Pat Byrne - Ideagen event in WIT

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Presentation from Pat Byrne at 1st Ideagen event in WIT 15.10.09

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Pat Byrne - Ideagen event in WIT

  1. 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. 2. Agenda Role of Enterprise Ireland What is HPSU ? Key Trends in Software Lessons learned. www.enterprise-ireland.com
  3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 13. Cloud Computing – the Opportunity CAGR 2009 -2013 = 27% Largest segment: Cloud based Business Processes = 83% revenues www.enterprise-ireland.com
  14. 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. 15. Start Up - Lessons Learned Some of the more common mistakes we typically see……. www.enterprise-ireland.com
  16. 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. 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. 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

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