Start-ups blossom in hothouse programme

Six firms pitching for funding after intensive development process attract investor interest, writes ADAM MAGUIRE

The six debutants of the DCU Ryan Academy’s Propeller Accelerator Fund put the results of its intensive programme on show last week.

Following a €30,000 investment and just 12 weeks of incubation, six start-ups pitched themselves to a crowd of investors and peers in Dublin’s CityWest. The presentations were brief and to the point, reflecting the tight turnaround expected of the companies as part of their involvement in the fund.

They were polished and well-received, however, belying the fact that in some cases the products on display did not even exist as solid concepts just three months ago.

“The three months really puts them under a lot of pressure; things really did change between a Monday and Friday in the incubation offices and there were sleeping bags in there as the guys really pushed through and took on a lot of work,” said Gordon McConnell, deputy chief executive of the DCU Ryan Academy.

The Propeller Accelerator Fund puts companies through a short, intense development process to quickly refine their plans into saleable products. The TechStars network, of which the DCU Ryan Academy is a charter member, follows a similar structure.

In this case, six companies were given €30,000 investment in return for a 6.5 per cent equity stake. They were then given office space, access to mentors and contacts, in the hope they would refine their product and, where possible, establish partnerships and deals quickly.

The six companies chosen for the first run of the fund were Associate Mobile, Fantom, GreenEgg, HealthComms, Simple Lifeforms and VendorShop.

The plan was to propel these companies into the market, with ideas too weak to survive being adapted or abandoned before any serious money was wasted. It is the Silicon Valley mindset of “fail fast, fail cheap” and one that seemed to impress investors at the Ryan Academy event.

“I think that intensive three months is the way to do it,” said Tom Shinkwin, partner at Enterprise Equity Venture Capital. “I think that way of doing things is catching on here though the legislation and the perception of it doesn’t allow people to take that risk quite so much.”

What makes the three-month incubation period all the more impressive, however, is the stage some of the companies were at when it began. Detailed business plans are not part of the application process. Companies can get in on the strength of the idea – and the people behind it.

That was the case for Paul Healy’s Fantom, which entered the process with a plan to monetise celebrities’ social media presence. The end product has taken the shape of an online trading card system, which Healy hopes will soon become the focus of the lucrative schoolyard marketplace.

According to Healy the words “trading cards” never appeared in its application and only came about when the company had its “pivot” moment.

This “pivot” was mentioned numerous times throughout the day. According to Healy, the term represents the point when a company shifts its focus, often at the expense of the original idea.

For VendorShop, the process was slightly different. This company, which has developed an integrated e-commerce platform for Facebook, was the one to emerge with most of its original concept intact. However, founder Chris Small said they still gained a lot.

“This was a part-time endeavour only a few months ago but now it’s full-time and we’ve got a few people on our team. What it did was help us identify things within our business plan that were the real stars within it.”

Of course, the overriding aim of last week’s demo day – and the fund as a whole – was to push the start-ups into the world of serious capital investment and growth.

Associate Mobile, the first company to present, announced it already had a commitment for €200,000 but would be looking to re-engage towards the end of the year for a further €400,000.

Fantom was hoping for €450,000 while VendorShop said it was looking for €500,000, half of which it was earmarking for the next 12 months.

The remaining companies were seeking €200,000– €600,000 for their growth plans.

While investors were unsurprisingly coy about what they saw at the event, it was clear that at least some of those funding needs would be met in the near future.

“There’s one company in there that I’ve a keen interest in and I’ll be following up with,” said Kealan Lennon of K Partners. “It was an obvious stand-out for me where I can absolutely see the potential and they’ve done some great work in 12 weeks.”