This document summarizes a presentation given by Pat Byrne of Enterprise Ireland about high potential startups (HPSUs). It outlines Enterprise Ireland's role in supporting HPSUs, what qualifies a company as a HPSU, trends in software like cloud computing and SaaS, and common mistakes made by startups. Some key points include that over 1,200 startup inquiries are received annually with around 70 HPSUs approved for initial funding packages. Software in Ireland generates over €22 billion in revenues annually. Cloud computing is projected to grow at 27% annually through 2013.

1. IDEAGen - Waterford
October 15th., 2009
Pat Byrne, Department Manager, HPSU.
Patrick.byrne@enterprsie-ireland.com
Tel : (01) 727-2830 or (087) 221-4524

2. Agenda
Role of Enterprise Ireland
What is HPSU ?
Key Trends in Software
Lessons learned.
www.enterprise-ireland.com

3. E.I. Client Base is Segmented by
Stage of Development
High Potential
Established SMEs MNC’s
Start-Ups
Entrepreneurs Manufacturing and Irish-based
starting companies international-traded food and natural
with the ability to resource companies
services companies
compete in that are overseas
world markets employing
ten or more owned or
Scaling Controlled
Ambitious companies
with the ability to
grow to scale and
achieve significant
global success
Total E.I. Client base approx. 3,500 companies – 145,758 employees
Total Exports in 2008 €14.3BN (2007 : €13.9BN)
www.enterprise-ireland.com

4. What is a “HPSU” ?
The company must be :
1. Recently established (between 0-4 years from date of first
employee)
2. Innovative (operating in a growth sector).
3. Capable of generating at least :
10 full time jobs (in Ireland) - by end of year 3
Annual revenues of €1.25M - by end of year 3
4. Export focused.
www.enterprise-ireland.com

5. E.I. HPSU Activity
~ 1,200 start-up enquiries received p.a.
Of those ~ 400 can be classified as eligible as E.I.
clients
E.I. approves first round funding packages for ~70
HPSU’s p.a.
www.enterprise-ireland.com

6. Sourcing people with new ideas
1999 – 2007
35%
30%
25%
Indigenous - 148
20% MNC - 126
3rd Level - 38
15% Serial Ent - 64
10% Other - 21
5%
0%
www.enterprise-ireland.com

7. HPSU review 1989 - 2006:
Status of EI client companies
500
450
400 100%
(637)
350
300 69%
(440)
250
200
150
100 20%
50 (127) 11%
(70)
0
1989-2006
Started Still Trading Closed Taken over
www.enterprise-ireland.com

8. 1. Funding the Concept (Category One)
Mentor, Bus. Accelerator
Strategic Consultancy Max E.I. Funding is
€60K (over 2 years)
Feasibility/CORD Based on 50% grant
Recruiting Key Person
Innovation Vouchers (max. €5,000)
Overall Objective : Move the project toward a full Business Plan
www.enterprise-ireland.com

9. 2. Funding the Business Plan –
Innovative Funding
Evaluation of the Business Plan (which includes Cash Flows).
E.I. will invest by way of Equity (usually Cumulative Convertible
Redeemable Pref. Shares).
E.I. will invest based on identified cash need per the Business Plan.
Typical first investment is ~ €300,000 with additional sums based on
achieving agreed milestones.
E.I. will always look for co-investors (BES, VC’s, Promoters)
www.enterprise-ireland.com

10. HPSU Approvals 2007-2009
Comms Digital Elearning Other Totals
Media
2007 12 1 3 7 23
2008 12 12 1 2 27
2009 (YTD) 10 4 1 3 18
Totals 34 17 5 12 68
www.enterprise-ireland.com

11. Software Industry – Key Drivers and Trends
Challenging economic environment consolidation,
globalisation.
The internet becoming the key distribution channel to deliver new
software and services (Web 2.0, Cloud Computing, SOA)
Users moving Software from Capital to Current Spend
i.e. “Delivery on demand” (SaaS)
Emerging Markets – BRIC countries
www.enterprise-ireland.com Enterprise Ireland - Confidential. Not for distribution

12. Software in Ireland
MNC’s Indigenous Total
# Companies 210 500 710
Revenues (2007) €21.1BN €1.5BN €22.6BN
Exports (2007) €19.95BN €1.05BN €21.0BN
Employment (2007) 18,000 10,000 28,000
Source : Forfas ABS 2007
www.enterprise-ireland.com

13. Cloud Computing – the Opportunity
CAGR 2009 -2013
= 27%
Largest segment:
Cloud based Business
Processes
= 83% revenues
www.enterprise-ireland.com

14. SaaS – the Opportunity
2008 2009 2013 CAGR 2008 - 2013
SaaS WW Revenues US$6.6B US$9.6B (+21%) US$16B +20%
Enterprise Application Markets
Source: Gartner 7/5/09
IDC predicts:
• SaaS adoption by 45% US Companies in 2009 (from 23% in 2008)
• 76% US organisations minimum 1 SaaS application by end 2009
www.enterprise-ireland.com

15. Start Up - Lessons Learned
Some of the more
common mistakes we
typically see…….
www.enterprise-ireland.com

16. Some common start up mistakes …
Value proposition is not clearly defined. Technically brilliant product but
does it deliver VALUE to the customer?
Inability to identify and qualify the customer.
“Our product has no competitors” !
Unbelievable numbers (revenue projections and costs).
Unrealistic expectations on raising cash (time needed and valuations). It will
take 3-6 months. Plan conservatively.
Inability to manage cash – high burn rate.
www.enterprise-ireland.com

17. Some common start up mistakes (cont’d)
Inability to identify clear – and achievable – milestones.
‘Unbalanced’ Management team – dominant CEO with little commercial
experience.
Recruiting a good CEO costs money - and equity.
Weak (non commercial) Board. Securing a hard-nosed, no nonsense,
commercial Chairman is invaluable.
Inability to plan for contingencies (they will happen !!).
No exit strategy (an absolute must for VC funding).
www.enterprise-ireland.com

18. Thank You !
Pat Byrne
Manager HPSU
Telecom, Internet, Media & eLearning Software & Services
Tel : (01) 727-2830 or (087) 221-4524
Patrick.byrne@enterprise-ireland.com
www.enterprise-ireland.com