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Shaking off a management coup, nasty litigation and two tragic deaths in the past two years, the Canopy Group on Tuesday marked its resurrection as a prime Utah technology investor.
Under the new leadership of Executive Manager Ron Heinz and Brandon Tidwell, the Lindon venture capital company's general counsel and finance director, Canopy announced a $3.9 million investment in Solera Networks.
"We are very pleased with this, the first investment outside our [existing] portfolio group in more than two years," Heinz told The Salt Lake Tribune. "This investment reaffirms our commitment to the market and Utah County, and particularly Solera Networks."
Although hinting at the possibility of one or two more deals in the coming year, Heinz said Canopy's first priority will be to continue providing monetary and operational expertise to its corporate family - today numbering about a third of the nearly 40 tech companies it once boasted.
"When it was first announced that Brandon and I were taking the helm at Canopy, [we talked about] looking at investing on a limited basis outside our portfolio companies," Heinz said. Solera "was a natural [partnership] for us."
The privately held Solera, also based in Lindon, provides network monitoring solutions that can collect, store and quickly analyze up to 128 terabytes (or roughly 128,000 gigabytes) of data. For many companies, that would include every packet of information transmitted in, out or across a large, high-speed network over several weeks.
"It looks like Canopy is up and running again after what has been an incredibly painful road for them, largely resulting from what largely appears to be poor staffing choices," said Rob Enderle, principal analyst for the Enderle Group.
Solera Chairman and President Bryan Sparks and Heinz are longtime acquaintances, formerly serving as CEOs of Canopy-funded companies Caldera and Helius, respectively, and earlier as executives at Novell.
"When Ron and I began our discussions, we felt this was a perfect fit," Sparks said. "We have developed a superb product and proved it with some highly sophisticated customers, and now is the time to start growing sales more rapidly. Canopy's investment will help make that happen."
It has been a long, strange road back for Canopy. Founded in 1995 by former Novell President Ray Noorda, its reputation began to tarnish with negative reaction to the $5 billion federal lawsuit filed in 2003 against IBM by its then-subsidiary, the SCO Group.
Backed by Canopy CEO Ralph Yarro III, SCO's suit - scheduled for trial next February - alleged Big Blue had illegally released SCO's Unix code into versions of the "open source," or freely distributed, Linux operating system.
Linux is seen as a challenger to Microsoft's Windows, so SCO's claims that it was tainted stirred antagonism in the open source community worldwide. SCO's accompanying, albeit short-lived, campaign to force Linux users to buy licenses to avoid being sued drew more ire, and the company's Web site was subsequently slowed or knocked out by people unknown.
In December 2004, Yarro, along with chief financial officer Darcy Mott and corporate counsel Brent Christensen were ousted by the Noorda family and others. Allegations flew on both sides afterward. Yarro and Co.'s claimed of wrongful termination and manipulation of the elderly Ray Noorda by their foes; the Noorda contingent countered with allegations of financial mismanagement and fraud.
In March 2005, just days before court hearings were set, the parties reached a settlement. Canopy relinquished its shares in SCO to Yarrow, along with an undisclosed sum of money. SCO surrendered control of its shares in Canopy, and the two companies split.
Adding a pall over the war for Canopy were two suicides - Robert Penrose, the company's information technology director, in December 2004, and Val Noorda Kreidel, Ray Noorda's daughter, less than a week after the settlement was reached.
The Noordas had replaced Yarro with William Mustard, the former managing director of Smooth Engine Inc., a growth consulting firm. Mustard's response to the ongoing controversy was to steadfastly refuse to speak with reporters - a policy reportedly extended to a dwindling staff via a media gag order.
By contrast, Mustard's successor, the personable Heinz, has made himself available, emphasizing Canopy's optimism for the future. A seasoned tech executive, he is the former CEO of Helius, a company specializing in Internet-based audio, video and data communications for business.
In Tidwell, Heinz has a savvy attorney and tech financier. Most recently with the Salt Lake City law firm of Ballard Spahr Andrews & Ingersoll, Tidwell oversaw many venture capital deals and initial stock offerings.
Company's rise, fall and rise again ä FOUNDED IN 1995: Ray Noorda, former Novell president and father of modern computer networking software, starts Canopy. Privately held, Canopy invests in Utah tech startups. At its height, the fund had launched about 40 ventures.
COUPS AND SUITS: Noorda family members stage a management coup in December 2004. Ousted CEO Ralph Yarro sues for wrongful termination; Canopy countersues.
SETTLEMENT, SUICIDES: In March 2005, Yarro and Canopy settle in a deal that severs the controversial SCO Group from Canopy. The battle's costs are tragic. By the time it is over, two figures in the case had committed suicide.
A NEW DAY: Veteran Canopy executive Ron Heinz takes the reins in May.