GETTING VENTURE capital funding may be proving more difficult for start-ups in the downturn, but the quality of new technology firms coming out of Ireland in recent times should go some way to persuading funds to part with their cash.
One of the more interesting stories to come out of Ireland in the past few years is Intune Networks. The company developed a technology that helps network carriers cope with the explosion in data traffic and combat capacity issues.
It has attracted international attention and, more importantly, funding from venture capital firms. Amadeus Capital Partners, invested in Intune in 2008. It was recently announced that its co-founder, Dr Hermann Hauser, would join the board with immediate effect.
The role is one of a non-executive director, but it means that Hauser is on hand to help with networking, raising finance if necessary and helping to grow the firm. The company also gets the benefit of his experience – he has made in the region of 100 investments over the years, and his list of involvements is impressive.
Aside from co-founding Amadeus Capital Partners, a venture capital firm that invests in European high-technology, in 1997, Hauser was involved in setting up Acorn Computers with Chris Curry in 1978, from which microprocessor firm Arm Holdings spun out in 1990. He also started the Active Book Company, and was involved in the founding of NetChannel and Cambridge Network Limited. Among his directorships, he lists PlasticLogic and Cambridge Silicon Radio (CSR).
These days, however, he is excited by what Intune has to offer.
“It is one of these spectacular technical breakthroughs that you don’t get very often,” he says. “It’s the holy grail in the optical industry because it combines a very efficient way of transmitting data with switching it at the same time, so you’re basically getting rid of an entire layer of hardware and make the whole thing a lot more efficient and cheaper. The fundamental breakthrough on the technical side allows the company to address a very large market in metropolitan area networks, and that combination is very exciting.”
Hauser’s involvement in the firm was carefully considered. Amadeus’s partners are permitted to hold six directorships; joining the board of Intune brought his total to five.
Next on the agenda is breaking into some of the larger global telecoms markets, which will provide the revenue needed
“The company clearly needs to connect to some of the big markets worldwide, because this is very much a global market,” Hauser says. “It is very good to see the first installation in Ireland, but there are one or two very large American carriers that are looking at Intune. If we get any of those, this would be a fantastic breakthrough for an Irish company to make, and of course will lead to revenues that would make the company a very valuable asset.”
Beyond his current project with Intune, Hauser is always on the lookout for potential start-ups to invest in. The economy does provide a challenge to venture capital funds, however, with the availability of funds being affected by the more risk-averse environment. “It has been very difficult to access funds, and I think it will remain a tight funding situation for a few years to come,” Hauser says. “Having said that, the quality of the technology companies I see in Britain and also coming out of Ireland is better than I’ve ever seen.”
Hauser says there is a correlation between downturns and the quality of start-ups.
“During a downturn, some very good people are being made redundant,” he says. “Good people often just start a new company, so the quality of the proposals we get at the moment is really first class.”
There is always the prospect, however, that companies will not make it. About 30 per cent of companies don’t, Hauser says.
Amadeus has made a number of investments in other Irish firms in the past too, including Valista and Aepona, which have now merged.“We’re very happy with that investment as well, because it’s growing very nicely, and I think it could be one of the Irish success stories,” he says.
Hauser believes that Ireland has the potential to build up a knowledge economy.
“If you look at what needs to be done in a country in order to have a chance to build up a knowledge economy, number one is a world- class educational system, and there is no doubt that Ireland has that,” he says. “But you also have to have an entrepreneurial spirit and people willing to start companies, to engage in new technologies. And you have to have the presence of some large companies to relate with, to relate to and sell to, and sometimes to get management expertise. Ireland has all these ingredients.”
More could be done, he says, but the Government is trying. Some potential areas to look at, though, would be a favourable tax environment both for business angels and venture-capital companies, which would encourage investment,
“In the present environment in particular, we need support for venture-capital companies because there is so little venture capital available as the world investment community had become so risk-averse,” he says.
Support for entrepreneurship through universities is also vital, although it can be a slow process. “It takes a long time, because it also needs a cultural change at universities, that they embrace entrepreneurship as well as producing high-quality students,” Hauser says.