2023-07-25 04:00:00
Kaloôm, a promising young shoot, in which Investissement Québec has invested millions of dollars, is now administered by a trustee, in the hope of finding a buyer who could revive it.
Kaloôm, which specializes in the development of networking software for data centers and cloud service providers, was placed in receivership on July 13, at the request of Investissement Québec (IQ). The government agency provided between 2018 and 2023 five loans totaling $23.2 million, of which $21 million was not repaid.
At the beginning of June, the company founded in 2014 still employed 107 people and it reduced its workforce to 8 during the month. Nobody would have been paid in June.
“There, we look at how key employees can revive the company. We hope to arrive at a proposal in the coming weeks. This is a situation that I did not see coming just a few weeks ago,” said founder and chief technology officer Laurent Marchand.
A departure supported by the Fonds de solidarité FTQ
The first funds granted to Kaloôm were used to develop its solutions, before marketing. The Fonds de solidarité FTQ, which was a start-up partner, invested between 2016 and 2022 some $18 million. The first marketable software was released in early 2020 and the pandemic hit hard.
“All the centers that test technology before introducing them were closed for more than a year and when they reopened, we had major supply problems in our area,” explains Mr. Marchand.
Thus, servers that we previously received in 24 hours were delivered in a year and the emerging chips that were to be received 18 months ago have still not arrived, says the entrepreneur.
In this context, marketing difficulties have weighed on the company’s finances, despite federal business assistance ($2.5M in 2020). Also, it took a $2.8M emergency loan from IQ last February to keep the business alive.
A new round of financing was prepared and a new CEO had agreed to join Kaloôm on the condition that the company’s main shareholder, ACG Capital, reinvest.
“But because of his own financial difficulties, he was no longer able to inject the amount for which he had committed himself,” laments Mr. Marchand.
It affects the master
Other investors were to match the bet, but everything fell like a game of dominoes. In the circumstances, the CEO also withdrew.
Kaloom could be taken over by other interests, but its founder believes that the knowledge held by key employees trying to revive it is essential to its progress.
“We don’t have a venture capital structure in Quebec, unfortunately for very structuring companies like Kaloôm. We are sprinkling in a bunch of companies that make small applications that can give results quickly, but that does not make structuring companies, ”says Laurent Marchand, an engineer by training.
Kaloôm hired highly qualified people, who risk leaving elsewhere.
“I started this business because it was my way of keeping brains in Quebec,” says the man who was shocked to see, at the graduation of his engineer son, all those who were going to leave Quebec, not having enough interesting job opportunities here in networking.
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