BELFAST BRIEFING:One of the top 50 Irish Americans working in technology has good reason to be dismayed by what he experienced during his time here, writes FRANCESS McDONNELL
HOW ARE Northern Ireland venture capital funds performing these days? It may seem like a perfectly innocuous question but when it is posed by a Belfast-born Silicon Valley tech entrepreneur – who has invested quite a lot of money in the North – it suddenly takes on a life of its own.
In fact, David Kirk’s decision to try and find the answer to his own question has caused the virtual row (thanks to his online blog http://dhkirk.tumblr.com/) of the year in the North.
Kirk has quite a pedigree – he has been a senior vice-president for Cisco Systems and a vice-president with AOL. Over his four-decade career, he has worked for multinationals from IBM to Amdahl and Tandem Computers.
To say he knows his way around the technology world, particularly in the United States, is an understatement.
He has been an enthusiastic cheerleader for the North’s fledgling hi-tech start-up sector since he “retired” in 2002.
Kirk has not only invested considerable sums of money in a number of start-ups – his latest project is with Planzai which describes itself as “a simple, user-friendly web app that helps normal people get things done” – but he has also been more than happy to share his knowledge, at his own expense, by coming to Belfast to hold boot camps (or, as they are known locally, kicking collective ass camps) for innovative start-ups and entrepreneurs.
Kirk is not just some modern-day Good Samaritan; there is a profit to be made for him if his investments come good. But that has never been his prime motive. His enthusiasm for helping local start-ups comes from the rather old-fashioned belief that once you arrive where you want to be, you should give something back.
This might be why he was recently named as one of the top 50 Irish Americans in technology.
You would imagine Kirk might be a handy man to have on your side if you were, for example, a local economic development agency such as Invest NI or a Belfast-based venture capital fund manager such as Crescent Capital.
Money and enthusiasm do not grow on trees, particularly in Northern Ireland. If Kirk and others like him have questions, it stands to reason that it might be a good idea to supply the answers. Particularly since they seem quite straightforward. These are questions some people in Northern Ireland should have asked before a hi-tech investor got on the case.
Here is a taste of what Kirk wants to know:
1. How much public money has been given to all investment fund managers (including but not limited to Crescent Capital, e-Synergy, Clarendon Fund Managers) in the past 20 years?
2. How much (a) was returned or (b) is expected to be returned? (by expected, that would include terms of the contract that would forgive the repayment in any form).
3. When any public money not returned is considered in the overall financial performance of funds, did any make money? And if so, how much? If not, how much did they lose?
4. Has any private investor (angels or otherwise) who has invested in any businesses alongside any of the above funds ever made any money?
5. Is there a correlation between companies that have received investment from any of the above funds and grants/support from Invest NI.
Kirk decided the only way to proceed was by going down the Freedom of Information route. He has not yet got all the answers but, so far, his position is that there are “issues with the investment ecosystem in Northern Ireland”.
He highlights the example of the only fund to report results to date – Crescent Capital – which, according to his figures, returned less money (£13.27 million) than the £14 million it was given to manage – comprising £7 million from Invest NI matched with £7 million from private investors.
Forget for a moment the other questions Kirk has raised. Two need answering immediately – were private investors subsidised by public money and who really made money out of this at the end of the day?
Invest NI’s official response to Kirk’s requests under Freedom of Information is that they will be “responded to in line with the legislation”.
A spokesman for Crescent Capital said the company “isn’t responding at this stage” to what Kirk has been saying.
But Kirk’s initial conclusion is that “co-investing with a Northern Ireland fund that is backed by Invest NI is bad for angels”. Kirk, who incidentally said on his blog that he had been “encouraged” by at least one party to take it down, says he has made “his last investment in Northern Ireland”.
“To say I am disappointed with everything that has happened is an understatement. I am finished with guys who are more interested in their pensions and bonuses, who don’t want to rock the boat, who don’t have a clue about investing in start-ups.
“There are great start-ups in Northern Ireland. It is a pity they are going to lose out because of certain guys who could not find their way across the street.”
Kirk is now switching his attention to India.
As it happens, Invest NI chief executive Alastair Hamilton was last night scheduled to talk by phone with Kirk. Not before time, it would appear.
