pat byrne - ideagen event in wit

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.


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)


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.


~ 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


1999 – 2007

Sourcing people with new ideas

0%

5%

10%

15%

20%

25%

30%

35%

Indigenous - 148MNC - 1263rd Level - 38Serial Ent - 64Other - 21


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)


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


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)


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


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


Cloud Computing – the Opportunity

CAGR 2009 -2013= 27%

Largest segment: Cloud based Business Processes

= 83% revenues


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


Some of the more common mistakes we typically see…….

Start Up - Lessons Learned


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.


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).


Thank You !

Pat ByrneManager HPSUTelecom, Internet, Media & eLearning Software & Services Tel : (01) 727-2830 or (087) [email protected]

pat byrne - ideagen event in wit

Business

cloud computing

business plan

common start

enterprise

funding

hpsu

end

saas