Local Enterprise heroes

Following in the footsteps of Local Enterprise heroes

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For many companies, becoming an Enterprise Ireland client is a significant step on a journey that started at a regional level. Local Enterprise Offices throughout Ireland provide supports, advice and training to start-up companies and existing micro-enterprises of up to ten employees. It is in this environment that experience is gained and vital lessons are learned which allow companies to prepare for growth and to take their ambition global.

A recipe for successful growth to €21 million annual turnover

It was in 1993 that a young man from Clonakilty got in touch with his Local Enterprise Office (LEO) in West Cork to ask if they could help him turn his business idea into a reality. Diarmuid O’Sullivan wanted to produce traditional churn-made yogurts. He knew how to make yogurts but he didn’t have enough funding to get the venture off the ground.

“I had the idea but not enough money,” Diarmuid recalls. “I heard there was funding available from the Local Enterprise Office, so I contacted them and put in an application. The maximum support they could provide at the time was £50,000 and the LEO in Clonakilty was able to help me put my ideas into a business plan to help secure funding.

“I also received quite a lot of mentoring and coaching. That was all done at concept stage – I hadn’t even identified a production site – but the support meant that I was able to get Irish Yogurts up and running by March 1994.”

Diarmuid’s yogurt-making idea was a recipe for success. His company grew quickly and its products were soon on the shelves of Irish food shops and supermarkets.

“In one of those early years, we grew by about 78.5%. That brought its own challenges, with regard to working capital. The Local Enterprise Office suggested that I move onto Enterprise Ireland, where there were financial supports for fast-growing companies which were creating jobs.

“We hadn’t really focused on exports, not at that stage. That came after we started working with Enterprise Ireland. Our first export customer in the UK was Tesco.”

This progress was recognised in 1998, when Irish Yogurts was named winner of Ireland’s first ever National Enterprise Award. In just a few years, it had gone from being a bright idea with insufficient funding to becoming an award-winning food producer.

Today, Irish Yogurts employs 160 people at its Clonakilty base and sells to every major supermarket chain in the UK and Ireland. Its annual turnover has grown from €300,000 to €21 million, with exports accounting for 30% of their business.

“We appreciate the input of the Local Enterprise Office and Enterprise Ireland, who supported us and our staff every step of the way,” Diarmuid says. “We still work with them and avail of supports and advice. Enterprise Ireland is very much a part of our team.”

A roll of honour

Irish Yogurts is one of hundreds of companies from every corner of Ireland that have transferred from Local Enterprise Office support to become Enterprise Ireland clients. Last year, 80 companies made the move. In 2016, the figure was 40. The roll of honour includes 10 other former winners of the National Enterprise Awards:

It is a track record that the Local Enterprise Offices are proud of. Oisín Geoghegan, chair of the network of Local Enterprise Offices, said, “It’s one of our targets to transfer companies to Enterprise Ireland – it’s progression. Companies which transfer into Enterprise Ireland are companies with growth ambitions to be exporting and creating jobs, which is incredibly important, particularly for the regions. So we would see it as an indicator of success when a company moves on to Enterprise Ireland.”

Local expertise supporting global ambition

Engineering services provider Obelisk engaged with their Local Enterprise Office in Cavan, even before they set up the company in 1996. Four years later, Obelisk won the National Enterprise Award.

Founder director Colm Murphy said, “We were looking to capitalise on the growth of mobile phone usage by offering installation services for operators. The people in our LEO understood the idea that opportunity was coming down the track. That gave us the confidence that our idea was good and could to grow into something big.

“They had an incubator office which we were able to rent and provided grant aid for early employees. They also provided us with advice about how to set up a company, and other supports such as training and mentoring – there was a lot more to it than financial support.”

The support has been paying off ever since, Colm says. “Last year we turned over €27 million. Employee numbers are between 250 and 300 people. We’ve expanded to include infrastructure solutions for fixed telecoms and the energy sector in Ireland, the UK, and South Africa.

“We want to continue growing. We’re looking for further investment. Over the next two to three years, we’re looking to hit the €100 million mark in sales. Exports are currently a third of our turnover but we expect that to become a 50/50 split.”

So what part did being able to access business expertise and support at a local level play in the company’s success? “Back in 1996-97, we would have found it difficult to kick-off from a zero base,” Colm explains. “We were just a couple of guys with an idea, and sometimes going for funding and that kind of stuff can be daunting. But when you get the kind of support that we did from the Local Enterprise Office, that’s a massive kick start.

“I would recommend that any company should be in touch with their Local Enterprise Office. They’ve always been good at describing the product set they have and how they support you. If you don’t ask, you don’t get and if you’re not engaging with them then you won’t necessarily be aware of new supports that are on offer.”

Reassurance and support

The view that “if you don’t ask then you won’t get” is shared by John Lynch, Chief Technology Officer of Acutrace. The Dublin tech company provides software and hardware which allows companies to control and monitor their energy usage. They count the likes of Google, Twitter and IBM among their customers.

Founded in 2015, Acutrace wasted no time in contacting their Local Enterprise Office in South Dublin. John says, “We reached out to the Local Enterprise Office immediately and they were brilliant. They gave us an employment grants and we managed to employ two engineers under that scheme. Within the first three months, we were exporting to London.

The company was growing quickly and the Local Enterprise Office was instrumental in steering Acutrace towards Enterprise Ireland’s High Potential Start-up (HPSU) programme.

John says, “Once we learned the criteria for the HPSU, we used that as our yardstick to reach for. We knew we had to have significant exports, we knew we had to have a scalable product that would generate employment and we needed to have the magic number of a turnover of €1 million, so it was a good objective to hit and we exceeded the target that year.

“By the end of 2016, we had turned over more than €1.5 million and we were exporting 40% of a product that was created in Ireland to the UK.”

The advice, professional support and reassurance they received has left a lasting impression on John and Acutrace.

He says, “I’m coming off the back of 20 years in the industry and so is my business partner Aidan, but it’s a little bit different when it’s your own enterprise – the risks are higher and there’s an isolation you feel, it can be profound. Then you engage with your Local Enterprise Office and you feel part of something, that you’re being protected or mentored.

“There’s funding and that’s important, but it’s also having that extra bit of confidence that there’s someone else behind you who has your back, that if you are going to create employment, well there’s someone there who’s grateful for that and they’re helping you, and they’re encouraging you.”

“You might be destined for Enterprise Ireland but until you hit that criteria the LEOs will mentor you and steer you in the right direction.”

Working hand in hand

That direction involves advice and supports, which evolve and change to meet the needs of encouraging start-up companies and other micro enterprises of ten or fewer employees, says Oisín Geoghegan.

“We provide a very broad range of supports – initial business advice, information and guidance, training and mentoring, and financial supports such as feasibility, priming or expansion grants. It can include money to employ people or towards marketing costs, business development, and so on.

“We also point entrepreneurs and companies in the direction of other supports that are available, such as the New Frontiers incubation programme and Innovation Vouchers from other agencies such as Failte Ireland, Intreo, Bord Bia and Microfinance Ireland.”

“For companies with strong growth ambitions, we work hand in hand with Enterprise Ireland on their journey and ensure that they make that contact at an appropriate stage so their development continues to be supported.”

Our friends in the north offer opportunities for Irish companies

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Marina Donohoe, Director UK & Northern Europe at Enterprise Ireland, describes how the UK’s Northern Powerhouse project is creating opportunities for Irish companies.

The north of England is engaged in a historic transformation from an industrial past to a bright future that connects vibrant cities and globally competitive commercial activities. The scale of those activities should not be underestimated.

Growing faster than anywhere else in the UK, if the north of England was a country, it would be the 10th largest economy in Europe, exporting €56.4 billion worth of goods each year and accounting for nearly 20% of the UK’s overall gross value add (GVA).

 

The UK potential

The opportunities set out in Enterprise Ireland’s recent Northern Powerhouse report play to the strengths of Irish companies, particularly in the construction, life sciences, and digital sectors.

Northern Powerhouse is a government initiative that aims to rebalance the UK’s economy, by maximising the combined potential of the north of England’s cities and regions, including Leeds, Manchester, Liverpool, Newcastle, Sheffield and Tees Valley, an area of approximately 14,400 square miles with a population of 14.9 million people. The goal is to create a collection of modern cities sufficiently close to each other that ‘combined they can take on the world’.

The initiative, first launched in 2016, is delivering substantial public investment, with a focus on improving transport infrastructure between cities in the north of England and supporting economic activities around emerging capabilities. As a result, Northern Powerhouse is creating a wide range of business opportunities suited to the strengths of Irish exporters.

 

Trading Partnerships

Theresa Grant, CEO of Trafford Council, comments, “Irish companies are long-standing trading partners to the north of England, contributing to its robust economy and reaffirming Ireland’s successful relationship to this part of the UK. With rail links like HS2 and HS3 and improved worldwide air connectivity opening up, enabling the cities in the Northern Powerhouse to grow and prosper, we anticipate the Anglo/Irish partnership will grow even stronger, as major opportunities to continue to work together and collaborate present themselves.”

The most significant opportunities are likely to arise from new economic activities and clusters, which are largely based on science and innovation. With the European Commission’s 2017 Innovation Scorecard ranking Irish SMEs first for innovation, Irish companies have a leading position internationally.

 

Significant growth for Irish companies

Brian Crowley, CEO of TTM Healthcare, says, “Since 2012, the TTM Group has been working with NHS trusts, private hospitals and charitable organisations across the north of England, supporting more than twenty clients and employing 110 permanent and temporary staff. We see this region as of one of the fastest in growth terms for TTM, as we work with amazingly innovative and progressive healthcare organisations. Through the support of Enterprise Ireland and Northern Powerhouse, Irish Small and Medium Enterprises can provide modern, innovative and high-quality services across several industries which enhance the growth of the economy in the north of England.”

Ardmac, a construction specialist that works with leading companies across the pharma and technology sectors, has an office in Manchester and a portfolio of clients across the north of England. Ronan Quinn, CEO of Ardmac, comments, “Our business has seen considerable growth in the region in recent years. A significant amount of that business has come from building a shared vision of what our clients want to achieve. The ease of travel between the north of England and our offices mean that we can be face to face with a client within an hour – a key benefit for those working across multiple territories.”

Notwithstanding the threat of Brexit, the UK’s economy is in growth mode and remains Ireland’s most significant export market. Enterprise Ireland is focused on supporting Irish companies to consolidate and grow exports to the UK market, while also supporting them to diversify their export markets across the globe.

Companies interested in exploring opportunities should begin by downloading the Northern Powerhouse report.

This article was originally published in the Sunday Independent.

Fuelling company growth AsiaPac

Fuelling your company’s growth in AsiaPac

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The size of Asia reflects the scale of the opportunity it presents to Irish businesses, delegates at Routes to Growth AsiaPac, a major conference held in Dublin’s Aviva Stadium, heard recently.

“Three of the four top economies of the world are in Asia. It accounts for half the world’s population and a growing middle class,” said Julie Sinnamon, chief executive of Enterprise Ireland, which organised the event.

“China, India and the ASEAN countries are showing more than double global growth rates, so they are not alone large markets but ones have massive growth within them. And ASEAN is one of the world’s largest economic zones, with a population greater than the EU and economic growth of double the EU’s.”

The AsiaPac region also includes Australia, remarkable for enjoying more than 25 years of continuous growth.

The region offers particular opportunities right now for Irish businesses in sectors such as aviation, financial services, international education and construction & engineering.

But there are challenges too.

“With Asia, you can’t go in, do a bit of business, and come home. You have to be really committed to the market. You need a balance sheet that can withstand the investment and you need an understanding of the culture,” she said.

There are logistical challenges related to distance, cost, lack of relationships and the need for a local presence. It’s not a homogenous block either. “Each of these countries has different culture that we need to recognise and appreciate. The Western mentality – believing we have the answer to your problem – doesn’t go down well in AsiaPac, you have to listen, and have patience.”

Be aware of distinct operational requirements in markets such as China, said MJ Guan, a partner at the China Ireland Growth Technology Fund.

It isn’t a question of simply translating your marketing materials but of doing first hand, on the ground market research for yourself. “Don’t just rely on third party agents,” he said.

Localisation requires much more than translation too, as companies such as Google and Uber have discovered. To assume that just because your business is successful in the Western world it will be successful in the AsiaPac region is a mistake.

Trip wires can include not finding out if you can get a direct licence to operate in your sector, and, if not, partnering with a local business. If you sell B2B get your “China Pricing” right. “In China we like to ask for a high discount from a vendor. If you don’t give a discount the customer may think you are not serious about the business,” he said.

Guan was at the event representing the second China Ireland Growth Technology Fund, which is newly launched. It aims to support Irish companies looking to access the Chinese market, as well as Chinese firms looking to use Ireland as a European base.

Announced in March 2018 by Ireland’s sovereign wealth fund, the Ireland Strategic Investment Fund (ISIF), and its Chinese equivalent, the CIC Capital Corporation (CIC Capital), the Euro 150 million fund is a successor to the now fully-invested China Ireland Technology Growth Fund launched in 2014.

That USD 100 million fund supported six Irish technology firms expanding into China, including Irish-founded Movidius, the global leader in machine vision technology that was subsequently acquired by Intel.

The new Fund will once again be co-managed by Dublin-based Atlantic Bridge and Beijing-based WestSummit Capital.

The sectors it is open to applications from are quite wide, said Elaine Coughlan, founding managing partner of Atlantic Bridge. They include agri-tech and med-tech, enterprise and consumer software, semi conductors and industry-4.0 “all the things China wants access to and wants to buy,” she said.

Even where a company is not ready for investment, the Fund can help applicants make contacts and start building crucial relationships.

“We look at thousands of companies on an annual basis and with a lot of them we say ‘You are not ready yet, here are some contacts, here are some relationships, do a little more work, a little more market research, and come back to us’” said Coughlan.

“It’s very rare we say ‘no, never’. We say ‘not now, come back to us’, and give them some pointers to think about in terms of execution. We’ve a portfolio now of companies – of CEOs, VPs (vice presidents) and BDs (business development executives) – who are in China and who can share that knowledge with other Irish companies.”

One company the Fund has already invested in is indoor positioning systems company Decawave, which currently has five people based in China.

“You need to get out there on the ground so use Enterprise Ireland and the Department of Foreign Affairs and all the resources open to you. There is always someone who can give you introductions,” said Paul Costigan, chief sales and marketing officer at Decawave.

Its technology is based around “really precise GPS that works indoors, with very many applications for robotics, drones, AI, automation and smart factories, all the areas that China is so far ahead in,” said Costigan. In fact, “China already accounts for 60% of our revenues and we haven’t even got going yet.”

Knowledge Transfer Ireland

Research shows that Knowledge Transfers to the bottom line

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Alison Campbell, Director, KTI Knowledge Transfer Ireland, outlines what small and medium Irish companies stand to gain from connecting with Ireland’s rich research ecosystem.

Busy Irish SMEs can sometimes see research and development as a nice to do, rather than activities that can heavily influence business results. If a company has not previously been involved in knowledge transfer, they can at times view higher-education institutes as removed from the competitive reality of driving business.

Results from Enterprise Ireland’s most recent client survey show that companies that collaborate with the Irish research system on market-led projects report more than double the sales and exports than those that don’t. Knowledge transfer delivers many additional benefits, including a closer understanding of industry challenges within academia, new entrepreneurial activity, higher business activity, and new jobs. These compelling benefits show why Irish SMEs should invest in research and development and take advantage of supports available to help them do so.

Supported by Enterprise Ireland and the Irish Universities Association, Knowledge Transfer Ireland helps companies to benefit from access to expertise and technology, by making it simple to connect and engage with the domestic research base.

A review of the performance of the Irish Technology Transfer System published by Enterprise Ireland in December showed that strong performance and a high level of impact has been achieved in the commercialisation of research over the last four years. The Annual Knowledge Transfer Survey (AKTS) published by KTI reports that an impressive 109 spin-out companies from research institutions are active in Ireland many years after their initial formation. Spin-out companies currently employ over 980 people. 99% of active spin-outs are based in Ireland, with many having a global footprint. 24 new products and services were brought to market based on ideas and technology from state-funded research.  

The Herschel is a robot arm IR sensor technology, developed in a research collaboration between the School of Engineering at TCD and Ceramicx Ireland, a spin-out company that supplies industrial heating technologies to support manufacturing processes. Frank Wilson, Managing Director at Ceramicx, describes his experience, “For me, knowledge transfer works best as advanced common sense. An organisation like Knowledge Transfer Ireland helps SMEs to connect with a world of academic expertise and institutions they might otherwise find difficult to access. They help you answer questions like ‘Who do you engage with?’ KTI can help your company focus on what your specific project needs. You might want to implement a product process that no other company is using yet. The expertise of academic specialists can help realise those plans. At Ceramicx, we’re working on two important knowledge transfer projects at the moment. But everything depends on the specific circumstances of the company.”

For company’s eager to explore what knowledge transfer could do for them, KTI’s interactive “Find R&D Funding” tool provides a mechanism that helps them to find the most appropriate funding and supports for research and development activity in Ireland.

Enterprise Ireland recently approved the third phase of its Technology Transfer Strengthening Initiative, a €34.5m investment to be made over five years that will help sustain capacity within the Technology Transfer Offices to ensure continuing effective commercialisation of research and to maintain the bridge between the research organisations, businesses and entrepreneurs.

The number and range of supports on offer by the Irish state to support enterprise innovation directly and indirectly are critical to driving increased levels of innovation in Ireland.

Ireland now ranks tenth in the world in the Global Innovation Index 2017 and has been cited as the most R&D effective country in the EU, achieving maximum innovation output per euro of public funding.

With a skilled technology transfer resource in the publicly-funded research sector and an active innovation system, we can further KTI’s work to make research collaboration and commercialisation simple and accessible.

This article was originally published in the Sunday Independent.

End of year results

Positive Results but New Year means New Markets

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Julie Sinnamon, CEO of Enterprise Ireland, describes how the agency will support Irish companies to target opportunities in key markets in 2018.

Despite the challenges and uncertainty created by Brexit, Irish companies continued to grow global exports in 2017, supporting strong job creation across all regions of Ireland. That positive trend was evident in the End of Year results Enterprise Ireland announced in January at the Dublin headquarters of client technology company Ding, with job creation figures up across every region, every county, and every sector on 2016.

The job creation figures were up on 2016, despite the uncertainty that Irish businesses faced in 2017 in the context of Brexit. 209,338 people are now employed in companies supported by Enterprise Ireland, the highest total employment achieved in the history of the agency. 19,000 new jobs were created across all regions in Ireland last year. The figure represents a net increase of 10,309 jobs for 2017, taking account of job losses. In line with total employment levels, the net increase in jobs, is the highest on record with Enterprise Ireland.

While we welcome these positive results, it not a time for complacency about the forecast for Irish companies in 2018. It is imperative that Irish businesses continue to build on the strength of their 2017 performance and implement robust plans to prepare for the impact of Brexit.

In recent months, Enterprise Ireland launched a number of new measures to strengthen the rural and regional economy and provide quicker access to innovation funding for exporting companies. The Market Discovery Fund is a new response from Enterprise Ireland to help companies to diversify in the context of Brexit. The fund supports Enterprise Ireland-backed companies to diversify into new markets and promote new products to existing markets. Three levels of funding are available to companies: up to €35,000, up to €75,000 and up to €150,000.

This latest initiative is just one example of the work Enterprise Ireland has undertaken to deliver our strategy, Build Scale, Expand Reach 2017-2020, focused on transforming the innovation and competitive capabilities of Irish companies, to help expand their global reach by diversifying into key export markets.

While the results for the first year of the strategy are encouraging, Brexit represents a huge challenge for Irish companies and is top of our agenda. The Market Discovery Fund, along with our intensive international programme of export-focused trade missions and our recently introduced Agile Innovation Fund, are key supports which are instrumental to helping even more companies grow and reach new export markets.

The Eurozone, and non-Eurozone European countries, have always been important markets for Irish companies but now their importance is significantly enhanced. Consolidating exports to the UK, while expanding the Irish export footprint in markets beyond the UK, is a high priority.

The strong 2017 performance by Irish businesses can be attributed to the continuing growth of an entrepreneurial climate for start-ups, allied to strong jobs growth in sectors such as construction, engineering and life sciences, which all saw an 8% increase. I was pleased to report the increase in female-led businesses, with 63 female-led start-ups receiving backing in 2017. 42% of Competitive Start Fund Approvals were to female-led start-ups.

It is encouraging that job creation was evenly spread across the country in 2017, with every county seeing increases. 64% of new jobs were created outside of Dublin, with the west, mid-west and north west seeing the largest level of increases for 2017 at 7%.

Whatever the outcome of the complex Brexit negotiations that lie ahead, it is vital that as a country we are ready to continue to support Irish companies to drive exports and expand to growing markets.

Last year, a new €60m Regional Enterprise Development Fund was launched to invest in the regional ecosystem. 4 new Regional Accelerators were established. €23m was invested in New Technology Centres – Irish Manufacturing Research and Meat Technology Ireland. 9 Regional Brexit Advisory Roadshows were held across the country. Irish Advantage digital campaign to promote sourcing from Ireland. 33% Increase in international Trade Missions and Events. 878 International buyer visits to Ireland. 1,391 New overseas contracts won by EI backed companies

The new Market Discovery Fund is just the first initiative of 2018 as we work with our partners in government and enterprise to help Irish companies build their scale and expand their reach whatever the challenges on the international horizon.

This article was originally published in the Sunday Independent.

US flag - exporting to the US

Top 10 Tips for Exporting to The USA

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Ireland enjoys a unique advantage in trading with the US because of our deep historical links. Relations between the two governments are exceptional; and cooperation at an institutional level is excellent including in areas such as research, innovation and education.

There is, without doubt, huge opportunity in the US. Around 700 Enterprise Ireland client companies are exporting there and companies like Aerogen, Fenergo, Cylon Controls, Candidate Manager and Rubicoin have set up offices and accelerated exports in the past 24 months. To date, over 20 clients have won contracts worth over €500,000.

1. Preparation

Before entering the US market, extensive research at home is strongly advised. Make contact with State agencies, relevant support organisations and companies who currently export to the US, if possible. Targeting the US usually requires additional financial and human resources, so to keep costs and operations manageable in such as geographically big country, first-time entrants are advised to segment the market and target a particular region or state. Give careful consideration to the resources needed to serve the selected market, for instance, will the operation use a direct or indirect sales channel. Some companies hire locally and others (often in the early stages) put a C-level member of the team in the market for a short period to get things off the ground.

2. Legal

Corporate – Confirm your corporate structure. Typically setting up a US subsidiary makes sense both for tax and liability reasons. Your US subsidiary also will need to appoint a registered agent, and “qualify to do business” in every state in which you have an office or similar presence.

Intellectual Property – Address US trademark issues defensively (confirming that no one else has prior registered or unregistered rights in respect of name and key brands); and offensively (by filing a US trademark application). Patent issues may need addressed depending on the business.

Contractual Terms and Conditions – These must be converted to the laws of a US state, for legal and commercial reasons.

Employment – Get professional employment advice locally. Most US employees do not have employment contracts but employers are bound by offer-letter terms, employee manuals and other undertakings. Also, ensure confidentiality and IP assignment agreements with all employees are established.

3. Tax Structuring and Compliance

Establish appropriate arm’s-length arrangements between the Irish parent and US subsidiary to separate taxable income. This is particularly important because US corporate tax rates (federal and state), totalling about 40% are typically three times the level in Ireland. Have appropriate compliance procedures in place to address federal and state corporate income tax, as well as other potentially relevant tax regimes (sales tax, personal property tax, etc.), particularly at the state and local level.

4. Trends

US import trends indicate high potential for Irish exporters. Meat imports were valued at €9.4bn which was the second fastest-growing import; while dairy went up over 40% to €2.8 billion. The US also imports pharmaceuticals worth $86.1 billion; medical and technical equipment worth $78.3 billion and organic chemicals worth $52.1 billion. These are all among the top 10 Irish exports by category. It is also a big importer in sectors such as aviation and aerospace, mechanical and electronic equipment, insurance and ICT services – all of which are growing in Ireland.

5. Banking

It can be difficult for a non-US company to set up banking for its US subsidiary. Some banks are particularly focused on banking high-growth companies on a trans-Atlantic basis, which can help ease the process.

6. Immigration

Most Irish companies exporting to the US find it critical to establish a presence in the market. This is particularly true in software and high-tech. An estimated 65% of Irish exporters to the US have a full-time presence, ranging from a single-person sales office to manufacturing operations with thousands of employees. Route-to-market decisions are crucial and the role of agents and distributors cannot be ignored. Buyers rarely purchase directly from manufacturers, particularly those from overseas. So fulfilment centres have become increasingly important in the supply-chain, especially since the growth of e-business. This approach is better suited to non-perishable items and consumer products.

7. Insurance

The US is a high-risk environment. Get an insurance broker with trans-Atlantic experience to advise on types of cover, terms and limits.

8. Recruitment

The most difficult aspect of setting up in the US is finding the right people. Obtaining recommendations from trusted people including investors and advisors is often the best way. Otherwise get professional support (especially with sales people). Consider outsourcing for book-keeping, employee tax withholding, HR and mandatory employee insurance and benefits, and similar matters. Also note that visas permitting Irish personnel deployed in the US to work are needed. Allow three to four months to sort this out.

9. Offices

Get professional advice on office space and other properties such as co-working spaces (like WeWork), accommodation offices (like Regus) or renting an individual premises.

10. Incentives and Supports

US supports should not be overlooked. Federal, state and local development agencies and international chambers of commerce can provide very useful support. State and local incentives for investment and job creation also may be available.

 

Grant engineers French success

Grant engineers French success

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In the wake of the Brexit vote, oil boiler specialist Grant Engineering immediately looked to develop its export markets.

The Offaly-based company employs up to 320 people. It also has operations in the UK, where it employs a further 80 staff and accounts for more than half of the UK oil boiler market.

This year it will launch in France, delegates attending Ambition France, an Enterprise Ireland event, heard.

How Enterprise Ireland supported market entry to France

It started by attending a French trade show, supported by Enterprise Ireland. “It was an opportunity to invite people from our industry to meet us,” said Niall Fay, a director of the company.

The company availed of Enterprise Ireland’s Business Accelerator initiative, which helps companies retain the services of an industry expert in country. “He spent two months contacting local potential distributors and clients, asking them to come to see us at the show and arranging the meetings.”

The result was an unexpected but welcome offer. “Two guys from a company that was of particular interest to us were looking for a career change and were keen to develop the business for us so we agreed to take them on an consultancy basis. We were lucky to find French people with 40 years industry experience between them.”

A Market Access Grant from Enterprise Ireland enabled the company to localise the product for the French market. The company then set up offices and a training facility. Grant established in France as an SAS company, the most common limited liability structure in France, opened bank accounts and registered for VAT.

Having French nationals heading up the company was a huge advantage. “One of the biggest concerns we had was finding someone within the industry who would come and join a company that is a complete unknown in France. We have gotten over that hurdle and now we are looking at sales. It is very common in France to have sales agents all over the various regions of France and that is the route to market we are going to go.”

Here too, having French nationals who know the market, and can assess candidates, has been a boon.

His French hires have extensive knowledge of the agent network and have already selected 12 they reckon can deliver. “That would have been very hard for us to do,” said Fay.

Establishing the right corporate structure is vital, said Noel Cunningham, head of FDI at Mazars in Dublin. While a liaison office can be a good way to test the waters, incurring no tax liabilities in the country, it isn’t a sustainable solution because it precludes the signing of contracts.

And if you have three or four sales people on the ground, you could find you have a taxable presence there.

Hiring locally is important. “But doing your due diligence in relation to who you hire is extremely important too,” said Cunningham.

“Apart from the cost and effort involved in hiring unsuitable candidates, it can also damage your brand. Make sure there is someone back at base who is controlling them and be clear about what type of reports they should be generating,” he said.

Work with people who have an understanding of the different culture and language, said Fabrice Folliot of F4B Development, a French national and market accelerator.

“The mistake is to come into the market from a very strong position in Ireland, even a dominant one, and think that going into to France from that position would be easy. It’s not the case,” said Folliot, citing the common tourist experience of Paris by way of analogy.

Efforts to localise essential for French market

“If you start to ask directions in English, no one will stop for you. If you start even with broken French, to show you are making an effort, people will. In business, it’s about making an effort and working with the right kind of people. That is a positive sign that shows you want to invest in, and plan to be in, the market for the long term.”

Despite France’s reputation for bureaucracy, the time it takes to set up a company has been reduced to a matter of minutes online, pointed out Hubert Levesque, managing director of Morgan McKinley France, a recruitment agency.

The “Macron effect” has seen economic growth of more than 2% and unemployment of 5% at executive level, leading to a tightening of labour market, Levesque warned. The result is salary inflation of 7% this year.  “All of this makes it harder and harder to get good high profile candidates if you have a good brand. So when you are entering with an unknown brand, it’s even harder.”

Being open to locating outside of Paris can help.

“Everybody wants to go to Paris but that is going to be more expensive and you are going to be more anonymous. There are other cities too to consider, including dynamic ones such as Lyons, Marseilles or Bordeaux, which is just two hours from Paris by train. Salaries are cheaper there because you can offer a better quality of life.”

Take advantage of the supports available to you, including Ireland’s short “distance to power”.

“When we opened our French office the Irish ambassador, government Minister Bruton and Enterprise Ireland CEO Julie Sinnamon all came,” said Tony Richardson, CEO of Venn Life Sciences.

“Our French staff were gobsmacked by the level of access an Irish company can get to a government representative, which you simply would not get in France. It made them feel really important and that they work for an Irish company which is really important to the Irish government.”

For more information on doing business in France download our Going Global guide to France.

Enterprise Ireland companies with Global Ambition

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Attendees at Enterprise Ireland‘s International Markets Week heard from established Irish companies successfully selling globally and had the opportunity for meetings with Market Advisors, available to provide expertise on exporting to new markets.

If you are attending IMW please consider the following:

  • In which markets are you successful and how have you achieved this success?
  • What is your business/value proposition?
  • Why have you decided to target this new market?
  • What market validation have you carried out and what evidence do you have for a demand for your product / service?

Contact the International Markets team at International Markets Week for further information.

Mid-Life Dilemma: Time To Sell Out or Stock Up?

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An upswing in market momentum in 2015 pushed IPOs into the spotlight for strong-growth companies. Gordon Smith asks if they are right for every business.

Positive signs from the Irish Stock Exchange during 2015 helped to push IPOs (initial public offerings) back to prominence as a viable option for businesses. Hostelworld floated in Dublin and London raising €245 million while another Enterprise Ireland-supported company, Mainstay Medical, had a successful joint listing on the Paris Euronext and Dublin’s ESM, raising €18 million. Other prominent and well-received listings included Applegreen, Malin Corporation, Permanent TSB and Cairn Homes.

So, will we see a flurry of flotations among Irish companies? For many, the idea of going public remains shrouded in mystique.

In a bid to address this, the Irish Stock Exchange launched its ‘#IPOready’ initiative. A secondary aim of the #IPOready initiative was to nudge Irish businesses away from the traditional exit of a trade sale – a trend that has seen promising companies snapped up early– like the UCD spinout LogEntries, which was acquired by US outfit Rapid7 for $68 million.

“There have been some high-profile trade sales where the owners got an offer and went for it, but I’d love to see more people accessing capital markets to raise that funding,” says Orla O’Gorman, head of equity at the Irish Stock Exchange. “An IPO gives a business permanent strategic capital. It’s not like a loan that will need to be repaid, and it enables you to grow your business.”

Missed Opportunity

“If you’re on your first company and you get the chance to sell out for a personally significant sum, but the company did have the potential to scale and potentially IPO, it is a missed opportunity,” agrees Cronan McNamara, CEO of Crème Global and chair of the Irish Software Association (ISA).

“Some founders don’t go into business to build and sell, but when that offer comes along, they can’t refuse because they have no other way to de-risk their financial structure. They might be heavily taxed on their income, so there’s not a lot of incentive to keep plugging away. And perhaps it’s a more straightforward transaction compared to the reporting burden of going public.”

The ISA supports the IPOready programme, especially as Ireland’s software scene has few active participants who have been through the experience of life in a public company. However, an IPO may not be the only valid option for a growth-minded company. On a personal level, Mr McNamara says the greater availability of private investment is an attractive alternative. “You see Michael Dell taking Dell private because he felt they were undervalued on the market. As a business, you need a lot of structures in place to IPO, and there are a lot of very successful companies, like Mars, Bosch and Deloitte that are all private.”

Enterprise Ireland also supports the #IPOready programme. “We have a variety of funding options so that companies can grow and scale, such as the Seed and Venture Capital schemes, the Development Capital Fund and the Innovation Fund Ireland programme,” explains senior policy adviser Garrett Mooney.

“An IPO is one strategy within that mix, and we believe a certain cohort of Enterprise Ireland-supported companies should look at it.”

The Decision to Float

In weighing up that decision, John Casey, partner in PwC’s deals practice, says companies don’t necessarily need to be at a particular size or scale to consider an IPO. “The requirements for the Enterprise Securities Market in terms of the startup track record are pretty generous. It’s a question of whether investors would be willing to back the management team and back the story. Let’s say you’re a pre-revenue startup: an IPO will be a hard sell to raise money, so you tend to see that people will get funding from other sources until they build critical mass.”
Business owners have to see the value in bringing external equity into play, adds Michael Neary, a corporate finance partner with Grant Thornton. Even to embrace the concept, they’ve got to accept that sharing the pie and owning a smaller share in a bigger business is more worthwhile than owning a larger share in a smaller business.

The decision to go public may be also affected by factors beyond the business itself. A good adviser can help the business make a decision about whether or not to press ahead with a public listing if external conditions are less than favourable. “You can be just at the wrong stage, and there have been public examples of IPOs that have been pulled. Digicel were quite public about not getting the valuations they had hoped for, so they decided to hold it over. There’s no loss of face in pulling out of an IPO at the right stage, if you as a founder say ‘I think my business is worth more than that’,” he says.

Some businesses keep their options open by undergoing a vendor due diligence process that prepares them either for flotation or for a trade sale. Casey says an IPO process requires more detailed preparation in terms of due diligence. An IPO exit shouldn’t be equated with a trade sale for founders, he adds. “With an IPO, investors are backing the management team, which will likely include the founders. This may or may not be the case in a trade sale, depending on the buyer. An IPO is a method of introducing liquidity to the shareholder base and taking some money off the table. But don’t forget, the majority of funds raised in an IPO tends to be for the benefit of the company, to fund expansion, debt-reduction or both.”

 Irrespective of a company’s decision whether or where to float, the rigour of preparing the business will stand it in good stead no matter what funding route it ultimately chooses, says Mooney. “In looking at the IPO journey, you are also preparing yourself for other investment options that may arise. Governance isn’t unique to IPO. We wanted to make sure that even if entrepreneurs come out from the IPO ready programme and decide they don’t want to IPO, they will still have learned from it.”

Start-Up Story: Initiafy – Hitting the Big Time in The Big Apple

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Having established in the UK, launching in the US was the next logical step for software start-up Initiafy. Its two founders share the company’s story to date with John Stanley.

After a number of years working in construction, mainly overseas, Seán Fennell return to Ireland some six years ago to join a company specialising in Health & Safety and online learning. There he met his future business partner, Julie Currid.

“We both saw the same problem repeated, over and over again,” Fennell recalls. “Using conventional approaches, organisations struggled when they tried to induct a large numbers of contractors or temporary staff in a short space of time.”

So in April 2012, the two took the plunge, setting up Induction Manager (since rebranded as Initiafy) to provide an online “employee onboarding” tool. This enables organisations to pre-induct employees online before they arrive for work. “We saw the opportunity to improve day one for the frequently overlooked workforce – contractors, temp staff, seasonal workers – and even for visitors,” Currid says.

Platform development was outsourced to a software company with offices in Ireland and Poland, and, within eight weeks, they had the designs they needed to begin selling. Their initial focus was on chasing the potential reference sites they would need to gain credibility and to stimulate investor interest.

Target Market

“Traction is the new IP,” Fennell says. “Our target market is medium to large companies, so while we do have some Irish customers, we put a huge amount of effort into the UK from the outset.”

Within 18 months, they had recruited over 30 customers, including such high profile ones as Pfizer and British Gas. Adobe adopted it for all its inductions in the Middle East and Europe, while Sodexo, ranked fifth in Fortune magazine’s list of ‘Most Admired Companies’, used it to induct thousands of event contractors for Royal Ascot Week.

On the back of this success, the founders raised €400,000 in October 2013 from Enterprise Ireland, private investors and the Cork-based Boole Investment Syndicate. This seed funding allowed it to move into an office in Dublin’s Temple Bar, hire its first staff and begin to drive revenues

The founders began looking seriously at the US market last year. In November 2014, they raised €1 million from ACT Venture Capital, Delta Partners and the well-known Irish businessman Leslie Buckley. This stage-two funding paved the way for the recruitment of a vice president of global sales and the opening of a New York office.

“We got some initial stage orders to validate our US growth plans, and 50 per cent of our business in Q1 this year came from the US,” Fennell says. “Deal sizes are so much bigger there, and it’s English speaking. It’s a natural step for a software company such as ours to go from the UK to the US.”

Having started out in an Enterprise Ireland incubation space in the New York office, Initiafy found WeWork, a company that provides office space in 14 different locations in that city as well as in other cities around the world. “There’s a strong collaborative culture within WeWork; it’s more like a community, and there’s huge flexibility – you can choose the amount of space you need and switch between locations from month to month. It’s a little more expensive that Regus, for example, but the benefits are absolutely huge,” Currid enthuses.

Lessons Learnt

One lesson from the first fundraising was that they hired too slow, she adds, which meant the full impact of those hires was not reflected in the second round valuation of the company. “So we hired our first three sales people a month before the second round funding, which was needed to pay their salaries, actually arrived. It was very much a bootstrapping approach, but effective.”

“We wanted people who would hit the ground running in the US. We felt that experienced US sales people might be more assertive than we’re used to here in Ireland, but in the US environment that’s what would be expected. Given the nature of our product, we looked for people who are as methodical and structured as they are good communicators. The results to date vindicate our decision to hire US people to sell to US customers.”

In other respects, the company has been successful in replicating its original ethos State-side. “We’ve managed to bring across the culture we have in Ireland to the US. Wherever they are, everyone’s involved in our sales meetings which are held on Google Hangouts. We also run competitions and celebrations across the group. We do everything we can to eliminate geographical barriers between team members.”

Fennell says that “As we build and develop out the product, we do need to continue to improve it, and we are investing a lot in R&D – and doing a lot of listening to our customers. We have plans for exciting further developments but they are all within the existing platform. There’s no unique custom building involved.”