Plenty of seed capital flying about
EI’s work with the Innovation Fund is also seeing more international VC funds setting up in Ireland. While Polaris’ Dogpatch Lab, for example, does not automatically offer investment to start-ups, it does provide a collaborative home for companies in their early days. And money often comes with the work-space, as Balcony TV can attest to, having recently raised $750,000 from Polaris, amongst others.
There are other further options out there, including business angels. According to Michael Culligan of the Halo Business Angel Network, about €12 million was invested by angels in Irish companies last year, and he expects this will be surpassed this year, with about €90 million waiting to be invested.
“We’re seeing increased angel activity this year than we’ve ever seen before,” he says, adding that investors are interested in sectors like technology, cleantech and medtech.
But success for a start-up might depend on finding someone that understands their business.
While RWorks got off the ground with the help of an angel investor, Redmond has found his recent experiences of pitching to investors “a complete waste of time”. “What you have are people who watch too much Dragons’ Den on the TV,” he says, pointing out that his experiences have involved people who have made some money on a property deal and are looking to invest, but don’t understand the company. “From our point of view, it’s quite a complicated concept (RWorks’ products) for the average man on the street to understand, unless they have an enterprise background.”
Indeed looking for investment from individuals can be fraught with difficulty.
RWorks has teamed up with a number of online marketplaces aimed at matching companies with investors, including Irish start-up Seedups.com.
However, they have yielded little in the way of results. What they have yielded, says Redmond, is “a lot of cowboys”, particularly from putative international investors. “The big thing is you have to check out their bona fides. We had someone from Florida who said they were happy to put in €250,000 but they wanted us to fly over. So we looked at their address on Google Earth and it was for a car park!”
In this regard, it might be the traditional seed capital funds that offer the best hope for funding for Irish start-ups in the near future.
Having tried other routes to funding, RWorks for example is currently in talks with a number of Irish seed capital funds, with one “very interested”.
From Rimmington’s perspective, she notes that Kernel Capital has closed 20 investments so far this year, and she expects more to come.
“We at Kernel are seeing exceptionally high quality deal flow,” she says, adding that companies looking for investment should “ensure that they have been out in the market place they are seeking to sell into, understand the market dynamics and have validated the need for their offering”.