pat byrne - ideagen event in wit
DESCRIPTION
Presentation from Pat Byrne at 1st Ideagen event in WIT 15.10.09TRANSCRIPT
IDEAGen - WaterfordOctober 15th., 2009
Pat Byrne, Department Manager, [email protected] : (01) 727-2830 or (087) 221-4524
www.enterprise-ireland.com
Agenda
Role of Enterprise Ireland
What is HPSU ?
Key Trends in Software
Lessons learned.
www.enterprise-ireland.com
High PotentialStart-Ups
Entrepreneursstarting companieswith the ability to
compete in world markets
ScalingAmbitious companies
with the ability togrow to scale and
achieve significant global success
Manufacturing and international-traded services companies
employing ten or more
Established SMEs
Irish-basedfood and natural
resource companiesthat are overseas
owned orControlled
MNC’s
E.I. Client Base is Segmented by Stage of Development
Total E.I. Client base approx. 3,500 companies – 145,758 employeesTotal Exports in 2008 €14.3BN (2007 : €13.9BN)
www.enterprise-ireland.com
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
~ 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.
E.I. HPSU Activity
www.enterprise-ireland.com
1999 – 2007
Sourcing people with new ideas
0%
5%
10%
15%
20%
25%
30%
35%
Indigenous - 148MNC - 1263rd Level - 38Serial Ent - 64Other - 21
www.enterprise-ireland.com
HPSU review 1989 - 2006:
050
100150200250300350400450500
1989-2006
Started Still Trading Closed Taken over
Status of EI client companies
69%(440)
20%(127) 11%
(70)
100%(637)
www.enterprise-ireland.com
1. Funding the Concept (Category One)
Mentor, Bus. Accelerator
Strategic Consultancy
Feasibility/CORD
Recruiting Key Person
Max E.I. Funding is €60K (over 2 years)Based on 50% grant
Innovation Vouchers (max. €5,000)
Overall Objective : Move the project toward a full Business Plan
www.enterprise-ireland.com
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
HPSU Approvals 2007-2009
681251734Totals
18314102009 (YTD)
272112122008
23731122007
TotalsOtherElearningDigital Media
Comms
www.enterprise-ireland.com Enterprise Ireland - Confidential. Not for distribution
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
Software Industry – Key Drivers and Trends
www.enterprise-ireland.com
Software in Ireland
28,00010,00018,000Employment (2007)
€21.0BN€1.05BN€19.95BNExports (2007)
€22.6BN€1.5BN€21.1BNRevenues (2007)
710500210# Companies
TotalIndigenousMNC’s
Source : Forfas ABS 2007
www.enterprise-ireland.com
Cloud Computing – the Opportunity
CAGR 2009 -2013= 27%
Largest segment: Cloud based Business Processes
= 83% revenues
www.enterprise-ireland.com
SaaS – the Opportunity
2008 2009 2013 CAGR 2008 - 2013
SaaS WW Revenues US$6.6B US$9.6B (+21%) US$16B +20%Enterprise Application MarketsSource: 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
Some of the more common mistakes we typically see…….
Start Up - Lessons Learned
www.enterprise-ireland.com
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
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
Thank You !
Pat ByrneManager HPSUTelecom, Internet, Media & eLearning Software & Services Tel : (01) 727-2830 or (087) [email protected]