The start-up island
Ireland has emerged as a dynamic hub for start-ups with global growth potential
Nicola Mortimer of Three: “I definitely think the environment for entrepreneurs has changed for the better.”
Ireland now boasts 36 incubators and accelerators dedicated to supporting start-up activity, with another six due to come on line this year. Accenture’s Leaders of Tomorrow competition, which has now evolved into a start-up competition for students and some established entrepreneurs, saw entries increase by 70 per cent to a record 240 this year. Enterprise Ireland has comfortably exceeded its three-year target of supporting 550 start-ups to the end of 2016 – the final number was 629.
These are all indicators of the new vibrancy and dynamism which has grown up around Ireland’s start-up scene. “Ten years ago, people would have thought a start-up happened in a garage in San Francisco,” says Alastair Blair, country managing director with Accenture Ireland. “Start-ups are a very important part of what’s going on in Ireland now.”
KPMG tax partner Anna Scally also sees evidence of a change. “I think there are a number of initiatives that have helped the outside world to see the energy and vibrancy of what is going on,” she says. “Niamh Bushnell and the work she has put in over the last two years as Start-Up Commissioner has really helped to shine a light on the great work being done by many start-up and growing companies in Dublin. Also, I think programmes like Going for Growth, which is supported by KPMG and Enterprise Ireland, have really helped to highlight and support great companies which are being started by female entrepreneurs.”
She points to the latest Going for Growth results as a small example of the energy and vibrancy of the start-up scene in Ireland. “Seventy-three per cent of participants in the last cycle of the Going for Growth programme increased their turnover by an average of 36 per cent, showing demonstrable growth and ambition,” she says.
Enterprise Ireland’s start-up development manager Tom Early sees it as well. “Absolutely, I agree 1,000 per cent that there is more energy and vibrancy around the start-up scene than ever before. There are people out there willing to do things that they never would have done in the past.”
His belief is supported by the results of new research carried out by DCU’s Business School, which reveals the entrepreneurial intentions of third-level students in Ireland. The study formed part of a global research initiative, The Global University Entrepreneurial Spirit Students’ Survey (GUESSS), which examined the responses of 122,000 students in 50 countries. Sponsored by Enterprise Ireland, the GUESSS National Irish Report 2017 is authored by Dr Eric Clinton and Roisin Lyons of DCU’s Business School.
The results showed that immediately post-graduation the majority (44 per cent) of students in Ireland would like to begin their career with a medium- to large-sized business. Interestingly, when asked where they saw themselves five years’ post-graduation, the highest-ranked career path was as an entrepreneur or business founder, with 27 per cent indicating their intention of working in their own business at that stage.
The research also showed that one in 10 (11 per cent) are already in the process of setting up their own company; one in seven (15 per cent) are determined to start their own business in the future; and that 84 per cent of those linked to family businesses planned to succeed their parents.
While the new vigour around the start-up scene is welcome, it is still important to ask how and why it has come about. Gary Leyden of start-up accelerator NDRC believes it has more than a little to do with the unique conditions created by the economic crash of 2008 to 2010. “The downturn in the economic cycle helped to a certain extent,” he says. “We saw some fantastic people starting up businesses during the downturn. It made costs cheaper and made it a good time to start.”
Andrew Parish of Connect Ireland sister organisation Start-up Ireland echoes this point. “The landscape has changed greatly over the past five years,” he says. “With the collapse in the economy, people who had grown up in a world where a pensionable job in a multinational was the ultimate goal had to ask what can they could do instead. Many were leaving with redundancy packages and no job to go to. This led to many distressed entrepreneurs starting up and the Government supported them. That has been one driver.”
Alastair Blair concurs. “I’m a great believer that necessity is the mother of invention. Lots of companies just popped up post-crash. Lots of people gave it a go.”
Technology has also been a key enabler, according to Blair. Not so much in the sense that all of the new start-ups are technology-based but that it has opened up new possibilities and routes to market for Ireland’s latest generation of entrepreneurs. “The technology allows people take a great business idea and scale it very rapidly,” he says. “The mindset of entrepreneurs now is to try something and if that doesn’t work, try it a different way.”
Nicola Mortimer is head of business products, marketing and operations with Three. She points out that technology is creating new opportunities for creative entrepreneurs. “I definitely think the environment for entrepreneurs has changed for the better,” she says. “Irish culture is very strong when it comes to giving things a go. We have an entrepreneurial culture and technology is important. The internet of things (IoT) and machine-to-machine technology is allowing new businesses to form.”
One example of such a new business is Boat Warden in Skibbereen. “It’s a small company that uses a machine-to-machine SIM card in a boat to allow owners keep track of it using an app on their mobile phone. That’s an example of a company seeing an opportunity to build something new around technology. On the other hand, St Mel’s Brewery uses social media extensively to assist with the sales and marketing of its beer.”
Positive funding environment
A positive funding environment has also helped. The funds supported by Enterprise Ireland have leveraged more than €1.5 billion in investments in Irish companies over the past 20 years while the private-sector seed, venture and private equity firms are also playing a significant role.
“Despite claiming the opposite there is money available to start-ups,” says Tom Early. “We have only recently announced four new funds. The channels are more organised and sophisticated. The reality is that the majority of our start-up investments get their matching money from the three fs – family and friends are an extremely important source of finance. What often surprises me though is that there is a lot left on the table in terms of these investments. They don’t avail of the EIIS (Enterprise Investment Incentive Scheme), for example.”
Mostly the barriers he sees in companies obtaining finance centre on their capability. “The company’s inability to articulate why this is a sound investment opportunity – clearly explain what they are doing, why it is important why people will pay for it why it will make money and when.”
Anna Scally believes the funding environment is “reasonably good” for start-ups at the moment. “The banks appear to be reasonably open for business and SBCI (Strategic Banking Corporation of Ireland) has been active through its lending platforms. Many companies have been very successful in raising private capital and the Irish Venture Capital Association (IVCA) has confirmed that companies in Ireland received more venture capital in 2016 than ever before, amounting to €888 million.”
Another difference is the knowledge and understanding of those with the money. “When an entrepreneur goes into a bank or support agency and says they are setting up a software as a service business with half its employees in India and mainly selling into China, people will actually know what they’re talking about now,” says Tom Early. “It has to be said that Bank of Ireland and AIB are doing a lot around the whole start-up space.”
Alastair Blair also believes the universities deserve credit. “I have to pay tribute to the work of the universities. There is a relentless focus on commercial outcomes. We now find college courses on digital entrepreneurship. That tells you everything about the focus. There are innovation hubs in UCD, TCD and DCU. Leaders of Tomorrow applicants are highly commercial people and they know how to make money. In fact, some of them are already making money.”
One fear expressed by many is that there might be a little bit too much exuberance around this relatively new phenomenon. “I would have been concerned about the amount of froth around,” says Andrew Parish. “You see a lot of entrepreneurs who think their job is to go to start-up events every night of the week. However, we are seeing a growing number of older entrepreneurs as well. If you are over 35 you are going to think long and hard about the risk profile of the business. This tends to lead to more solid business ideas. They realise the need to get to revenue quickly and to have an offering that is differentiated and scalable.”
Tom Early is also aware of this potential downside. “There is definitely a lot more activity in the marketplace these days, with a lot of people trying to help and offer advice – it seems just about everybody is involved in some start-up event. Any night during the week there are multiple events on. This is great but it also means that there can be a lot of noise out there with conflicting messages and entrepreneurs getting too much or conflicting advice. It’s really important for entrepreneurs to have a clear focus and be very targeted in what they want to achieve – that doesn’t mean they should have a blinkered approach but it does mean that they shouldn’t chase after every shiny new thing.”
That said, it appears the conditions have never been better for start-ups in Ireland. Andrew Parish sums it up best when he says: “I really think that it is a good time to start up in Ireland. Business confidence is growing day by day and Government policy has been and continues to be very business friendly. I have spoken to overseas start-ups here who said they had never had as easy and simple an experience of opening a company as in Ireland.”
The optimal solution
Founded by Leaders of Tomorrow finalists Norma O’Mahony and Owen McCabe, Effy develops staff scheduling and optimisation tools which use existing in-store data to ensure retailers have the right staff, in the right place, at the right time.
“We take all data that retailers have – sales, footfall even weather data – and we use that to predict what staff they need and when in order to achieve the highest sales,” Norma O’Mahony explains.
She was inspired by her experience both as an employee and from watching her mother struggle with staff rosters as a nurse manager. “Lot of schedules are still done on pen and paper,” she says. “We saw the potential to make it easier and smarter. Our solution affects the bottom line. It can increase sales and decrease costs.”
She entered the Accenture Leaders of Tomorrow competition in her final year in college in 2014. “I started talking to potential customers and that’s when I realised that this was something I could turn into a business. Since then, we have had support from the Enterprise Ireland New Frontiers Competitive Start Fund. We also have some early customers using the scheduling platform and have a trial going with Bank of Ireland. It’s really exciting – Bank of Ireland and Accenture have been great supporters.
“I really can’t talk enough about how great the support has been,” she adds. “There is a great community of start-ups now, particularly in Dublin. Everyone is really helpful with advice and opening doors to contacts and so on. You can’t underestimate the value of that. It’s just brilliant. Ireland is a fantastic place for start-ups. It’s not such a great place for entrepreneurs though, with capital gains tax and so on. But there is an amazing amount of support for start-ups.
“My advice to potential entrepreneurs is 1,000 per cent to go for it. There’s a lot people can do that’s low risk and low cost to get something out there and see if it will fly.”
For the immediate future she is intent on building the business and developing the product. “In a year’s time I would like to have seen Effy grow to have a UK-headquartered retail chain using it. My focus is on delivering a product that creates value for customers.”
A fantastic place to start a business
Coindrum machines are a new feature of departure areas in a growing number of international airports. The machines solve an age-old problem by taking unwanted coins from travellers in up to four different currencies at once and giving them a printed voucher that is worth 10 per cent more than the value of their coins in return. The voucher can then be spent in airport duty-free outlets.
Coindrum inventor and Irish Times Innovation Awards finalist Lukas Decker chose Dublin to start up this internationally focused venture. “It’s a great place to start up,” he says. “There is a very pro-business environment. Tax is important but I guess it’s more the availability of equity. The Irish Government and Enterprise Ireland are doing very good work in that regard. Enterprise Ireland is now the largest seed funder in Europe. ”
He came here to do an MBA and met Declan Ryan, who became the initial funder of the business. “Coming here to do the MBA put Dublin on my map. At the time, it was not as well-known as a start-up city. All the roads led to Berlin at that stage. I have received great support from Enterprise Ireland every step of the way.”
He also points to the availability of top-level accelerators to assist start-ups. “They are punching way above their weight internationally,” he says. “I didn’t go to an accelerator myself but they can add a lot of value to technology firms in particular. The availability of talent is important as well. I doubled my workforce last month. It is very good to have a young, highly educated workforce. Office space used to be a pain but we are in Dogpatch in the IFSC. It’s very flexible and we rent by the desk. Very practical things like that help a business. Also, the fact that Ireland will be the only English-speaking country in the EU is important. This allows us to sell into the US and Europe. It’s a great place to trade from, with great time zones. The bottom line is that Ireland is a fantastic place to start up a business.”