Last week, Microsoft confirmed plans to acquire Hexadite in a deal rumored to be valued at around $100 million. But on the same day, the cybersecurity startup laid off nearly all of its U.S.-based workforce, according to sources familiar with the matter.

To make matters worse, VentureBeat has learned that all affected employees were informed of their layoffs by telephone and offered just two weeks severance, and no shares were forward vested.

One source told us that most of the employees had joined the U.S. branch less than a year ago, though two of the affected employees had joined just a few weeks before the acquisition was announced, one of whom had left a “successful and lucrative” position at another company. This raises some questions given that the Microsoft acquisition was reportedly in the works for at least a few weeks — it’s possible, if not probable, that senior personnel were aware of an imminent acquisition while they were hiring new staff.

Founded out of Israel in 2014, Hexadite uses artificial intelligence (AI) to help companies identify and address cyberattacks swiftly when they happen. The startup has raised around $10 million since its inception, and last June it officially moved its main headquarters to Boston, where CEO Eran Barak was based.


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It’s thought that Hexadite employed around 12 people across sales, marketing, and customer service in the U.S., with some working remotely away from the Boston HQ.

Rumors first surfaced last month that Microsoft was lining up a bid for Hexadite, a move that was entirely in line with Microsoft’s increased investment across the cloud and cybersecurity realm. But on June 8, the day Microsoft publicly confirmed that it had signed an agreement to purchase Hexadite, the company dropped the bombshell news to its U.S.-based employees.

VentureBeat reached out to Hexadite to get its version of events, but the company wasn’t available to comment. A Microsoft spokesperson, however, told us:

We are working with the Hexadite team to determine the best options. We expect many of the Hexadite team to join Microsoft as part of the Windows and Devices Group. As company policy, we do not disclose personnel matters.

It’s believed that most of Hexadite’s Israel-based R&D employees, who accounted for a little more than half of the company’s workforce, will be offered roles at Microsoft once the acquisition concludes later this year. Our sources also told VentureBeat that two U.S. employees have been offered a temporary three-month position at Microsoft.

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