Business angels ready to lend helping hand
REGINA BREHENY is optimistic: “There has never been a better time to start a company,” claims the director general of the Irish Venture Capital Association. “There’s plenty of money out there.”
Ms Breheny is referring to the seed and venture funding available to start-ups and developing enterprises through a range of public and private sources. She explains that in recent years venture capital companies have moved away from funding very early-stage companies, where returns are less secure.
However, in Ireland, State and banking sources have filled this gap with €135m worth of seed funds. “The seed funds can invest about €500,000 in each company, so you could argue then that for €135m they could do 270 companies.”
Business angels offer a second source of funding to early-stage companies. The Halo Business Angel Partnership is a joint venture between Enterprise Ireland, InterTradeIreland, and the Irish Business and Innovation Centres (BICs).
The partnership works with start-ups to bring them from concept through to an investor-ready stage.
“There’s a lot of tough love along the way.” John Phelan of the Halo explains.
As a first step, the entrepreneur meets with a local BIC representative to evaluate the proposition and the business plan, and ascertain if the Halo Partnership can help. The rep then creates a ‘one pager’ for the potential investor.
“If we know a particular angel who’s interested in that space we’ll send that to them. They’ll have a look at the page and may come back to us and say, ‘Yeah I’m quite interested in that, can you hook me up with the guys?’ And literally what we’ll do is we make the connection and sit in on the first meeting to make the introductions.”
Extensive due diligence is then performed by the investor, alongside a series of meetings to establish whether the company is the right fit. The relationship may then be formalised.
Ms Breheny says venture capital firms will become interested in the company once it has a product and established a pathway to market. Thereafter the relationship evolves along similar lines to the business angel model.
“The VCs should have a deep understanding of the technology and where it can go, and they should be able to open doors for the company. It’s a real two-way street. They provide a lot more than money, and they participate deeply in the management and the driving of it,” she says.
Ms Breheny explains that the venture capital in-vestment cycle has worked fortuitously in Ireland; most mainstream VC funds were fully funded before the crisis hit, leaving them in a strong position to fund developing enterprises.
Ms Breheny is currently engaged in kick-starting another round of fundraising for the next tranche of VC investments.
Successful enterprises follow an established development path.
Once the venture capital is invested, the firm progresses ultimately towards sale, usually to a multinational company (MNC).
W: www.actventure.com; Fund Size: €170m; Investment Range: €1m–€10m; Sectors: Information and communications, technologies, medical devices and life sciences.
W: www.aibseedcapitalfund.ie; Fund size: €53m
Investment range: Up to an initial investment of €500,000; Sectors: Companies at the seed and early stages of development across a range of sectors throughout the Republic of Ireland.
W: www.delta.ie; Fund Size: €105m (total funds under management is €250m); Investment Range: €750k to €4m; Sectors: ICT and health care.
W: www.dfjesprit.com; Fund Size: €95m; Investment Range: €1m - €15m; Sectors: Digital Media & Web 2.0, Electronics, Energy, Environmental, ICT, Life Science, Medical Devices, Photonics, Semi-conductors, Software, Telecommunications
W: www.dbic.ie; Fund Size: €36.5m; Investment Range: Up to €250,000.
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