Two Irish tech firms raise total of nearly €2m

TWO IRISH technology firms this week closed investment rounds totalling almost €2 million.

Inishtech, the firm formed last year following the acquisition of technology from Microsoft, completed a €925,000 round of investment led by Kernel Capital. This brings the total the software licensing firm has raised to €1.825 million.

Benetel, a wireless design and test company based in Dublin’s Guinness Enterprise Centre, raised €1 million from the AIB Seed Capital Fund, which is managed by the Dublin Business Innovation Centre, private investors and grants from Enterprise Ireland.

Inishtech was formed by a trio of Irish IT veterans and acquired the rights to technology originally developed by Microsoft under the software firm’s IP Ventures programme. In return, Microsoft took a significant minority stake in the company.

Cork-based venture capital firm Kernel Capital, which manages the Bank of Ireland Seed and Early Stage Equity Fund, has committed €650,000 to the company. A further €275,000 was sourced from investors in the Halo Business Angels Network.

This is in addition to €400,000 in funding from Enterprise Ireland when Inishtech launched last year, and €500,000 invested by the company’s three founders.

Benetel has been providing wireless test and design products and services since 2001 and has clients in Ireland, the UK, Sweden, Switzerland, China, France, Germany, the Czech Republic and the US. Starting as a specialist consultancy, it has a portfolio of products.

It plans to use the funding for product development and to push into new markets. As a result, it also plans to hire an additional eight staff by 2011.

Inishtech chief executive Aidan Gallagher is a veteran of the IT industry, having worked for Similarity Systems, Baltimore Technologies and Mentec.

Payment models for software are changing rapidly. Instead of customers paying upfront to use software, many applications are now delivered over the internet and paid for in monthly rental fees.

“In an online environment, your selling model changes totally,” Mr Gallagher says. “You’ve got to offer managed time control versions such as a 30-day trial, or standard and pro versions of the software, and you need to underpin this with licensing. That’s the driver for our business.”

Inishtech sells its software protection and licensing to independent firms that develop applications on Microsoft’s .Net software framework.

There are over 100,000 such companies worldwide and their needs vary: established software developers require more sophisticated licensing models, whereas start-ups need simpler ways to handle licensing, based on the revenues they are likely to earn, says Mr Gallagher.

Daniel McCaughan, chief technology adviser with Kernel, says he believes Inishtech’s service has “global opportunities in a fast-growing market”. The company already has customers throughout Europe, North American and Asia.

Mr Gallagher says the funding would be put towards hiring sales staff and product development, which he says requires constant reinvestment.

Inishtech employs 10 people in Dublin and is recruiting software development staff.