Technology companies face a range of legal and capital issues in the new "lean-burn" economic climate, but funding and support is still available in the State for promising companies.
A number of legal and finance specialists presented this cautious but generally upbeat picture yesterday to an audience of 150 technology entrepreneurs. They attended a conference given by A&L Goodbody Solicitors, entitled "Technology companies in Ireland: the lean-burn environment".
"Today's environment is not all bad news," said guest speaker Mr Michael Kelly, chief executive of Dublin financial services software company Fineos, and Ernst & Young's 2001 Technology Entrepreneur of the Year.
He emphasised the need for companies to prove their business model by generating revenue before seeking major funding and offered tips on how to survive in a downturn. These included selling more to established clients, defining and chasing the company's ideal customer, sticking to the easiest markets and giving incentives to sales staff.
Mr Peter Coyle, director of Enterprise Ireland, noted that the agency had a €300 million (£236 million) budget and was ready to provide advice and, in some cases, funding. He said the most problematic issues among companies he talked to were poor sales and marketing skills and "the weakness and inappropriateness of the proposed chairman and board members".
In the current downturn, investors were making fewer investments in Irish companies, but those investments tended to be larger, said Goodbody Corporate Finance director Mr Finbarr Griffin.
The Irish venture capital (VC) market had performed strongly and showed fewer losses than markets abroad.
"Irish VC firms have very significant funds, while US VC firms' presence has never been stronger here," he said.
Goodbody partner Mr David Widger outlined how firms should get "investor ready" by engaging in good corporate and financial housekeeping. Goodbody partner Ms Sheena Doggett explained several ways in which companies could still use share options as an incentive for employees.
But she noted that many employees held options that were now virtually worthless and said companies should look at ways of restructuring share offerings to re-inject value.
A more downbeat note came from the final speaker's, partner Mr Mark Ward, who addressed the issue of company directors' responsibilities in case of insolvency, and partner Mr Ian Moore, who discussed downsizing - or as he said, "right-sizing" - a company.
With the Government's appointment of a Director of Corporate Enforcement, Mr Paul Appleby, the responsibilities of company directors were under much stronger scrutiny, Mr Ward said. In particular, he warned of liabilities under reckless trading and fraudulency laws.
