"One of the hardest things to do is to let go of an idea if it's not going to work. Entrepreneurs struggle with this because something looks good on paper. They're convinced there's a gap in the market when there may not be a market in the gap," says tech entrepreneur, Paul Healy, who is now on his second start-up having been part of the successful sale of jobfinder.com for €7 million in 2000.
Healy's new venture is Fantom, an online collecting platform that has blossomed in the wake of a previous start-up that didn't fly.
“We were trying to create a social media product for politics and when the idea burnt itself out we didn’t have a business,” Healy says.
"What pushed us forward was being accepted onto the Propellor Programme at the Ryan Academy in DCU in 2011. We got a huge amount from that experience.
“In particular, it put a valuation on our company as we got €30,000 for a 6.5 per cent stake. Trying to get a valuation on a start-up is what keeps entrepreneurs awake at night.”
Healy co-founded Fantom with business colleague, Aine-Maria Mizzoni, and its first product was launched in July 2012.
The company employs eight people in Dublin, a part-time sales consultant in the UK and is about to open a New York office.
Fantom left the Ryan Academy with a prototype and a business plan but completely broke.
"If you're looking for what is effectively seed funding you have to start in Ireland unless you are very well connected overseas. The potential investor pool is small as it's basically high-stakes gambling," Healy says.
"Fortunately, there are a few experienced and seasoned investors here willing to take that risk. We raised €490,000 in our first funding round in December 2011 and an additional €310,000 earlier this year."
Digital platform
Fantom is a digital collection platform focused on sports and entertainment. Instead of putting cards or stickers into a physical album, Fantom collectors fill virtual albums.
According to Healy, collecting is a global obsession with adults as well as kids. The company has players in their 40s, 50s, 60s and 70s in places as far afield as Egypt, Romania and St Kits.
Fantom’s flipbook format is free to play. Those who are impatient can pay to play faster. Its launch product was TNA Impact Wrestling from the US.
“TNA has been fantastic to work with because they are a risk-oriented company and were willing to give us a try with no track record. That is like gold dust to a start-up company,” Healy says.
Fantom will launch a UK Premier League product at the end of October and one for the German Bundesliga by Christmas.
Others are on the way for the Indian premier league and the Heineken Cup.
There are two main companies in the card/sticker collection space, the Italian company, Panini, and the UK/US company,Topps. Neither has a strong on-line presence.
In March this year Fantom became Topps’ digital partner. This opens up significant sales opportunities as Topps owns the content for brands such as Dr Who and Star Wars.
Fantom has also done a deal with global toymaker, Mattel, for its big selling Monster High Dolls range.
Healy says how start-ups deal with blips along the way is what sorts success from failure. “We’ve had a number of ‘moments’ – not being able to pay the wages in 2011 and discovering in mid-2012 that our technology wasn’t good enough and our business model and structure were wrong,” he says.
"Within three weeks we had it sorted. We brought technical development back to Ireland, changed our business model, our offices, our team and our website."
Crunch issues
Healy credits his board with identifying the crunch issues.
“When you look for investors you’re told to choose carefully, but for most companies desperate for money, that bit gets lost in translation,” he says.
“Having been down this road before we were very aware that attached to the money is a person. They need to be aligned to your vision and to bring something other than money to the table.
“We have very high calibre investors who come to every board meeting. That way I’m held accountable and if I’m going down the wrong path they tell me. Most importantly, I am prepared to listen no matter how painful it might be.
“We have always deliberately acted like a big company with detailed monthly management accounts always delivered on time and a very disciplined approach to all matters of corporate governance,” says Healy.
“This sends the message to investors that you are serious and they treat your business accordingly,” Healy says.
Fantom currently has about 250,000 “live” users but Healy’s aim is to be in the same league as games companies who laugh at the idea of 10 million users.
“We are very much in the lift-off stage and heading towards having several million ‘live’ players every month.
“As an entrepreneur the challenge is to be still standing when the bell rings. Too many people travel hopefully rather than putting a laser focus on how they will survive the next three or six months.”
