Finnish mobile OS maker Jolla, whose Sailfish platform is one of the few remaining alternatives trying to fight the Android-iOS duopoly, has pulled out of its latest financing death valley by closing a delayed Series C financing round.
A relieved chairman, Antii Saarnio, confirmed to TechCrunch Jolla has received the “first tranche” of the investment — which he said will stabilize the company’s financial situation.
“It’s not often that you can actually recover from the very, very difficult situation but we have done it,” he said.
Late last month the Finnish mobile OS maker announced it was having to temporarily let go of half its staff and file for debt restructuring after failing to close a €10 million ($10.6M) Series C in the required timeframe.
Jolla is not disclosing the total size of the Series C it has now closed at this point, given it’s presumably only received a fraction of the figure at this point.
Nor is it saying who the investors are — although Saarnio said it’s “a group of investors”, including some existing investors, which is a positive change from last month when he was saying Jolla only had one investor in the frame at that point.
“The total amount we can’t unfortunately disclose yet because it is part of the bigger financing package,” added Saarnio. “The next packages will be securing our growth and further investment to the operating system agenda. So that’s why we don’t want to start disclosing the size of the investment because it will basically start speculations on how long this money will last and so on.
“It’s a sizable investment what we are receiving but it also includes some other instruments which we are continuing to negotiate at the moment. But at the moment we have received enough financing to continue the operations and stabilize the company’s financial position.”
Despite pulling up from a classic startup death spiral to live to fight another day, Jolla is still in a precarious position. Staff wise it’s literally half the company it was — after being forced to make temporary cuts last month when it ran out of financing.
Saarnio confirmed it is canceling those layoffs now but added that “many people already resigned” in addition to the layoffs so it’s not clear how many staff can be persuaded to return.
It’s now in discussions with some of the staff about rejoining, but he estimates Jolla will only be able to bring back half of circa 100 employees it had before the investment crunch. So that’s a very big cost in human capital.
“Things are looking good. I’m not saying that the ship is in perfect shape at the moment — we have lots of repair work to do but we are operational and able to continue with the agenda,” Saarnio added.
The crowdfunded Jolla tablet is also being impacted by the funding crunch, with ongoing delays to shipments and most backers still waiting to receive their tablets. Saarnio said it’s now considering options on that front — including potentially canceling the tablet and refunding backers — now it has secured fresh financing.
“This is a quite challenging situation because it’s not linear what is the harm done on the tablet program,” he told TechCrunch. “It’s something that if you delay or stop working with your production partner for a couple of months it basically means that it’s difficult to [re]start the process as well.
“So we are now looking into different alternatives. One of them is to continue with the tablet production. One is refunding of the tablets… We are now working to find out what is the realistic way to serve our customers.”
In terms of Jolla’s strategy for the Sailfish OS going forward, it will continue on its licensing path but with more flexibility in terms of letting customers “tailor” the OS, and with a focus on working with corporates and governments that have immediate security and privacy needs, rather than attempting to sell to general consumers.
“We are focusing on licensing the operating system to industrial customers and we are maybe more ready to support tailoring of the OS for different players because it clearly seems that — especially the big players — they want to have a possibility to tailor the OS for themselves,” he said.
“Of course that’s exactly what’s happening on the Android side as well, I would say,” he added. “This is the same what Cyanogen Mod and others are examples of the same business model.”
There is some competitive overlap in the enterprise/government segments Jolla is targeting Sailfish at with Silent Circle’s Blackphone devices and services business, however Saarnio argues Jolla is the only player in the market that can provide “a licensable, secure, private operating system”. (Blackphone devices run a security-hardened version of Android.)
Is he confident Jolla will still be in business this time next year? “This was now our third debt valley, basically, and I believe that this was the last one,” he said. “I do see a serious interest from licensing partners and others to pay for projects where they can utilize the Sailfish OS.
“Requests are coming from the corporate side, from the government side, what is still to be seen is how the consumers are going to see the need for alternative operating system — are they waiting for that? And we all see that consumers are starting to understand the importance of privacy, and understanding that the current system doesn’t provide any privacy. But whether it becomes a volume demand for an OS that’s a big question mark for me.”
“It’s really difficult to see the world after five years being based on the operating system which are actually making money by people’s private information. I think that’s really difficult to see how the world would work — when everybody’s money is in the mobile, even credits, person information, all your business information is all open. So I believe in that world but the consumer demand remains to be seen. That’s hard to predict,” he added.
Comment