The founders of Nohovation have ringfenced €10m solely to help early-stage Irish companies with the potential to scale rapidly across the globe in an attempt to address what Cork native Phelan said is a lack of venture-capital funding in the Irish market.
Specifically, Nohovation will look to bridge the gap between seed and subsequent funding rounds.
“Illan is going to manage it on a day-to-day basis with a team based in New York and what we want to try find is Irish companies who want to scale in the US; early stage but [those who can] scale rapidly and we want to help Irish companies to grow quicker.
“There are companies who are raising small amounts of money that have opportunities to grow much larger much quicker,” Mr Phelan said.
Speaking at the it@Cork European Tech Summit 2016 in Cork City Hall, Mr Phelan said Nohovation was close to finalising its first two investments and is targeting at least three more this year.
Investment amounts are flexible and the self-styled “super angel investment fund” will not take any equity as part of the deals.
In a wide-ranging address, Mr Phelan, who sold his fraud detection company Trustev to Chicago-based TransUnion in December 2015 for €49m, railed against what he considers a self-centred culture that exists among start-up bosses.
Mr Phelan described the cult of the start-up founder as “bullshit”, saying that there are too many events, summits and pitching competitions that distract leaders from doing their job.
“We need to support our entrepreneurs be they start-ups or be they SMEs. That’s really important and it’s been forgotten about.
“You open the Sunday papers every week and it’s page after page after page of two dudes who have a spreadsheet and they’re going to change the world.
“There’s a guy over there with an amazing coffee shop who’s been selling me coffee for years and he’s probably got the best service I’ve ever seen.
“So we also have to support the guys like that. That’s forgotten about,” the New York-based entrepreneur said.
Start-ups should protect their equity “like gold” and stop giving it away to mentors while Irish firms with aspirations to expand globally cannot do so from a small market like Ireland, he added.
“You cannot sell into a global market from a rental car. You have to be there. You can’t take your bi-quarterly trip to New York and expect to grow the business from Cork. You have to be there; they expect that.”
Since being acquired TransUnion, Trustev has has grown in Ireland and in the US with “hundreds of jobs on the websites” at the moment.
Mr Phelan also told of how he advised Stripe founders Patrick and John Collison to go back to school when they approached him for advice on “setting up a bank”.
Ultimately, he put them in contact with fellow Cork entrepreneur Liam Casey who backed them and helped them on the road to developing the blossoming global payments business they have today.