If you use Google or Wikipedia or WordPress, you should care about the fate of MariaDB, a company whose name is not nearly as famous as the organizations that rely on it. One of the world’s most popular database servers, MariaDB is vital to content users because it turns data into structured information. Known for being “open source,” meaning that it is readily available to the public, it has remained viable financially since its founding because of its affiliated foundation, which is funded by individuals and corporate donors like Intel and Alibaba Cloud.
Founded in 2010, MariaDB was carved out of MySQL, an open-source database created by Michael “Monty” Widenius 15 years earlier. MySQL became a part of Sun Microsystems in 2008, and when Oracle bought Sun in 2010 Widenius started a new open-source database, naming it MariaDB. So, the company had a respected pedigree and years of business operations — it would become the database employed by Samsung to support 1 billion Android users — when in 2022 the decision was made to take it public. Initially, the move seemed like the logical next step in MariaDB’s development, but some began to question the decision before the IPO was even complete.
The announcement to go public came on February 1, 2022. As it was listed on the New York Stock Exchange, Businesswire called MariaDB “one of the fastest growing and most popular open-source database software companies in the world.” At the time, the chief executive officer was Michael Howard, a tech veteran, and problems began during the IPO process, which was described by one observer as being “disastrous” with the company’s share price dropping by 40 percent on its first day of trading.
The problems didn’t stop. Following the IPO, under Howard MariaDB “burned through,” to quote one publication, $100 million as it racked up cash losses that drove its stock price down by as much as 95 percent — so low the company risked being delisted on the NYSE. It made sense, then, for the board of directors to replace Howard — The Register called the company a “hot mess” — which occurred in May 2023. The new CEO was Paul O’Brien, who was already with the company overseeing a global field operations team. Howard remained on the board providing, to quote a company statement, “strategic planning and oversight.”
In April 2023, as MariaDB sought financing to offset chronic revenue shortfalls, the company laid off 26 employees from its 340-person workforce. While the company continued to flounder, its underlying business — providing much needed services to some of today’s largest technology corporations — remained valuable, even if that value was not reflected in its stock price. So, it should not have been surprising when, last month, MariaDB received an offer from Runa Capital II LP, a global venture capital firm specializing in technology, to acquire 100 percent of the ordinary shares of the company, an offer that currently resides with the board of directors.
But, according to a source close to MariaDB, the board has recently received a second offer. This one is from a company called North Run Capital Partners LP, a privately held hedge fund based in Boston, Massachusetts. One company profile reveals that the hedge fund has two employees; another sets the employee total at seven, either full or part time. And while it manages $271.5 million in regulatory assets — not necessarily in the field of technology — it does so in an advisory capacity with little involvement in the hands-on running of a company; in short, the fund does not engage in any business activities other than advisory services. Clients pay performance-based fees for those services, so it is hard to see how its business model would support the purchase of a software company.
One of North Run’s most high-profile deals — acquisition of a stake in Lensar Inc., a medical device outfit focusing in part on the development of cutting-edge cataract laser treatment systems — was not without controversy. In exchange for a $20 million capital raise following the FDA approval of a revolutionary cataract laser treatment system, North Run was allowed, to quote one source, “to convert millions of stock warrants at below market prices so long as its overall stake in Lensar remains below 20 percent.” One investor sued in chancery court in Delaware, describing North Run as an “obscure Massachusetts-based investment fund with only a handful of employees’ run by two money managers who have a history of poor returns” and claiming Lensar shareholders were not provided adequate information about the transaction. “There is no apparent rational reason,” the shareholder’s complaint argues, “to approve North Run becoming the company’s controlling shareholder when approval was not a condition of the 20 million capital raise.” That case was dismissed, but a similar shareholder lawsuit is ongoing in a Delaware district court.
So, the MariaDB board has a decision to make: accept an offer from a global investment firm specializing in technology or a mom-and-pop hedge fund with no management experience in running companies, technology-based or otherwise. MariaDB shareholders hope the board makes a better decision than those that got the highly valuable company in financial trouble in the first place. This matters because in the end the future of an essential open-source data provider depends on it.
