Dexterus Seeks Additional Funds; Last Founder Quits

LONDON--Dexterus, a start-up company specializing in providing integrated telecommunications and IT services to the financial community, has lost Nick Holland, the last of Dexterus’ original three founders and the company’s innovations director. The company has also laid off several of its 80 London-based employees, and it is trying to secure additional funding to keep its head above water.

Dexterus’ other co-founder had left the company when new management was brought in early this year; the third, Jeremy Lloyd, was made redundant last month, say sources close to the company.

Sources say that Dexterus, which launched in April (IMD, April 9), is trying to secure an additional £15 million of funding from backers Bain Capital. However, that funding may come in £5 million packages and with strict caveats. One of the caveats may be that Dexterus has to find other backers, and Bain will match the additional investments.

Sources say that another of these caveats mandates a reduction in staff levels from the current 80 employees in London. Between 10 and 16 people are said to have been laid off or have resigned (IMD, Aug. 6).

Nigel Hartnell, corporate development director for Dexterus, says that this is the third round of financing and that only a handful of people have left the company since January.

Dexterus operates a metropolitan area network, supplied by Level (3) Communications, which spans the greater part of the City of London, the Docklands and the West End, where the majority of big investment banks are located.

The company has already spent around £30 million, sources say, with an average "burn rate" of around £1 million per month. This, sources say, is an alarming figure when compared with the company’s income. "If they are lucky, they’re billing £100,000 per month," the source says. "They are spending around £150,000 on line rentals from Level (3)."

Another source says that the company is soon due to pay three months’ rent in advance on its posh offices in the Citypoint building on Ropemaker Street in the City of London, but it may give notice to leave the premises instead.

Hartnell says that the burn rate is actually lower than the original business plan agreed by Bain, although he declines to elaborate on either the spending or the income. He does say, however, that Dexterus’ revenues are small and that so far the company has only signed small customers.

But, he adds, there are some larger sales in the offing, which he is confident will be closed, which include major investment banks and exchanges. Hartnell adds, "The market is pretty distressed. People will only do what they have to do." He is also optimistic about the company’s Reuters 3000 Xtra thin client hosting solution, which is part of its business strategy.

Dexterus teamed up with the Financial Applications Specialist Team (FAST), headed up by Robert Maxwell-Smith (IMD, April 9), which provides it with financial markets expertise. Sources say that FAST is still involved with this project, despite the layoffs, and it will be actively involved with the Reuters 3000 Xtra hosting strategy.

"With Reuters withdrawing support for Marketsheet and the migration to 3000 Xtra, we expect to see some business. How do you deploy 3000 Xtra? It needs a very big PC." Hartnell says that many companies are not prepared, and cannot afford, to implement the hardware needed to support 3000 Xtra.

A spokesperson from Reuters says that 3000 Xtra does not take a bigger PC than usual but notes that the split screens may cost slightly more to have than a single screen.

Dexterus was set up to offer application service provider and Internet Protocol voice, data, LAN and WAN network services over a dark fiber network to the financial services arena.