1. Funding Start up Enterprises in Ireland
I have been amazed over the years at the number of entrepreneurs I have met up with, that have
poor awareness of the funding process and sources of funds available at the various stages of
evolution of a new business, so I thought I would put some information out into the entrepreneurial
world. In addition, I have seen entrepreneurs enter into the wrong stage of the funding cycle all too
often leading to delays and frustration for all parties. This is not meant to be the be-all and end-all of
funding but just a few guiding points for anyone that may be interested.
Despite the economic situation there is a healthy level of entrepreneurial activity on our Island,
which will play a significant role in our recovery, and job and wealth creation. My disclaimer is that
you should always seek professional advice when seeking funds or making investments.
Whether a promoter or an investor, there are some key questions that will regularly arise at every
stage of the start-up and funding maturity cycle, these are:-
1. The emotional engagement, this is about the individual promoter(s), the successful ones are
competent & passionate about their idea, opportunity, product and/or service. Is this
passion and emotion underpinned by some rational and facts?
2. Is there a defined problem or clear opportunity that the new entity is going to address and
does the proposed offering address the defined area in manner customers will pay to have
the product or service?
3. Have we confirmed that there are sufficient customers (Market), Groups of customers
(Segments) to allow current and future competitors have a chance of achieving a share that
delivers acceptable profits to stakeholders?
4. Who is the competition? How are we different? Can we use our uniqueness to focus on a
real addressable Market where we have advantage?
5. Have we a beach head market defined and analyses that are easy to build initial customer’s
sales, usually the home/local market as regards geography and/or specific vertical or
technology sub sets. Is there life after the beach head?
6. Came we explain/demonstrate our business model, how we make money globally and at a
unit level.
The first stage of investment of resources in a new enterprise (Up to circa €100k)
1. Type 1 – Start-Up, It is normal that the promoter(s) will spend time researching their
business idea, and sometimes they may even spend some of their own money before they
make their first decision which is to commit to doing something active to start the new
enterprise. Even at this stage there can be supports available mainly in the form of feasibility
study grants from Enterprise Boards, Enterprise Ireland and InvestNI. It is in everyone’s
interests that a solid feasibility study is completed to start to determine the viability of the
idea.
2. Type 2 -Start Up, Normally has its birth in academia, perhaps through primary research or
research for a thesis. All our main universities now have research and incubation centres and
Science foundation Ireland working with the IDA and EI have various funding programs to
support these initiatives.
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2. 3. Type 3 – Start Ups, I call these the spin outs, where in fact within the life cycle some end
customer has in fact paid for the initial development indirectly. As an example a solutions or
services business is paid by a client to design, build and deliver some solution and it is
determined that this solution can be resold to other clients. Naturally IPR ownership
considerations must be taken into account as should the suitability of the architecture and
design to service a market rather than a client.
At this stage often friends and family have demonstrated some support and generosity with their
time or cash to support the promoter.
Through this stage as progress is being made some meat has been put on the bone, perhaps some
market research completed , even the framework for a product or service defined or sketched out.
Depending on the promoter’s approach, skill and experience there are supports available through
state-sponsored programs, there are a range of programs which usually provide incubation centre
facilities, training, coaching and mentoring, professional services support. There is a broad range of
these programs and different types of cash and professional support; sometimes through subsidies
sometimes the entity providing the support requires some small equity in the promoters venture in
return for their support, which also demonstrates their willingness to share risk. Some examples
are:-
 Business innovation centres such as Dublin Business Innovation Centre (DBIC)
 University Enterprise centres such as
o Nova in UCD
o Invent in DCU
 DCU Ryan academy programs – propeller/techstart
 County enterprise board centres
Seed Funding (Up to circa €500k)
Though still in the early stages, the promoter would normally have a clearer proposition for the
market, perhaps a working proof of concept tested with prospective target friendly customers. The
promoter at this stage usually is seeking funding to resource completion of product or service
development; at least the initial market release and initial sales to the beach head target market.
This is still a reasonably high risk phase, where neither the product, service, market or promoter are
proven, so the sources of funding as specific.
Government supports through mainly EI and IDA include
 High Potential Start Up program and related financial supports such as matching funding, in
the form of a convertible loan note.
 Government supported R & D vouchers and grants.
 Government funded seed funds administered by banks and professional investment firms
e.g. Dublin Seed Capital Fund
Business Angels, high net worth individuals who are seeking investments in early stage companies,
or syndicates of angel investors who share the risk and bring greater expertise to support their
investments. There are several Angel types:-
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3.  Full added value investors who want to become actively involved on a day-to-day basis
providing their skills and experience to achieve the goals of the business coupled with a
financial investment.
 Partial added value investors, similar to above but more advice and support, also perhaps
taking on specific tasks or projects, but not engaging full time.
 Board engagement investors who will aid in the strategy and governance of the company
but keep an arm’s length from the day-to-day operations.
 Arm’s length investors, who want to invest money but do not want any active engagement
apart from getting regular updates on progress.
IBAN & HALO entities exist across the country and provide structured processes for introducing
promoters to business angels and angel syndicates.
Some of the venture capital firms will invest at this stage and specialise in early stage companies,
often they may have an administration role for government supplied seed capital. Crescent Capital in
NI is an example and in ROI Kernel and Enterprise Equity are examples. As is the Dublin Seed Capital
Fund.
Scaling Early Stage and Growth Funding (Funding greater than circa 500k)
This is the stage normally where the promoter has paying clients, revenue streams and has proven
the model and now needs to scale the business perhaps refining the product or service or follow-on
product development, but more importantly ramping sales, customer acquisition and market share.
The largest source of funding at present in Ireland is via the VCs who have the access to funds
whether private or public, the skills and processes, to support the entity scaling.
Often at this stage a source of funding may also be a strategic partner, supplier or customer, a
stakeholder who has seen the value proposition and has a strategic interest in its success.
Useful Links
http://www.enterprise-ireland.com/en/funding-supports/
http://www.idaireland.com/
http://www.investni.com/index.htm
http://www.hban.org/
http://www.businessangels.ie/
http://www.dbic.ie/
http://www.enterpriseboards.ie/index.aspx
http://www.dcu.ie/invent/
http://www.software.ie/Sectors/ISA/ISA.nsf/vPages/Home?OpenDocument
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4. http://www.isin.ie/
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