Irish tech firms bullish in US bear market

Despite the recent dotcom and telecommunications crash and the stalled American economy, Irish-owned technology companies in the US are continuing to grow strongly, according to the unexpectedly-upbeat findings of a survey by Enterprise Ireland in New York.

"Although the American information technology sector is the one most seriously affected by a slump in demand, Irish companies selling to the IT market are, on average, achieving double-digit sales growth," stated John Corrigan, CEO of Enterprise Ireland for the Americas.

"The fact that Irish companies are managing to win substantial business in the face of an American economy that is in near recession has important implications for the indigenous Irish high-tech sector that looks to the US as the key export market," he said.

The survey of a cross-section of client companies indicates that the advice of the American 19th century editor, Horace Greeley, to "go west, young man", still holds good for Irish technology start-ups.

Many Irish companies entered the US market when it was at its peak in 2000, "but the subsequent downturn doesn't seem to have stopped them getting a foothold. Almost all are reporting that they are meeting or exceeding their sales targets," said Mr Corrigan. Fifty per cent held on to original sales targets, 40 per cent scaled back on growth expectations, and 10 per cent upgraded their projections.

Most companies revised downwards their start-of-the-year projections in the light of tougher market conditions, but "feedback from our clients indicates that almost all expect a satisfactory US sales growth performance for 2001". Last year was the best on record for Enterprise Ireland clients in the Americas, with an overall increase in sales of 25 per cent to £1.15 billion (€1.46 billion), said Mr Corrigan. The increase this year would be more than 10 per cent.

Interviews with executives in several of the 200 Irish companies engaged in software and related service technologies in the US underline the Enterprise Ireland findings. Most attributed their success to having a well-developed product and identifying a niche market.

"We come in under the radar because we are a niche player," said Leo Casey, chief executive of TellingPower New Media, a division of AV Edge Communications based in Dublin and Massachusetts which expects a turnover of $1 million (€1.1 million) this year from US sales of "rich media" to banks and real estate companies.

"We're not even a year in the United States but we are doing well," he said. "The US is slower than expected but not dramatically slower. Things would have expanded faster" if it wasn't for the downturn. Dublin goes into "complete gloom" on bad news but "Boston is more realistic".

"We've had a successful year," said David Ryan, chief executive of Vordel, a Dublin company with offices in Boston and New York making secure frameworks for web services, which last week obtained new funding of up to $10 million.

Its success came from a proven, robust technology with intellectual property, a strong management team and a developed product, said Mr Ryan. He saw the tech downturn as a "blip" and expected continuing momentum in the sector and a significant upward curve.

"If you are focused and you have built something robust you are a long way to convincing buyers to choose you," said Mr Ryan. "People say 'show me the technology, demo it, let me touch it and feel it'. If you go with anything less, as they say in America, you're toast."

Technology Sales Leads, a two-year-old start-up, entered the US market in January 2000 and is on course to double its revenue to $2 million this year, said co-founder, David English. TSL is a typical story of a small company finding a niche service, in this case helping technology companies find new business.

Qumas, which provides compliance management solutions for regulated industries such as pharmaceutical and biotech, is another growing Irish success story in the US. The Cork-based company raised €7 million (£5.5 million) in venture capital last month and opened a global marketing office in Chicago in July.

"We carved out a new vertical market niche called enterprise compliance management," said Valarie King-Bailey, vice-president of global marketing. "A lot of start-ups have concentrated their efforts on the so-called flashy IT, but Qumas is serving a key business need. Because of the complexity of the problem, it's not quite as sexy as building a website, as this is a highly concentrated intelligent industry."

Other Irish companies doing well in the US have been in the news recently, including NTera, a nanotechnology firm which secured €20-€23 million in funding this month, and the education software company Riverdeep which acquired the education assets of a major Los Angeles learning company.

As a national market, the US is now the second biggest after Britain, said Mr Corrigan. Enterprise Ireland has a portfolio of around 750 Irish companies, of which 200 are in software and related technologies. Over the past four years Irish companies invested $250 million in establishing a presence in the US, he said. The newcomers' success "bodes well for Irish companies in the medium term".