Inside the life of Mike Lynch, who sold his search startup to HP for $11 billion and was charged with fraud
Sam Shead,Shona GhoshDec 26, 2018, 16:05 IST
Mike Lynch of Dark TraceMatt LLoyd/Rex Features
Mike Lynch, 54, is one of the most celebrated entrepreneurs in the UK, having sold his software startup Autonomy to HP in 2011 for $11.7 billion (£8.7 billion).
That reputation is at risk after Lynch was charged in the US with fraud and conspiracy over the HP deal. The central accusation is that Autonomy's execs inflated its revenues by $700 million (£552 million) before the deal. Lynch counter-sued, leading to a legal battle that just became a lot more complicated.
Lynch has always protested his innocence, and is fighting to maintain his central position in British tech.
Michael Richard Lynch was born in Essex, UK on June 16, 1965.
When he was 11-years-old, he won a scholarship to study at Bancroft's School in Woodford, Essex. Today, for those not on a scholarship, the school charges £17,382 per student per year.
Lynch, pictured in the centre of this five-piece jazz band, was interested in music from a young age.
After school, Lynch went to the University of Cambridge to study natural sciences. During his course, he combined mathematics with biological and physical sciences.
Lynch also studied electrical sciences as part of his degree. His interest in electrical sciences led him to meet Peter Rayner, who became his mentor in the signal processing laboratory at Cambridge's engineering department.
Towards the end of the 80s, Lynch founded a company called Lynett Systems Ltd.
In 1991, Lynch founded Cambridge Neurodynamics — a tech company that focused on computer-based fingerprint recognition.
Lynch also sold some of his fingerprint machines to South Yorkshire Police.
But Lynch decided to focus his efforts on software. He cofounded search software firm Autonomy in 1996 with David Tabizel and Richard Gaunt as a spinoff from Cambridge Neurodynamics. Autonomy would go on to be one of the UK's biggest tech companies.
Lynch's beloved otterhound, Gromit (not pictured), became famous when it featured in some of Autonomy’s earlier products.
Autonomy went public in 1998 with shares priced at 30p each.
In May 2007, Autonomy bought video search engine Blinkx from Suranga Chandratillake, who previously worked at Autonomy as CTO. Autonomy floated Blinkx in a stock market listing that valued the company at $250 million (£193 million).
In October 2011, Lynch sold Autonomy to Hewlett-Packard for $11.7 billion (£8.7 billion) as the US tech giant looked to put more of a focus on software and less on hardware. Léo Apotheker was HP's CEO at the time but he was fired by the board as the controversial deal went through.
In September 2011, Apotheker was replaced by former eBay CEO Meg Whitman. She remained committed to the Autonomy deal but she and Lynch didn't always see eye-to-eye.
In November 2012, HP announced an $8.8 billion writedown related to the Autonomy acquisition, with $5 billion due to alleged "accounting irregularities" that led HP to massively overpay for Autonomy. That same month, investors started taking legal action against HP based on how it handled the deal.
HP's legal battle with investors lasted 2 years before the firm won the right to settle out of court in March 2015, leaving it free to pursue Mike Lynch.
HP sued Lynch that same month for $5.1 billion in the UK's High Court.
Just to confuse things further, Lynch counter-sued HP in October 2015 for more than $150 million. Both suits are still ongoing.
In the meantime, Lynch planned a $1 billion (£770 million) fund called Invoke Capital to invest in fundamental European technologies.
One of the first companies Lynch has backed is cybersecurity firm Darktrace, which has its origins in Cambridge.
Darktrace has developed software that helps organisations detect strange behaviour on their network.
Darktrace is run by Nicole Eagan, formerly chief marketing officer of Autonomy, and Poppy Gustafsson, previously a financial executive at Autonomy.
Lynch's successes through Invoke are being overshadowed by the ongoing Autonomy lawsuits. Former CFO Sushovan Hussain was charged with fraud in April 2018.
Now Mike Lynch has been charged with fraud and will likely face trial in the US.
Following the charges, Lynch has stepped back from his public activities. He stepped from the board of Darktrace, and as an advisor to the Royal Society, and the government.
The Sunday Times once referred to Lynch as "Britain's Bill Gates," while The Financial Times called him "the doyen of European software".
In his downtime, Lynch spends a lot of time learning and caring for rare breeds. He keeps red poll cattle and other rare animal breeds at his home in Suffolk.
Lynch was asked whether he liked hunting at TechCrunch Disrupt last December. He replied: "I can assure you, I like foxes. They are my friends."
Lynch will now have to fight to maintain his legacy and reputation as a rare successful British founder who managed to sell their company for billions. With his legal battles likely to drag on for years, it isn't clear where this leaves his future endeavours in tech.