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DSO News: August, 2014 Archive

Why Galway has become the city of the start-up tribes

Thursday, August 14th, 2014

Are there ‘real’ tech ecosystems outside Dublin? If so, can they produce top start-ups? Are investors aware of their presence? And what are the pros and cons of setting up a tech start-up outside of Dublin?

Galway is testing the concept with some interesting results. The city that many people associate with music and culture has been carefully building up one of the strongest regional biotech clusters in Europe with multinational outfits such as Boston Scientific and Medtronic adding to local heavyweights such as Creganna. Now, the city is adding to this with a new wave of start-ups that are redefining what it means to grow a tech company in an Ireland outside of the Dublin area.

Start-ups such as OnePageCRM, Duolog, Element Software and Altocloud have broken out to win funding, awards and business all over the world.

Being in Galway hasn’t hurt one bit, say some of the home-grown entrepreneurs who have made it.

“Galway? Dublin? I deal mostly with US people and they see it all as the one thing,” said Mic Fitzgerald, founder of OnePageCRM, an online customer management software firm that now employs 13 people in Galway city.

“The motorway has made the whole thing a moot point as we’re under two hours from Dublin. So if there’s a meeting there I don’t think twice about it. The ecosystem now is Ireland, not Galway or Dublin.”

For early stage start-ups, there are even some infrastructural benefits to being in a regional city.

“You would probably have less of a queue in getting access to supports here than in Dublin,” said Breda Fox, chief executive of the Galway city and county enterprise board. And there are advantages of stability when trying to grow a company, say founders here.

“We’re not competing with as many rivals who might try to poach staff, which is a big issue when you’re trying to grow a company,” said Dorothy Creaven, co-founder of Element Software, one of the city’s fastest growing tech start-ups.

Then there is the city’s unusually large student population. Between NUI Galway (formerly known as UCG) and the Galway Mayo Institure of Technology, Galway has a whopping 26,000 students, with is roughly a third of the area’s population.

But one element increasingly being used to lure talented engineers to companies is lifestyle benefits. While Galway can’t quite match Dublin’s plurality of cafes, restaurants and hangouts, it has some other significant lifestyle attractions.

“We like to think we’re the cool and trendy place compared to Dublin,” said John Breslin, an online entrepreneur who advises some local start-ups and who is also a senior lecturer at NUI Galway.

“When you’re trying to attract people to a place, it’s great to talk up the standard of living. It’s more important than some might think.”

Lifestyle

Breslin’s point was recently made by a kitesurfing event in nearby Achill Island, where one of the world’s most successful technology investors convened a kitesurfing retreat that combined investors, start-ups and other technology experts. Bill Tai, who has backed A-list digital companies such as Tango, Tweetdeck and Voxer, chose Ireland’s west coast specifically for its proximity to world-class natural outdoor facilities.

“What I found is that it [kitesurfing and its lifestyle] becomes a magnet for super-interesting younger tech folks that are differentiated by an interest in extreme sports and who have often been successful their whole lives,” said Tai. “For me, it has become a good filter and a flywheel for attracting people who achieve great results.”

This lifestyle tie-breaker was recently summed up by Barry O’Sullivan, former senior vice president of Cisco and now chief executive of online Galway software start-up Altocloud.

“If Ireland is Europe’s new Silicon Valley, Galway is its San Francisco,” he recently told a gathering of entrepreneurs and investors in Galway.

One sign that the start-up ecosystem is reaching a critical mass in the city is that entrepreneurs such as Shankar Ganesh, founder of the digital signage firm Instillo, are seeking it out to start their companies there.

Other indications that the city is reaching a tipping point include the emergence of specialist networking organisations such as StartupGalway.org. Founded late last year by a group of founders and executives, the outfit now attracts over 100 people to talks and networking events that focus on local success stories and how start-ups are making it abroad.

“We drew inspiration from Boulder, Colorado,” said John Breslin, one of the group’s founders. “That city, which has a great tech ecosystem, has a lot of similarities with Galway. It’s a university city with a similar population and lifestyle.”

Still, with such a relentless spotlight on Dublin as the Irish centre of technology, isn’t there a temptation on founders to relocate there for their new venture?

“A lot of it is coming down to the entrepreneur,” said Barry Egan, programme manager in Galway for Enterprise Ireland. “There are lots of founders who are well able to grow international operations while not being in Dublin. There are also significant benefits in terms of retention of staff, as people are less inclined to jump from firm to firm.”

Others agree.

“It comes down to personalities,” said NUIG’s John Breslin. “I look at Galway firms such as Spamtitan and OnePageCRM who have customers all over the world and whose founders have such drive. Of course they could go elsewhere if they wanted. But if you‘re driven enough and single-minded, it doesn’t matter where you are. It comes down to the individuals who want to do it.”

Where to look for resources

For young companies with a great idea, where do you go or who do you talk to? One option is to consider the local enterprise board. Galway’s enterprise board has seen some solid start-ups come through its doors in the last three years.

“We’re the third most active enterprise board in the country,” said Breda Fox.

“Last year, we paid out about €1m in cash across around 25 start-ups and that doesn’t include other supports, such as employment supports. There are some really good start-ups here in Galway with a very active ecosystem, supports and peer network.”

Fox says that she has overseen 13 transfers to higher-funding supports from Enterprise Ireland.  “And 80pc of these would be tech start-ups,” she said.

Another avenue is Enterprise Ireland itself. Traditionally, the organisation has dealt with more advanced start-ups, including those that have attracted funding independently.

“We define a start-up as an early stage company less than five years old,” said Barry Egan, Enterprise Ireland’s director for the Western Region. “Last year, about five high-potential start-ups from the area made it across the line.”

But the agency has begun to get more involved with smaller start-ups in the last year. One programme, in particular, allocates €15,000 to approved start-ups with some office support and no quid pro quo in terms of company equity.

Called New Frontiers, the programme is administered through 14 college campuses throughout the country, including the Galway Mayo IT in Galway city.

“This year, we had 15 young start-ups who made it to the €15,000 grant stage,” said Tony O’Kelly, programme manager for New Frontiers in Galway. “That would have been from around 80 initial applications. The beauty of this grant is that it’s paid directly to the entrepreneur so it gives them time, space and flexibility.”

The programme also sharpens the start-ups’ minds on things such as product development and selling to potential customers.

“We take a ‘lean’ start-up approach,” said O’Kelly. “The key is to start market testing as quickly as possible, which means getting the founders in front of customers. A lot of people who come in to the programme have an engineering mindset and focus very heavily on product. While that’s good, it can sometimes lead to a ‘feature bloat’. Getting them in front of customers often results in a radical change in the product, branding, price-point or route to market.”

So far, this approach seems to be paying some dividends.

“At the end of our first six months, nine of the start-ups had a product on the market, eight had customer sales and seven out of these eight were exporting. So it is possible to get a robust process in place to move the odds in favour of the start-up.”

Are you are looking for a serviced or virtual office in Dublin City Center or Dun Laoghaire, call us at Dublin Serviced Offices on 01 2020212

Tech start-up of the week: NVMdurance

Monday, August 11th, 2014

Our tech start-up of the week is NVMdurance, a Dublin-based flash optimisation technology company that intends to disrupt the entire US$28bn storage market.

The company’s technology extends the life of solid state flash storage disks by more than 20 times by extending the endurance of the flash memory on 1x nm chips.

NVMdurance, a spin-out company from the NDRC, last year raised seed funding of €250,000 from New Venture Partners. Earlier this week, we reported the company succeeded in raising a further US$800,000 from original investors New Venture Partners, the NDRC, and new investors ACT Venture Capital and Enterprise Ireland.

“NVMdurance is about non-volatile memory endurance,” said CEO Pearse Coyle. “Flash memory is becoming the dominant medium for non-volatile storage, ie, the stuff that keeps your data when you switch off the computer, but after a certain number of reads and writes flash memory simply wears out.

“This so-called ‘endurance’ problem dogs the flash memory business and is retarding its growth, particularly its efforts to have solid state disks (SSDs) fully replace hard disk drives (HDDs).

“We make flash memory last at least 20 times longer – longer than anyone else in the world can.”

The market

What is fascinating about NVMdurance is the fact it is a young Irish company targeting the whole US$28bn flash memory industry, starting immediately with the manufacturers of SSDs.

“These markets are growing at 20pc and 40pc per annum respectively and are crying out for good solutions to the endurance problem, particularly because the six flash fabricators are making flash denser and cheaper per gigabyte (GB) and as they do its endurance further deteriorates.

The founders

Anyone who has been watching the genesis of the Irish start-up scene over the last decade would be familiar with Coyle.

He has been the lead commercial guy in several successful Irish tech ventures, including Eurologic, which gave him his grounding in data storage.

“I’ve also founded two less successful start-ups of my own. In recent years, through the venture CorporateSpinouts.com, I’ve been focused on commercialising spin-outs from research labs and that’s how I met Conor Ryan and Joe Sullivan, the inventors of this technology.

“This one was too good to just spin-out from the NDRC so I took the CEO role, at least until we do the next funding round.”

The technology

Co-founder Joe Sullivan worked on non-volatile memory at Analog in Limerick and spent a lot of time figuring out how to solve the endurance problem for NOR flash memory.

Early on he teamed up with Conor Ryan of the University of Limerick because Sullivan recognised that the key to extending the endurance was to vary the operating parameters of the flash memory gradually through the lifetime of the flash, as opposed to not varying them at all, which is the norm.

Sullivan, by now lecturing at Limerick Institute of Technology, recognised that determining the optimum parameter values could not be done manually and the problem needed a very sophisticated software approach, which is where Ryan came in.

In the past 14 years, they tried several different approaches and finally settled on NVMdurance’s present machine-learning approach, which has proved much more successful than expected.

“The ultimate goal is to deploy product in co-operation with flash memory fabricators or major SSD manufacturers that clearly proves our technical leadership in delivering a key feature for a large and fast-growing market,” Coyle said.

“When we can demonstrate this we will have a very valuable venture and whether we sell-out early or stay longer in the game remains to be seen.”

Roller-coaster

It has been something of a roller-coaster ride for the young company.

“Just as we secured our US seed investor last year we went to the world’s major annual Flash Memory Summit in Santa Clara and won the Most Innovative Technology award – a minor detail being that I spent the week of the show recovering from a near-fatal dose of pneumococcal pneumonia contracted en-route.

“Back then we believed we could only extend endurance 10-fold.

“Cash-wise we’ve been pretty lean all the way so far and have done two small rounds of investment – one just announced – that have each funded us just enough to get to the next key milestone.

“We have just completed multiple commercial trials and have met or exceeded the targets set. We’re now in commercial negotiations with several of the major players and have new interest from some of those who had originally passed.”

Coyle said the company has very supportive investors and a decision needs to be made whether or not to bring a new investor into the next round of funding, which will be triggered by a commercial deal.

“NDRC originally invested and took the guys in at my insistence. New Venture Partners of the US came in really early also, which was a great boost for the venture. ACT joined the round we’ve just announced.”

Shooting for the stars

Coyle said the major challenges faced by NVMdurance so far have been on the funding front but also because technical trials have taken longer than expected.

“We had pretty typical challenges in that few believed we could do this but those who invested early look like they will be well rewarded.

“We also had a big funding challenge in that it took us a lot longer than expected to complete our technical trials but we managed to stretch our cash wonderfully and survived that one.

“We’re really shooting for the stars – solving a very commercially significant problem – and those potential customers and investors who ‘got it’ early have been key to our progress.”

A challenging investment climate

As a seasoned start-up leader, Coyle believes the tech start-up scene in Ireland has never been greater but warns the investment climate is far from ideal.

“We have one of the most promising Irish tech ventures but it was murder to get a hearing from the local venture capitalists or even the US-backed venture capitalists. In fairness, most of them just did not know our space and so exited early but a few did not even respond to multiple approaches.

“ACT Venture Capital did understand our space and although it was obvious to them that they were the last man standing, in our most recent efforts to secure one new investor, they deserve a lot of credit for never trying to strong-arm us once they were in that position.”

Are you are looking for a serviced or virtual office in Dublin City Center or Dun Laoghaire, call us at Dublin Serviced Offices on 01 2020212

 

Start-up Soundings

Wednesday, August 6th, 2014

If any country can emulate Silicon Valley, it’s Ireland

Over the past few months I have written in this column about young Irish companies who have made the move to Silicon Valley to realise their dreams of global leadership. Having spent the past month in California reconnecting with friends and colleagues, it became clear to me that the current generation of Irish founders is following in the footsteps of pioneers – Irish leaders who have already made it in Silicon Valley – in start-ups, large technology companies and venture capital. People who moved from Ireland to the Bay Area in the days before the Irish Technology Leadership Group (ITLG), before Silicon Docks, before the Web Summit.

The list of well-known success stories is long. Limerick man John Hartnett rose through the ranks at Apple, ran worldwide sales at Palm and went on to found the ITLG and venture capital firm SVG partners. John Ryan, from Tipperary, moved to Silicon Valley in 1974. In 1983, he founded Macrovision, based on a technology which eventually became the world standard for video copy protection, and which today is included in virtually every DVD player and cable/satellite decoder worldwide. The company was floated on the Nasdaq in 1997. Symantec board member Anita Sands, originally from Co Louth, was previously group managing director at UBS.

Last week, I caught up with two of Ireland’s current Silicon Valley success stories:Shane Buckley, chief executive of wireless solutions provider Xirrus, and Conrad Burke, chief executive of solar player Innovalight, which was acquired by DuPont. I asked them what makes Silicon Valley different, what it means to be Irish in the technology business and what they made of the current Irish start-up scene.

Corkman Shane Buckley is a serial Valley success story. Before Xirrus, he led Netgear’s commercial unit to 50 per cent revenue growth over two years, and previously, as international president for Peribit Networks, he grew the company’s international business to account for 60 per cent of corporate revenues. He is clear about what makes Silicon Valley different: “The level and pace of innovation is unparallelled. Nowhere on earth is there the density of investors and entrepreneurs like this market. Companies can scale from a few employees to a few hundred in a matter of weeks”

Originally from Wicklow, Conrad Burke founded Innovalight in 2005 and served as the president and chief executive until August 2011, when DuPont acquired the company. Burke believes in the cultural diversity of Silicon Valley: “It’s a melting pot of smart people from all over the world that come to America with big dreams. Here, there is no stigma with taking bold risks, or even failing with those big ideas.”

Both leaders believe being Irish helped them along the way. “There is a distinct benefit coming from a small country, and that is the need for its citizens to always look outward,” says Buckley. “The Irish have always been received positively in the US, given the strong connections between our two countries.”

Are you are looking for a serviced or virtual office in Dublin City Center or Dun Laoghaire, call us at Dublin Serviced Offices on 01 2020212

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