Entrepreneurs
EY’s Entrepreneur of the Year finalists include eight businesses in the ‘Emerging’ category. They’re great at raising funds but only one makes a decent profit, writes Darren O’Loughlin
There are eight contenders in the emerging category for EY’s annual entrepreneur awards. Belfast’s Brendan McDowell makes the most money with BPerfect Cosmetics
EY’s Entrepreneur of the Year competition offers up an annual melange of ventures spread across Emerging, Industry and International categories. For the eight emerging contenders, investors have already backed their enterprise with c.€100m, though one company accounts for over half of that. However, the individual who conforms to most people’s understanding of a successful entrepreneur started with nothing and is now making millions a year.
Step forward Brendan McDowell, founder and sole owner of BPerfect Cosmetics in Belfast. Starting in 2012, McDowell (38) bootstrapped the business and began by reselling eyebrow kits. He then sourced cosmetics from manufacturers and expanded the range of products. The BPerfect brand is now sold online and in 1,800 stockists around Ireland, the UK and internationally.
Growth has been phenomenal for BPerfect in recent years. In the year to March 2019, the company booked a net profit of £1.6m, after posting profits of £618,000 in FY18 and £29,000 in FY17. Dragons’ Den investors Alison Cowzer and Barry O’Sullivan offered to pay €80,000 to buy into the venture in 2017. On reflection, McDowell turned them down. “They handed me an 80-page contract with language I didn't understand. It just felt like I would be losing creative control,” the entrepreneur told the Belfast
Telegraph last year. McDowell chimes with the contemporary zeitgeist in many ways. He’s gay with a long-time partner and is a big hit with social media influencers, though he insists that he doesn’t pay them.
The son of a digger driver, McDowell failed his GCSEs, dropped out of college, and spent his twenties as a salesman. Inspired by Rhonda Byrne’s self-help book The Secret, he came across an eyebrow kit at a London trade show and started reselling them at market stalls. From there it was onto the world of subcontract manufacturing, not just lipgloss and eye-liners but tanning products too.
EY has a strong diversity and inclusion policy, so some people in the firm may be hoping that the EoY judges take a shine to the northern dynamo. However another entrant captures the zeitgeist too, insofar as Professor Luke O’Neill has emerged from academic obscurity as a champion of Covid-19 lockdown.
O’Neill, chair of Biochemistry in Trinity College Dublin, is a founding director — with Matt Cooper — of Inflazome, which is developing treatments for Alzheimer’s and
Parkinson’s diseases, as well as a range of other inflammatory conditions. Cooper is the nominee for the award, though Prof. O’Neill may not be far from the spotlight when the awards are decided in November.
Progressing research from the drawing board to medical treatments is a long and expensive process, and the Inflazome principals are second to none in rounding up investment. The startup’s funding journey has been €7m in 2016, €7m in 2017, €14m in 2018 and €30m in 2019. Among the investors last year was the Michael J Fox Foundation, although it’s only a coincidence that in some of his previous media appearances, Prof. O’Neill sometimes looked like he stepped out of Back to the Future.
Clinical trials for Inflazome’s medications have been going well, the company says, although it will be several years before commercialisation. In 2018, the company reported no turnover and R&D expenses of €12m, and year-end accumulated losses stood at €21m. Directors’ emoluments in 2018 were €388,000, largely shared by Cooper and O’Neill.
Another TCD medical spinout on the EY shortlist is ProVerum, which is developing a device to treat prostate gland enlargement t can cause difficulty with urination among older men. Founded in 2016 by Conor Harkin (44) and Ríona Ní Ghriallais (34), ProVerum has attracted significant funding for product development.
In 2017, the EY client raised c.€3.5m, followed by €1m more in 2019 from angel investors, and another €1m in 2020, which included angel investors and existing backers. In March 2020, the European Innovation Council announced that ProVerum was one of two Irish companies that will share €4m
funding. That cash will be appreciated: ProVerum’s startup losses amounted to €3.4m at the end of 2018.
Cork biotech company AnaBio Technologies sneaks into the awards’ emerging category despite being founded in 2011. The venture was established by Sinéad Doherty (37) — who leveraged her academic research and subsequent dairy-sector career experience — and Jens Bleiel. The pair subsequently married and Sinead Bleiel, who leads the business, is the award nominee.
AnaBio uses proteins derived from natural sources to form ‘capsules’ that can protect delicate ingredients such as probiotics or medication against damage. The company’s patented encapsulation products are now used by a variety of human nutrition and animal-feed companies around the world.
Business is good for AnaBio. In 2018, parent company Dohble Ventures grew annual sales by 80% to €1.9m and the business booked a net profit of €158,000. Circa €2.6m has been invested in AnaBio since it was founded, including over €500,000 by taxpayers through Enterprise Ireland. Angel investor network Irrus Investments has invested c.€900,000 in the business while the founder and her husband have backed the enterprise with €650,000 of their own cash.
In 2017, Bleiel moved AnaBio into a facility in Carrigtwohill and opened a new production unit on the site the following year. Debt finance of
€800,000 was sourced in 2019 to progress development of the facility. With European and US approval secured for eight of its 13 patents, AnaBio looks well placed for further growth.
Another woman-led healthcare company up for consideration by EoY judges is Pharmapod, which has been emerging since 2012. Founder Leonora O’Brien (45) developed a software platform to record and manage patient safety incidents, such as medication errors. The product is aimed at pharmacies, care homes, hospitals and other healthcare locations, and has clients in Canada, Ireland and the UK.
In 2018 O’Brien announced that she had raised c.€2m in debt funding from the Canadian Pharmacists Association. The company’s allotment filings from inception through to 2019 add up to €1.9m. Pharmapod says that more than half of community pharmacies in Canada are using its software. The most recent account filings are for 2017, when the business booked a loss of €760,000, bringing accumulated losses to €2.6m.
Agtech business MagGrow is another of the more mature emerging contenders, having been founded in 2013 by brothers Gary Wickham (54) and Derek Wickham (60), and business consultant David Moore (46). The venture is a NovaUCD spinout and the technology is interesting. Using magnetism on pesticide fluids, the MagGrow device helps farmers spray their crops more accurately and with less waste.
Gary Wickham came across the magnetism technology for pesticide sprays in 2013 and convinced his brother and David Moore to join him in commercialising it. MagGrow was funded initially with €240,000 from the founders and private investors. Wert Capital (€200,000) and Enterprise Ireland (€250,000) invested in 2015, as did private investors (c.€740,000).
MagGrow sourced €2.3m equity funding from private investors in 2017, while in 2018 it secured €4m, including €2.5m from Dutch investor Atrium Group via a loan note conversion to equity. Other Dutch investors invested €750,000 in 2019.
Selling new ideas to arable farmers takes time. At the end of 2017, operating company Agricultural Magnetics’ financial statements didn’t give cause for optimism. The loss for the year was €2.1m, liabilities totalled €5.1m and negative net worth was €2.4m. Fresh equity in 2018 steadied the balance sheet, even if the company booked a trading loss of €2.2m, bringing accumulated losses to €6.3m.
MagGrow won’t be winning the emerging category for its trading performance though its resilience and perseverance are impressive. Those qualities are evident too in Devan Hughes (31), who founded Buymie in 2015. The business idea is fairly straightforward — an app-based, sameday delivery service for supermarkets.
You wouldn’t think there’s much profit in this high-maintenance service model but Hughes proved the doubters wrong recently when announcing a huge €5.8m funding round led by new investor Wheatsheaf Group, the food and agriculture investment arm of the Grosvenor Estate in England.
Hughes originally operated Buymie as an independent service, listing groceries on the app from various supermarkets that users could virtually shop from. Hughes then hired people to go to the shops, buy the groceries and deliver them to homes.
The entrepreneur raised €525,000 venture capital in 2018, and followed up with another €1.7m last year from angel investors, VC firms and existing backers, including Enterprise Ireland. Hughes anchored Buymie in 2019 through a partnership with Lidl to provide delivery services for the multiple in Dublin. In May 2020, the business expanded into the UK by partnering with The Co-Op in the Bristol area.
Prior to the Grosvenor Estate investment, Hughes sourced €2.2m earlier this year from a number of VCs. What has them all excited now is the Covid-19 boost for remote shopping. The venture booked a loss of c.€650,000 in 2018, and investors must be confident that scaling will reduce losses.
Cork software company Workvivo is the eighth contender for the emerging EoY award. It’s a pure digital play, with the founders billing the company’s software platform as the ‘Facebook for work’. Founded in 2017 by former Core HR executives John Goulding (48) and Joe Lennon (35), Workvivo’s employee communication platform enables users to post content to activity feeds, like and share material, link posts to company goals and values, create community spaces and feature ‘shout-outs’ for employee achievements. Customers pay a fee per employee per month.
Workvivo’s seed capital came from Enterprise Ireland, Zoom founder Eric Yuan, and John and Aileen Goulding, who are in for €360,000. The heavyweights came on board in February 2020, when the company raised €14.5m, in a funding round led by Tiger Global Management (€11m) and Irish VC Frontline Ventures (€3m).
Tiger Global’s past investments include LinkedIn, Facebook, Spotify and Stripe, and its endorsement will give the founders confidence and may impress the EY judges too. If the Cork lads live up to the hype, perhaps they can claim their EY award some other year. For 2020, it just has to be Brendan McDowell.