Tech hub’s rocket man helps high-risk star­tups fly high

Irish Independent - Business Week - - IN PERSON - El­lie Don­nelly

PEO­PLE come into in­cu­ba­tors and very often it’s just for space, they are think­ing ‘that’s what I need, a nice space would be good’. But ac­tu­ally, by the time they exit what you find is that the real value they’ve got­ten is the net­work­ing, the con­nec­tions, the monies they were able to at­tract as a re­sult of mak­ing con­nec­tions and talk­ing to peo­ple, and the ad­vice that they got from one an­other, the pure learn­ing that they have.”

Tom Flana­gan is di­rec­tor of en­ter­prise and com­mer­cial­i­sa­tion at No­vaUCD, an in­cu­ba­tion cen­tre for new ven­tures and en­trepreneurs that has sup­ported around 350 com­pa­nies that in turn have gone on to cre­ate more than 2000 high-tech jobs since 2003.

Flana­gan has been in the role just over a year, and his own back­ground is in en­gi­neer­ing. Af­ter grad­u­at­ing from UCD he worked in the UK, then moved to Canada where he worked as an en­gi­neer and then found him­self mov­ing – up the cor­po­rate ranks and out into the wider world.

From Canada, he moved to San Fran­cisco with Nor­tel Telecom­mu­ni­ca­tions. “That was a Cana­dian com­pany that spread into the US at the time of tele­com dereg­u­la­tion and I be­came vice pres­i­dent for sales and mar­ket­ing for Canada and a cen­tral part of the US for pro­fes­sional ser­vices. It was a global job so I was do­ing work all across Asia and Europe as well,” Flana­gan says.

“And then we had the dot­com crash and at that stage there was an op­por­tu­nity to come back to Ire­land. My daugh­ter was four at the time so it was per­fect time for her to meet the grand­par­ents and for the grand­par­ents to meet her, and it all worked out nicely – she’s 20 now!”

Back in Ire­land Flana­gan worked in con­sult­ing roles, “sup­port­ing peo­ple, help­ing peo­ple de­velop busi­nesses”.

“I found that was re­ally in­ter­est­ing, then I went into Dublin In­sti­tute of Tech­nol­ogy as the in­dus­try li­ai­son per­son and set up the first tech trans­fer of­fice in DIT, ex­pand­ing it out into Tal­laght and Blan­chard­stown and built up the ‘ Hot­house’ in­cu­ba­tion fa­cil­i­ties at the col­lege.

“Then this op­por­tu­nity [with UCD] came up and this is a great op­por­tu­nity in terms of com­ing into an es­tab­lished in­cu­ba­tor and tech trans­fer hub to see what we can do to grow this – I’m a year in now.”

The in­cu­ba­tor in UCD works with two types of com­pa­nies, what they call ‘spinins’ and uni­ver­sity-grown com­pa­nies.

Nat­u­rally he is a big ad­vo­cate for the ben­e­fits of startup hubs.

“I have seen this be­fore when I set up the first tech trans­fer of­fice in DIT and in other col­leges as well, re­searchers tend to do great re­search and they pub­lish pa­pers and they go to in­ter­est­ing con­fer­ences, but noth­ing comes of the re­search in terms of mak­ing new prod­ucts and ser­vices,” he says.

“What the trans­fer of­fices do is look at the op­por­tu­ni­ties, look at the in­ven­tions, and see what ap­pli­ca­tions they might have and de­velop what those ap­pli­ca­tions into real projects, and ei­ther you can li­cense it to a com­pany or there is a need to put to­gether a team around the tech­nol­ogy and de­velop a busi­ness, and that’s new ven­tures, so that’s what we would do here,” Flana­gan adds.

“There are [pro­fes­sors that set up their own busi­ness] but I con­sider them to be the ex­cep­tion, peo­ple that can tran­si­tion from an aca­demic en­vi­ron­ment to busi­ness.

“More often what we are look­ing for is the aca­demic who will have a great tech­nol­ogy or a great busi­ness po­ten­tial project, then it is im­por­tant for us to kind of marry them up with some­body that has the busi­ness ex­pe­ri­ence, that has the com­mer­cial ex­pe­ri­ence.

“We are all the time on the look­out for men­tors or peo­ple who want to come in and be a CEO, and we would show them the dif­fer­ent op­por­tu­ni­ties that might suit their area.

“They would have to meet with the re­searchers and the rest of the team and would have to like one an­other, it works out quite a lot, there are times when it doesn’t work. The re­searchers recog­nise the skill set that is needed and that there is a lot of heavy lift­ing in be­ing a CEO to go get in­vest­ment, to go con­vince cus­tomers that this is the right prod­uct for them.”

On av­er­age the hub would de­velop four or five new ven­tures a year from dif­fer­ent re­search.

Suc­cess sto­ries from No­vaUCD in­clude Chang­ingWorlds ac­quired by Am­docs in 2008 for over $60m, Bian­caMed ac­quired by ResMed in 2011, and Lo­gen­tries ac­quired by Rapid7 in 2015 for $68m.

In ad­di­tion to the com­pa­nies it de­vel­ops, it has around 80-100 in­ven­tions that it sees ev­ery year, from which it files be­tween 20-30 patents a year. On top of that it is do­ing 20-30 li­cences a year to dif­fer­ent com­pa­nies in­clud­ing the likes of Glan­bia.

As well as the uni­ver­sity founded com­pa­nies, No­vaUCD also has a lot of ‘spinins’. “Com­pa­nies where the idea might have come from an­other uni­ver­sity, or they might have come out of an in­dus­try with a busi­ness propo­si­tion and then they would come in here and we would sup­port them de­velop that propo­si­tion and take it through to rais­ing fi­nance.”

With uni­ver­sity-grown com­pa­nies, UCD will ac­quire eq­uity in the startup.

“We would typ­i­cally have 15pc eq­uity in the com­pany on for­ma­tion, which gets di­luted over time as more in­vest­ments come in.

“For a spin-in com­pany we don’t take eq­uity, we just sup­port them. They pay their way in terms of pay­ing for the fa­cil­i­ties here and sup­port ser­vices, and we will do ev­ery­thing we can to help them de­velop. The fees are based on the space that they want to take.”

Giv­ing up 15pc of eq­uity in a busi­ness is no small de­ci­sion for a startup, and the dis­cus­sion turns to the ben­e­fits for com­pa­nies in be­ing part of an in­cu­ba­tor.

“It makes a lot of sense to be in an ecosys­tem like Nova here or any of the in­no­va­tion units, where you are sur­rounded by peo­ple of a like mind.

“They learn more from one an­other than they do from any­body else and they have con­tacts and con­nec­tions, so get­ting into the ecosys­tem of star­tups is re­ally im­por­tant. It will help you shape up your idea, give you ac­cess to tal­ent, give you ac­cess to fi­nance and plenty of ad­vice to set you on the right di­rec­tion.”

Flana­gan adds: “If you set up a com­pany to­day and you have a good busi­ness propo­si­tion and you could ben­e­fit from all the ser­vices that we pro­vide here then we would in­ter­view you to see what the match-up might be; is there re­search go­ing on that might help your com­pany have a com­pet­i­tive ad­van­tage? Is there fi­nance? Could we put you in front of the right kind of in­vestors? Can we add value to your busi­ness plan?”

In terms of the type of busi­nesses that No­vaUCD is look­ing for, ges­tur­ing with his hand, Flana­gan says “rock­ets”.

“We are not look­ing for ones that trun­dle along. It is about high-risk, high-re­ward, it is about look­ing at com­pa­nies that would meet the kind of En­ter­prise Ire­land High Po­ten­tial Start-Up, the €1m turnover in three years.

“And we would have a mix of com­pa­nies, it wouldn’t mat­ter what the tech­nol­ogy was be­cause UCD has ev­ery­thing from data an­a­lyt­ics and com­puter science all the way through to med­i­cal.”

Fund­ing is ob­vi­ously a big con­cern for the busi­nesses.

Ac­cord­ing to Flana­gan, most of the com­pa­nies start out rais­ing fi­nance in Ire­land through an­gel in­vest­ment and En­ter­prise Ire­land fund­ing and then ven­ture in­vest­ments.

“Some of them go to the UK and raise money there as well, and some of them go to the US and raise money there through ven­ture funds there. As then as they grow they might get ad­di­tional in­vest­ments from cor­po­rates also.”

With some com­pa­nies in the hub look­ing to the UK to ac­quire fund­ing, not to men­tion its prox­im­ity as a mar­ket for busi­nesses, one imag­ines that Brexit is a con­cern for No­vaUCD.

“Ev­ery­body is very aware of it and ev­ery­body has been think­ing about it.

“Your sup­pli­ers may not be in the UK and they may not ap­pear to be im­pacted by Brexit, but maybe their sup­pli­ers are, so there can be a rip­ple ef­fect.

“Maybe the cus­tomers you sell to aren’t im­me­di­ately im­pacted by Brexit, but their cus­tomers could be and there­fore they will be.

“So, for com­pa­nies it is about look­ing in both di­rec­tions, look­ing at the im­pacts on sup­ply chains that they are in­volved in and the op­por­tu­ni­ties that are there, the risks that are there, par­tic­u­larly for food and agri-tech com­pa­nies where the ini­tial mar­ket will be the UK.”

How­ever, he says that a lot of the high­tech com­pa­nies are more fo­cused on de­vel­op­ing their prod­uct here and sell­ing it in the US.

“If they are do­ing that then Brexit has less im­pact on them.”

Be­fore we con­clude, the ques­tion of ad­vice to en­trepreneurs comes up. For Flana­gan it’s sim­ple: “Don’t keep your idea to your­self.”

“Talk to peo­ple about it be­cause you will get lots of feed­back and you need to get lots of feed­back to shape up the idea.”

“There can be a ten­dency to hold off on telling peo­ple about it be­cause some­body is go­ing to steal your idea, but peo­ple don’t usu­ally steal ideas be­cause it is only the per­son who comes up with the idea that has that en­ergy to put be­hind it and has that in­sights as to how it can be de­vel­oped.”

No­vaUCD’s Tom Flana­gan says the best ad­vice for would-be en­trepreneurs is not to keep your idea to your­self – talk about it and get feed­back

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