Despite a strong marketing presence and continued channel partner growth, Aliso Viejo, CA based High Tower Software threw in the towel last week [news coverage here]. Before the body was even cold, SIEM competitor Arcsight jumped on the chance by buying what was undoubtedly a cheap keyword (hightower), with these Google ads:

High Tower Software was officially founded in 1999 by former JPL researcher, Dr. Ursula Schwuttke. The technology High Tower employed was originally developed at NASA for high-volume data analysis and in its original incarnation, was used to dig into data from the deep space probes Voyager and Galileo.

Not wanting to miss the SIEM (at the time, just SIM) market boat, High Tower narrowed their focus and dove headfirst into the murky waters of the information security space. While focus is a definite positive in start-ups, was it the choice of this highly competitive market that planted the seed for High Tower’s demise?

Their first round of funding in July of 1998 came from Inroads Capital Partners, Merrill Lynch Capital (acquired by GE in 2007), Hallador Venture Partners and the J.F. Shea Company. The approximately $1.9 million was used to jumpstart the new company and transform the licensed technology into something more commercially viable over the next 18 months.

In the fall of 2000, they took on another $10 million in a B round led by Liberty Partners, adding Kinship Partners to the mix of previous investors: Merrill Lynch, J.F. Shea Co., Inroads Capital Partners, Hallador Venture Partners. This time, the money was earmarked to expand sales and marketing efforts of the maturing technology. At this point, High tower was still focused on their original data analytics plan, even drawing on their roots by securing Intelsat as a client and using them in an early case study.

By early 2002, High Tower had started dabbling in the networks operations realm by offering their TowerView product as a NOC tool, all while also maintaining their original vision of providing deep data analytics for broader business applications in retail, healthcare, and finance. In 2003, they launched a version of TowerView specifically targeting the security market.

Barely a year later, in October of 2003, they closed on a $6 million Series C round of funding. Once again, Liberty Partners led the round, and earlier investors Inroads Capital Partners LP and Hallador joined the fray, picking up the Falcon Fund along the way. In 2005, High Tower scored their fourth round of $4.3 million and did a bit of rebranding, positioning themselves squarely in the security space for 2006.

Later, in the fall of 2006, High Tower squeezed another $6 million out of Liberty Partners and InRoad Capital Partners in yet another round. By April of 2007, Cleve Adams, formerly of WebSense was brought in as the new CEO and President to restart/turnaround the firm, bringing with him a dozen of his WebSense colleagues to aid in the effort.

While they continued winning accolades and being a prominent fixture on the trade show and speaking circuits, the new team was unable to make good on the vision of a turnaround. High Tower abruptly closed its doors last week. Approximately, 34 employees lost their jobs and the technology platform is currently up for sale. We are not sure at this time if the original NASA licensing deal is part of the sale.

So, was the focus ill-timed or was it something simpler like expense management? Despite taking down large amounts of cash over the years, was it simply a matter of not switching their focus early enough?  Was their burn rate not able to be sustained in today’s capital markets? Regardless of the cause, I’m sure the channel and consulting partners they continued to sign up (some as early a few weeks prior to the shutdown) are feeling the sting.

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