Fledgling Irish firms pitched for international investment in London this week, writes MARK HENNESSY
MICHAEL KATZ of Arizona-based venture capital (VC) firm, TCF Capital spends his time hearing presentations by developing companies seeking investment, often from up to 60 firms in the course of a single day.
This week, he was one of 90 venture capitalists brought together by Enterprise Ireland in a Hilton Hotel in the City of London to listen to 25 Irish software and medical devices companies. Like others, Katz was impressed.
Despite Ireland’s economic woes, Katz, speaking during a break in the presentations, said he sees potential: “Ireland seems like a great stepping-stone for us. We were there a few weeks ago and we liked what we saw.
“We are still looking at it, so we are getting our bearings about the landscape. But we would hope to be quite aggressive. We are always looking for interesting companies to help with our US portfolio (for investors),” he told The Irish Times.
“Ireland makes a lot of sense. Start-up costs are quite low in Ireland. It is English-speaking, in the right location. And Ireland is getting more and more competitive. You can’t compare it to Eastern Europe: the talent-pool is much larger in Ireland,” he said.
His Japanese counterpart, California-based Taka Koda of Mitsui Ventures was keen to explore the offerings from the medical devices companies present, such as university off-shoots, Crescent Diagnostics from Limerick and BiancaMed from University College, Dublin.
“Ireland has some problems right now, but the market will recover. The situation doesn’t matter from an investment point of view. It is, in fact, a good chance for us to start. In times like this, companies start looking at new things.
“In good times, if they are satisfied with the provision of domestic capital they don’t need to look outside. Having a troubled situation is a good start from which to penetrate. Medical devices are the most realistic target for us. They look the most attractive,” he said.
However, Manus Rogan, managing director of Fountain Healthcare Partners, cautioned that progress does not happen overnight in the world of venture capital, particularly now, since VC deals are syndicated, and, therefore, all the harder to bring together. “The model is to use a strong local lead VC firm to invest alongside international partners,” said Rogan. An increasing amount of the money available in Ireland is now directed towards life-science companies, he added.
Irish investors, however, still need to absorb the VC message, according to Des Doyle of Enterprise Ireland’s investment services division. “They still have not got their minds around it. Before, they were pouring money into property, thinking it would be risk-free.”
Ireland’s economic problems have had an international impact, he concedes: “The reputational damage is real. But what we are saying here and elsewhere is that there is an underlying vibrancy in the real economy.”
One of the companies presenting this week was Heystaks, which is run out of Pearse Square in Dublin by Prof Barry Smyth, Dr Maurice Coyle, Dr Peter Briggs and former Yahoo executive, Jonathan Dillon.
Heystaks bids to change the $30 billion (€21 billion) search-engine world, now dominated by Google, by allowing people to combine their searching efforts so that one person does not have to do work already carried out by someone in their group.
Travel firm Expedia pays Google $1.37 for each referral that it gets, though, often, they are paying to acquire a customer that they have already dealt with: “Search engines should be more collaborative,” Prof Smyth said.
“This has the potential to grow virally. People can create three, or four stacks and then share them with people who are in their contacts for everything that they are interested in; travel, or whatever else,” he went on.
Now employing four people, Heystaks has ambitions to have 40 people on its books shortly, along with a San Francisco office.
Heystaks has recently agreed a €1 million investment for a 20 per cent shareholding from Dublin-based NCB Ventures: “We give them the first step and the institutional credibility,” said NCB’s Michael Murphy, who also attended the London event.
NCB Ventures backs Irish companies at a very early stage, he went on, pointing out that the €75 million Ulster Bank Diageo Venture Fund, established in 2008 with the backing of Enterprise Ireland, has already invested in seven firms over the last 18 months.
Faced with the pessimism of home, AIB’s Karl Heffernan, who is also involved in venture capital, said: “It is a challenge coming here from an Ireland in the years after the Celtic Tiger, but we have a good story to tell. The future is in Irish companies like these ones.”
