Avoiding the start-up 'valley of death'

The National Digital Research Centre helps start-ups bring their ideas to market, writes KARLIN LILLINGTON

THE “VALLEY of death” is littered with the carcasses of start-up technology companies that could not bridge the gap between early seed funding and larger-scale venture funding. The term, coined in Silicon Valley, is harsh recognition that, in between the time when an innovative idea blossoms and early work is done to develop it and the point at which a company might hope for significant funding to take it to market, support to develop the product or service dries up.

Addressing this issue is a challenge for entrepreneurs – and for development agencies and governments trying to nurture innovative start-ups. In Ireland, the National Digital Research Centre (NDRC) in the former Media Lab Europe building in Dublin’s Liberties has been one attempt to provide a funding and mentoring lifeline.

Established in 2007 with €25 million in Government funding, the support of five academic institutes – TCD, DCU, UCD, NCAD and IADT – and industry partners including Google, Microsoft, Xilinx and Ericsson, the research centre has more or less flown below the radar as it has passed through its initial phase of investment.

Now that it is firmly established – with a host of resident companies, its first annual report published and a new digital accelerator project called Launch Pad midway through its trajectory – the centre’s visibility is on the rise.

“The Irish situation is unique,” says chief executive Ben Hurley. “The country has been funding RD [research and development] for 10 years, but the actual connection between industry and RD isn’t as close as we might like. So there’s a bigger ‘valley of death’ gap than there would be elsewhere. We’re trying to fill that gap so that technologies can transfer across the arc more readily.”

To do this, the research centre provides early-stage companies with workspace and access to mentors who can help guide them through the many quagmires that lie in wait. The open-plan workspaces also enable companies to talk to each other and share experiences, he says.

By way of explaining what the centre is, Hurley is at pains to explain what it is not.

“We’re not a funding agency for basic research. We’re not an academic research centre. We’re not an incubation centre. We are not a tech-transfer office. We are an investor in collaborative innovation, a tech-transfer enabler, an idea incubation centre and execution centre. We are a player in the middle of academia, industry and venture investments.”

This is why the organisation has received the support of those groups.

Hurley points out that the centre has received €2 million in additional outside investment on top of €10 million in Government funding that has gone into the initial phase so far. What this translates to in real terms is a place where companies that have a good idea but have not yet refined it and stress-tested it or worked out its market can find the support they need to solidify their service or product and learn the ropes of operating as a start-up.

The bulk of companies are focused on applications or services in two areas: entertainment and health, with just under a fifth in the third area of education and a small number focused on the environment. On average, companies stay within the programme for 10 months.

About 17 projects are under way, with a second investment phase beginning this year, a phase which includes Launch Pad. This programme takes companies that are a bit further along the product-development process and places them into an entrepreneurship skills accelerator lasting a few months, based on the well-known Y Combinator accelerator programme in Silicon Valley.

Eleven start-ups are involved in the January- to-April programme, each receiving up to €20,000 in support. The companies receive mentoring and advisory services including weekly workshops, seminars and presentations. Speakers include venture capitalists, lawyers, PR and sales specialists and several successful Irish entrepreneurs.

Companies involved with the centre say they value the collaborative approach, the mentoring and the opportunity to mix with other start-ups in a similar position.

Simon Factor, director of video company Moving Media, is involved in one of the longer-term centre projects called MetaLabs, which aims to use video analysis expertise at DCU and translate it into a service that can place advertising effectively into online video. The project was a winner at the recent national Digital Media Awards.

“At the NDRC, we’re learning how to effectively develop a product out of academic research,” says Factor. “The commercial focus of our product has really sharpened up. It de-risks my investment in RD and allows us to get a product to market faster.”

Tim Walsh and John Ryan, co-founders of a company called Point the Way, are involved in Launch Pad. They are developing the use of GPS navigation on phone handsets as a simple device for guiding the visually impaired. They say they value the connections and direction received through Launch Pad, which has opened doors for talking to the likes of Google. “We never would have met people like that otherwise,” says Walsh.

The National Digital Research Centre will continue to issue calls for proposals from companies over the next two years, while setting the stage for whatever entity will succeed it in 2012. Most likely this will be a “next-generation” centre, says Hurley, based on the lessons learned from the current programme.