The Newstalk Startup Executive Programme

image1We’ve just come to the end of another interesting pilot here at the Commissioner’s office - a 3 month New York virtual accelerator, kindly sponsored by Newstalk as part one of a two-part Newstalk Startup Executive Programme. The idea behind the virtual accelerator was to match 5 Ireland based startups with mentors in New York and see how access to on-the-ground mentors helped them to accelerate into the market. The participating startups Indigo Connect, LogoGrab, Love & Robots, LegalShine and Bizimply all had live products, funding and revenue when the pilot began, and we hoped, a truck load of invaluable US market knowledge by the time it was over.

To cut to the chase, the pilot was very successful: 3 of the 5 companies say they have a very different outlook on the US market as a result of the pilot; four of the five are seeking a longer term relationship with their mentor; and one of the mentors has invested in the company they mentored and become a sales partner to boot.

So what did we learn from this, first of it’s kind, 5 startup pilot? How much does it really help to have a US mentor while you’re still based fulltime here in Ireland? Should we or Newstalk spend the time and money to do this again? Here are 3 big takeaways from the programme:

1. A virtual relationship does work - as long as you’ve met face to face first.

Each of the 5 companies traveled to New York (at their own expense) as part of the pilot, so they did eventually meet face to face with their mentors, but in some cases that was weeks or months into the programme. All 5 of the companies agreed that they lost valuable time and energy trying to establish trust and connection over Skype when it could have happened in a half hour over coffee in Dublin or New York day one.

2. To succeed in the market you must spend time in the market.

I once joked on Twitter that there seemed to be a direct correlation between the amount of time Irish entrepreneurs spent on planes and how successful their businesses were, and through the pilot our 5 startups learned something similar. As one of them said: “We can sell online but it won’t work in a market like the US. You’ve got to be there, and benefit from the referral effect and the network effect. Customers won’t hear about us online, they’ll hear about us through others. What we need in New York is boots on the street”.

3. It may be a similar sized market, but selling into the US is very different to Europe.

Each of the 5 companies had stories to tell about this valuable lesson, from being advised by their mentor to stop wasting money on online advertising or expensive trade shows they weren’t ready for, to focusing on a more niche segment of the market as an entry point, to developing more sophisticated messaging that resonated in tone and language, while differentiating them from a myriad of US competitors. In fact, a lot of our conversations about the value of the Newstalk pilot came back to marketing and messaging, tone and language, and just how different it was in the US from what they knew in Ireland, the UK and Europe.

In late September we’ll officially launch part 2 of the Newstalk Startup Executive Programme. It’s ambitious, focused on accelerating SaaS companies, and this time all the action will take place right here in Dublin.

Niamh Bushnell

 

 

Why Ireland needs SEIS

My editorial in last Sunday’s Business Post. The Dublin Startup Leaders Group submission is now available on this website HERE with a comment box below. Share your thoughts and help us amplify the message.

On July 10th, the 40 plus members of the Dublin Startup Leaders Group, which I founded, formally responded to a Department of Finance consultation on how to encourage entrepreneurship in Ireland. Our response to Minister Noonan was singular and specific: The government must unlock private “angel” funding for early stage, startup companies.

It has been clear to me since taking up the inaugural role of Dublin Commissioner for Startups last October that the entrepreneurial tax system in Ireland requires a significant overhaul. Our Capital Gains and Stock Option tax policies are shamefully anti-entrepreneur by both UK and US standards, and demand urgent redress. The members of our Group are accelerators, associations, universities and coworking spaces that support Dublin’s 2,000+ startups on a daily basis. From our perspective, early stage funding is an even bigger hurdle for Irish startups, so this became the focus of our submission to the Minister.

It is almost painful to look at a comparison between early stage investment in Ireland versus the UK, where an angel investor scheme called SEIS (Seed Enterprise Investment Scheme) was introduced in 2012 and made permanent in 2014.

Angels in the UK individually invest as little as between £1,000 and £10,000 into a startup’s funding round and receive up to 70% in tax credits in return. Recognizing and mitigating the risk of these investments is the genius behind SEIS and according to Deloitte, 58% of UK investors would have never invested without it. But, what I love most about schemes like SEIS is that they encourage thousands of ordinary people like you and me to actively participate in the entrepreneurial economy, engaging not only our money but our skills, networks, and professional experience for the benefit of startups.

The Irish government does fund early stage companies through Enterprise Ireland, and I’m sure EI’s matching funds model is the envy of many other countries. What we need now is a parallel track to mobilize broader investor participation and encourage the rest of us to play a role in picking and fueling Ireland’s best companies.

For the record, the Irish government does already offer an investment scheme called EIIS, a successor to BES. If you think you can stomach the harsh reality of how EIIS is working out for us, go to page 7 of our  submission on the StartupDublin.com website. Irish investment rates are low and have declined year on year since 2008. For the same period, the trend in the UK is upward and of hockey stick proportions.

I have been back in the Irish startup ecosystem for almost a year now and when I compare Dublin to the startup world I “grew up in” in New York, I am bowled over by our potential. It’s the confluence of innovative startups, multinationals hungry to collaborate and our compulsively can-do culture that gives Ireland its magic. I confess, I get frustrated when I hear Americans compare Dublin to cities like Amsterdam, Copenhagen or Stockholm. These are all great cities for sure, but the business culture in Dublin feels more dynamic, real and globally connected to me, much more akin to London or New York.

Detractors of Ireland’s reputation as a startup hub say we have yet to produce a company with a “billion dollar exit”. Have they heard of Ryan Air who are set to make a billion euros - in profit - this year? Our publication Dublin Globe recently showcased 25 Irish TravelTech startups that are killing the competition internationally and we’re world class in other areas too like HealthTech, FinTech and CleanTech. We’ll see many more billion dollar companies coming out of Ireland in the next few years as long as customers and angel investors don’t entice them to move lock, stock and barrel across the Irish sea first.

Ireland’s challenge as a startup hub is not in the quality of our companies but in the environment we’ve created for them to start and scale their businesses here. Our friendly corporation tax rate of 12.5% doesn’t help startups with job creation. For them, job creation is a funding issue, pure and simple.

In an interview last week with the NY Times, US venture capitalist Fred Wilson said that the mark of a great startup hub was its level of angel investment: “Get people to take their money out of bonds and put it into startups” Wilson said. According to the Irish Central Bank we have €98 Billion lying fallow in short term deposit accounts. Lets start our world class hub story right there.

A grand total of € 8 Million. That’s the number Ibec estimates it would cost the Irish government to introduce an Irish SEIS. So, taking a leaf from the construction industry’s playbook, here’s my suggested plan of action: Let’s borrow the € 8M from ISIF (Ireland Strategic Investment Fund), the public can play the role of strategic partner, and the result can be thousands more highly skilled jobs created in SMEs who already, by the way, make up 98% of the enterprise base in Ireland. The best result is when everyone wins.

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