Having been setting up companies since his university days, Nexagent founder Charlie Muirhead has refined his ability to recognise potential. He tells Glynn Davis how responding to challenges is his driving force.

Inside the historic Michelin building in London's trendy South Kensington is the office of serial entrepreneur Charlie Muirhead. It's from here that the founder of Orchestream now runs Nexagent, which is about to go live with a technology enabling the interlinking of data networks across multiple international carriers.

Unlike the figure of Bibendum (which can be seen from his office) and many start-up technology companies, Nexagent isn't bloated with too many superfluous staff. Instead Muirhead has gone for quality rather than quantity.

This is evidenced by his management line-up, which includes Nexagent co-founder Chris Gare, the former director of advanced services at Cable & Wireless; Steve Bennetts, a former finance director at Amazon Europe; Geoff Brickell, previously VP of service integration and providers at Cable & Wireless; and David Page, formerly a senior executive at Cisco Systems.

This recruiting ability is, he says, helped by his "increased credibility in the technology market" compared with when he set up his first company Orchestream in 1996. "The management team that I've built up has been possible because of my credibility in the market, which is a combination of my age and track record. There's no way these guys would have worked for me in 1996," he says.

While times and people may have changed, the challenge of solving a technology problem remains a constant for Muirhead and Nexagent sees him carry on in the same vein as Orchestream, where he spotted a technology problem and sought a solution.

"I love trying to solve difficult problems. I'm interested in making systems work better," he says.

Nexagent, which officially launched on 7 May - despite having been in stealth mode since its formation in mid-2000 - seeks to give service providers the ability to link data networks internationally across multiple telecoms carriers. It will also provide guarantees on performance to their customers, which comprise global companies with international networks. These will be able to transmit data over the Web with the knowledge that the various connections between computers operate on a common standard with a guaranteed service.

Muirhead uses voice telephony as an analogy to help explain the complex product. "With voice you get a standard around the world, which means that you no longer have to pre-book your international calls like you had to do some years ago. You simply pick up the phone and dial and everything happens behind the scenes."

He recognised that this was a problem for data services and believe that, like voice, it should be possible to have a seamless model in operation throughout the world, so he set about finding the solution.

He regards this latest challenge as an extension of what he'd been doing with Orchestream. "That was supplying a product to telcos for them to run their networks better; with Nexagent we're linking these networks together," he says.

So where did all this entrepreneurship and problem solving originally come from? Muirhead says he was just 18 when he did his first deal, which involved initiating a £350,000 buyout of a music industry services firm. Such was his inexperience that he "didn't ask for equity in the business. It was an early experience that I haven't forgotten".

He didn't make this mistake with Orchestream three years later when he brought in money and expertise from outside. This included university professors (he'd dropped out of a computer science degree to set up his business) as advisors and a family friend, record producer Hugh Padgham, who committed £20,000.

The new company developed the software to prioritise traffic over Internet-based networks so the company's customers, telcos, could offer higher priced services with a guaranteed speed of delivery.

As the Internet took off there was a need for such a solution and the company attracted funding from a number of VCs. The first was entrepreneur Sir Terry Matthews, who put in $1m (£670,000) in 1997. Muirhead says Matthews came in when most VCs were to risk-averse. "He deserves credit for kick-starting the VC technology market in the UK," says Muirhead.

In 1998 Muirhead recognised that he was too inexperienced to head a rapidly growing company and Ashley Ward was brought in as CEO. "It had got to the point where my management experience meant that it was the right thing to do," he says honestly.

Characteristically for the time, the company decided to float and raised £65m. Leading up to June 2000 the roadshow to potential investors took place and was an experience that Muirhead, like most people, found tough going. "On the 20th day with the 100th analyst in the 10th country, you swear you'll never do it again," he recalls.

With all this legwork and against the backdrop of a market already coming off its hyped-up peak, the company successfully hit the market with a valuation of over £200m and Muirhead found himself with a paper value of over £20m.

However, since he was more interested in building companies that amassing a paper profit, around the time of the float he set up angel investment network called iGabriel.net. Its aim was to bring the technology community together to fund start-ups. "I got sent many business plans and I wanted to help, so I put together 30 angels."

These angels - including Brent Hoberman and Esther Dyson - have created a fund worth £10m, which has so far been used to back five companies: Nexagent, OnRelay, Open Business exchange, Renoir Partners and Sourceree.

While iGabriel.net and Nexagent continue to grow, Muirhead has had to face up to some problems at Orchestream, which have contributed to its market capitalisation falling to less than £9m.

In its early search for revenue, the company had targeted the alternative carriers like Energis because they were deploying quickly, says Muirhead. But with the fall-off in the telecoms sector these companies have been hit badly. Orchestream has suffered from a combination of unpaid bills and has been forced to change its strategy and go after the tier one operators such as AT&T that it had previously left alone.

On the back of these difficulties the company has had to reduce its staffing levels and make senior changes; in May, Ward was replaced by Anthony Finbow and Greg Lock replaced Alan Bates as chairman.

Although Muirhead says he's a "very active" non-executive at Orchestream, his main concern at the moment is developing Nexagent. To this end he recently used his now considerable experience in fundraising to secure £10.3m of backing from a group of investors including Atlas Venture, Benchmark Capital and iGabriel.net.

Although he confirmed a further round of fundraising is likely, he says the company is now focused on the forthcoming pilot of its software with a couple of carriers whose names he wouldn't reveal.

If all this goes according to plan then the future could be very profitably for Nexagent. But before it gets to realise any of its potential, the big questions will likely be whether its founder's serial entrepreneur instinct will have kicked in and he'll have found the next big technology problem.

New Media Age 27-06-02