The Irish startup scene is growing up
Last week, Pat Phelan, who in December sold his company Trustev for €40m, announced Nohovation, a new angel investment fund designed to bridge the gap in funding between seed and later-stage fund rounds.
Some €10m will be specifically set aside for Irish companies to grow and scale within the US.
The announcement marks the end of an era. The Irish startup scene is growing up, adolescence begins.
We’ve always liked to think that Ireland has a strong entrepreneurial spirit. We had many domestic success stories before the turn of the century.
But it has been since 2008 that we have really begun to grow. With the economic crash, we came to the conclusion that developing companies rather than properties is a better way to secure a future.
Since then we’ve had our fair share of successes and failures. Nobody becomes the best by getting it right all the time.
In less than a decade, we’ve learned more in how to create a startup ecosystem than some countries have learned in three.
In that time, we’ve had major exits, major investments, and even billion-dollar companies, with more on the way.
There has also been a realisation that while Ireland is a great home, it’s the wider world where you make your money.
A number of weeks ago I was heading to London for business.
At baggage claim in Stansted, I bumped into somebody I had interviewed three or four years ago. We got to chatting about what he was doing now.
He explained how they focused their company to the US market and how it irrevocably changed their business.
“In the States the way they do business with you is simple” he explained. “When they do business with you, it’s because they want something done.
"There is no grey area. They want you and your skills and will pay for that. They know what they want.
"We are dealing with companies seven and ten times bigger than what we have in Ireland and it shows. We’ve been able to hire and bring in some amazing people to make a good product great and it’s getting better.”
In Limerick, I know a company on the brink of a major announcement: A big possible takeover on the cards and a big injection of capital. The negotiations have been ongoing for nearly eight months.
In terms of employees, it is a relatively small firm, but operate for some major companies. And it’s going to be massive.
The success stories of recent years are numerous: Stripe, Trustev, AMCS, which set an Irish record for investment last year, and NVMdurance, which is moving under the radar with major rounds of investment; it is ripe for a big buyout in the next few years.
Then there is the pay-it-forward approach. It is no longer good enough to do the speech circuit on being a startup. Now it’s about passing what you’ve learned on to the next generation.
I recently sat down for an interview with last year’s Seedcorn Ireland competition winner, Kieran Normoyle.
We talked about what’s happened in his business since then. He told me a great story on the value of a good mentor: “I was able to get a few hours with this mentor I had been trying to sit down with for months. I talked about how I was going to get Ocean Survivor to market and all things that were going to happen.
"He listened, he did a lot of listening. So I wrapped up my semi-pitch and what happened next was both the best and worst thing to happen to me.
“He systematically took everything I had said and pulled it apart. Why it wouldn’t work like this, but how it could work like that. I was a rabbit caught in the headlights. He told me I had a lot to think about on the train home.
"It was a steep learning curve, but it provided me with the ability to avoid major failures and move forward.”
The grassroots movement of startups in Ireland has provided many people with many lessons.
The daily grind of a startup gives you a lot to think about. What has emerged is a culture that is perhaps foreign in many aspects of Irish life: Talking about your problems, sharing those bone-crunching disappointments, and amazing highs. CEOs are sharing their hard-knock stories so hopefully other startups won’t have to.
With the announcement of Nohovation last week, it felt like the last chapter in the childhood of Irish startups.
The first volume signed off with the completion of a circle: Startup grows, scales globally, takes a major investment, sells for big money, moves that money into the investment scene to scale other companies.
All this with Irish people at the helm and Irish companies in mind. It was beautiful to watch.
We talk a lot about Ireland being one of the best places to start a company, but that has been an illusion for a long time. The reality is that we are way behind a lot of other countries.
The Irish scene has depended a lot on the kindness of strangers for a long time: Company founders and CEOs spreading their knowledge and ideas of business.
The movement supporting itself and driving itself internally.
That’s all fine if you want to stay the same.
We’re the caterpillar looking to fly, the cocoon needs to break.
The next step will be to bring all those hard-knock stories to fruition.
We need more investment companies to station and we almost certainly need a VC firm stationed in the west. Word on the grapevine is that Limerick is edging the race to get it.
Laws on serial investors, employee stakes in companies, and taxes all need to be reformed.
So we move into a new phase for the Irish start-up scene.
The growing pains of puberty are upon us.
