the IRS to plug into the side of companies' and individuals' IT systems to track and read not only their tax returns but any related e-mails, documents and voice-mails. Yesterday Autonomy signed a deal with an unnamed global bank based in the US which could be worth as much as $35 million (£22.7 million) over the next few years.
Get the latest updates about Dr. Lynch on Wikipedia.
Subscribe to RSS Feed