High Potential StartUp Businesses Irish Experience

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High Potential Start-Up BusinessesIrish
Experience Strategies
IRE Study Group Dublin-17th October 2006
Michael White
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Presentation Overview

• Context
• Historical background
• Profile of Irish Enterprise today
• Research Funding and Innovation
• The Future
• Enterprise Ireland (EI)
• Mission and Resource Network
• Our research High Potential Start-Up (HPSU)
  review 1989 2004
• Key Challenges
• Priorities and Measures
• Management Skills
• Volume and impact
• Future Challenges
• Case studies

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Historical background
A Decade of Growth
Department of Finance and AMECO, 2004
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How it happened

• Multinational Companies (ready market)
• People RD Experience
• European Programmes
• Developing VC Industry
• Demonstration Effect
• State Support for risk takers
• Returning Emigrants

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Effects of The Celtic Tiger

• Worlds leading exporter of software
• One third of PCs in Europe
• 13/15 top Pharma companies
• Leader in Pan-European call centres
• Top 3 strongest ICT sector in Europe

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Where We Are Now

• Diverse enterprise base
• Foreign Owned Firms (FDI)
• Manufacturing Internationally Trading Irish
  Firms
• Locally Trading Firms

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Indigenous vs FDI
Irish Exports (Agency Assisted Companies) 1990
2002
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Changing environment for MNCs

• MNCs are
• moving to specialisation
• outsourcing more functions to independent sub
  contractors
• concentrating on core activities design,
  product development, marketing etc.
• taking advantage of cost differentials and more
  efficient logistics.

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Profile of Irish Enterprise
Bulk of our exports are marketed / sold by
organisations outside Ireland
Most of the products we manufacture are designed
elsewhere
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Public Research Funding Structure
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Innovation
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Making it Happen
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The Future
We need indigenous High Potential Start-Up
businesses in services and high value
manufacturing
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Enterprise Ireland Mission

• The core mission of Enterprise Ireland is to
  accelerate the development of world-class Irish
  companies to achieve strong positions in global
  markets resulting in increased national and
  regional prosperity

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Enterprise Irelands Regional Offices
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UK European Offices
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USA and the Rest of the World
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Types of new enterprises we support .

• Definition of a High Potential Start-Up
  business (HPSU)
• Company that manufactures or trades services
  internationally
• Product / services based on technological
  innovation
• Likely to achieve significant growth within 3
  years
• Sales 1.0m and employment more than 10
• Export oriented
• Lead by an experienced management team
• Irish owned and located in Ireland.

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Our research

• An Analysis of the performance of 470 companies
  (HPSUs) established in the period 1989 -2004

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HPSU review 1989 - 2004
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Average number of HPSUs p.a.
no appreciable increase in failure rates despite
the substantial increase in the volume of
start-ups.
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Key sources of HPSUs - sectors
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Sources of HPSUs - Regions
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Sourcing people with new ideas
Where do entrepreneurs come from?
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HPSUsSome Key Challenges

• Early Stage Failures - 52 of Failures within 3
  years
• Achieving Scale - Sales, 5 - 10 million - 6.7
  years
• Only 11 of surviving HPSUs achieve 5 million
• Key Characteristics for Successful HPSUs of Scale

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Enterprise Ireland priorities

• Increase the flow of new high quality HPSUs
• Increase the number that achieve sales of 5m
  within 5 years and have the potential to scale
• Address key infrastructural and environmental
  issues affecting HPSUs
• Help companies secure key reference customers

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Who we work with .

• Key functional managers within existing
  businesses with new business ideas
• Experienced Managers looking at a management
  buy-out
• Irish ex-Pats, returning to Ireland with new
  business ideas
• Individuals involved in 3rd level research, with
  an interest in commercialisation
• Serial or repeat entrepreneurs.

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Our approach

• Mgrs in existing businesses
• Irish ex Pats
• 3rd Level researchers
• Serial Entrepreneurs

• In-company briefings, connections within MNCs,
  company closures
• Active promotional campaigns in UK, US, Middle
  East
• Campus Company Development Programme
• Active database, newsletters, network meetings

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Business Strategy
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Comprehensive assistance
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Some detail on assistance

• Funding
• Advice and mentoring
• Generating export sales
• Infrastructure

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Enterprise Ireland - funding for HPSUs
Funding to explore new opportunities - Small
grants
Funding towards establishing a HPSU Grants and
equity Milestone and standard
RTI grants and repayable grants
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Funding to Explore New Opportunities
Maximum funding is 65,000 over any two year
period. Market research 100,000 every 3 years
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Funding for HPSUs
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Funding for HPSUs
Typical HPSU
Milestone

• First or second time investment by EI.
• Funding for 2-3 year plan
• EI Package is 100 equity or 50 grant/50
  equity

• First time investment by EI
• Funding for first 12 months - RD
• EI Package is 100 equity
• Absolute maximum funding is 500K (Early Stage
  Start Ups) and maximum 200K (Very Early Stage
  Start Ups)

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Management Skills - For Successful Entrepreneur
Teams

• Prospecting and Selection - Crucial Phase
• Specialist Business and Technology Modules
• World Class Coaches, Tutors and Business Angels
• Technology Management and Commercialisation
  Training
• International Sales and Marketing Mentors
• Financial and Venture Capital Exposure
• Non-Executive Directors
• Special Development Advisers (DAs)- plus
  multi-skilled Team
• Building balanced Teams for Success

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Management Skills - For Successful Entrepreneur
Teams

• Best practice Entrepreneurial Training
• Access to International Expertise
• Babson, Harvard, MIT, Stanford, INSEAD and
  Cambridge (UK)
• RD and Innovation Master Classes
• M.B.A. Networks
• New Enterprise Venture Start Programme
• Sales Star Management Development Programme
  for CEOs

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Advice and mentoring

• Initial project evaluation
• Advice in development of a business plan
• Assistance with product / market validation
• Challenging of assumptions, projections etc.
• Advice on building an effective, balanced,
  management team
• Introductions to potential investors.

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Generating export sales

• Access to an international network of overseas
  offices
• Overseas incubation space
• Assistance in identification and securing
  overseas key reference sites
• Financial assistance towards costs associated
  with attending international trade fairs
• Access to overseas market intelligence and
  research

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Encouraging New Start-ups

• Campus Enterprise
• Enterprise Platform Programme (EPP)
• Rapid education/mentoring for Entrepreneurs -
  Business Start-ups
• Managed by Institutes of Technology (IoTs) -
  funded by DES
• Additional funding available from Enterprise
  Ireland for high quality innovative business
  concepts with export potential
• Team Skills Balancing
• Bankable Business Plans

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Encouraging New Start-ups

• Campus Enterprise
• New Regional Incubator Programme
• Partnership-Institutes of Technology
• Business Incubation and Commercial RD space
• Aimed at stimulating hi-quality start-ups
• 15 centres approved to-date 35m
• Funding for trained Incubator Managers

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Encouraging New Start-ups

• Campus Enterprise
• Wetlab facilities-BioIncubators
• Partnership-Universities
• Commercial research
• Early stage Biotech companies
• Universities at Dublin, Cork, Galway
• Hi Spec Innovation Centres UCD-Nova, DCU-Invent

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Infrastructure
Incubation and WebWorks
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Infrastructure (contd)
Community Enterprise Centres
CEC 2002 Construction 2003/4
CEC 1999 (2)
CEC 1999 (1)
CEC 1989
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Stimulating Innovation

• Commercialisation Fund
• Key Partners-Higher Education Sector
• to encourage and facilitate high quality
  applied research that can be commercially
  developed to create new business ventures

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Stimulating Innovation

• Commercialisation Fund-3 phases
• Proof of Concept Phase
• Technology Development Phase
• Business Development phase
• 2003/04 - 15m - 70 Projects

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R D - IPR Support and Ownership

• E I Funded Research in HEIsCollege owns IPR
• But EI must consent to Commercialisation Plan
• EI Patent Funding Programme for both College
  Research and for SME/HPSU Research and Technology
  IP
• Payback Terms based on Sales Royalties
• Programme aimed at Driving Innovation
  Entrepreneurship
• Clarity on Ownership of IPR Critical when seeking
  Investment
• Code of Practice for Publicity Funded Research

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Innovation Partnerships
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Stimulating Innovation

• Innovation Partnerships
• Industry / Universities / Institutes of
  Technology
• Stimulating Commercial Research
• Technical feasibility studies
• Access to diverse range of expertise
• Funding - 35-75 of College costs
• Maximum grant per project - 190k

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Stimulating Innovation

• Research Technology and Innovation (RTI)
  Competitive Grants Scheme
• To encourage and support Irish based firms on
  commercially focused, industry led projects in
  product and process development.
• Funding -30-45 - depends Company size and
  Region
• Maximum grant 450k

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Stimulating Innovation

• ITS 2007 Regional Webworks
• Regional development hubs for high-tech industry
  start-ups-strong RD and export performers
• Addresses
• Difficulties of seeding growth of new
  technologies in the regions
• Difficulties associated with rapid growth in such
  companies.
• Strong links to Universities Institutes

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Stimulating Innovation

• Networks to Deliver Expertise
• TecNet-a network of all the Institutes of
  Technology-jointly funded by the Institutes and
  Enterprise Ireland
• Aims to enhance the research capability of the
  Institutes and develop mechanisms for delivering,
  research, development and consultancy services to
  Irish Industry

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Stimulating
Innovation

• Networks to deliver expertise
• The Technology Transfer Initiative (TTI) a
  project under the Atlantic University
  AllianceAUA Universities of Cork, Limerick and
  Galway.
• To deliver expertise from the Colleges by
  developing existing sectoral networks and where
  necessary establish new ones to identify industry
  needs and develop collaborative projects.
• AUA-Masters in Technology Management.

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Stimulating Innovation

• Networks to deliver expertise
• Irish Innovation Relay Centre (IRC)
• One of 70 EU funded IRCs-SME focus
• Enterprise Ireland-TECHSEARCH Programme
• Rich source of Technology Opportunities
• Inward and outward Technology Transfer
• Exploitation of EU funded research
• Sectoral and Regional Specialists

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EI assisted HPSUs since 1998
Volume and Impact
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Volume and Impact (contd)

• c.800 start-up enquiries p.a.
• c. 500 business plan submissions p.a.
• 70 HPSUs assisted p.a.
• Average deal size c. 300k
• Total investment by EI c.20m p.a.
• Total number of new jobs c.1,200 p.a.

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Case studies
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Enterprise Ireland Application Process
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Advice for budding entrepreneurs

• Strive for number one position
• Have passion build great products / services
• Keep it simple in terms of business management
• Stay focussed pay attention to detail
• Source Cambridge Enterprise Conference 2002

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Characteristics of companies that achieve scale

• A strong and experienced management team,
  (frequently led by or supported by serial
  entrepreneurs) with a background in the target
  industry.
• A product offering that is based on a clear
  technological advantage
• A team of experienced and dedicated sales and
  marketing professionals
• Have successfully built a close strategic
  alliance with one or more key target customers.
• Well funded or with access to substantial equity
  funding from the outset.

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Enterprise Ireland - Future Challenges

• Accelerate Sustainable International Sales
• Accelerate Campus Hi-Tech Start-ups
• Accelerate Investment Commercialisation of
  College Research to new and existing SMEs
• Innovation Scaling of Irish SMEs for World
  Markets
• Accelerate Regional Entrepreneurship
• Key Regional Stakeholders to ensure a world class
  infrastructure for Enterprise development

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http//www.enterprise-ireland.com/StartBusiness/
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Useful Websites of relevant Irish Government
Departments and Organisations

• www.gov.ie www.cinario.com
• www.entemp.ie www.smallworld.ie
  (www.idiro.com)
• www.education.ie www.biancamed.com
• www.forfas.ie
  www.celticcatalysts.com
• www.enterprise-ireland.com
• www.enterprise-ireland.com/ResearchInnovate/
• www.ida.ie
• www.sfi.ie
• www.iua.ie (Universities)
• www.councilofdirectors.ie (Institutes of
  Technology)
• www.fas.ie

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Michael WhiteManager Regional Technology
Innovation
michael.white_at_enterprise-ireland.com