Innovating in a recession – are we on the right path?

12 Mar 2009

The recession has meant many things for the Irish technology industry. While we watched large firms such as Intel and Dell shedding staff, we are now also looking at a surplus of highly skilled individuals, and the right mix of innovation, entrepreneurship and co-operation from larger corporates could sow the seeds of change.

At the recent Microsoft BizSpark event (co-organised by the Digital Media Forum) in Dublin, it was clear by the large turnout that there is a big appetite for entrepreneurial advancement in the tech sector, and many early stage start-ups are looking for advice, funding and networking.

This is the first of many BizSpark events Microsoft hopes to hold in Ireland, and Ronan Geraghty, a member of Microsoft Ireland’s Developer and Platform Group, says that aside from the actual software support from Microsoft, there is also the chance to avail of legal, business and tech advice.

“Not all start-ups will be using Microsoft software and they don’t need to. BizSpark is about providing the support that will help turn early stage start-ups into viable businesses.”

Since November 2008, over 100 firms have signed up as BizSpark members.

A thriving tech economy is good for everyone, says Geraghty: “In order to create a sustainable software eco-system in Ireland, we need a pipeline of companies coming along. Where is the next Iona Technologies or the next Baltimore? They all started somewhere. We’d like to look down the line and say some of them started at BizSpark.”

The BizSpark panel discussion on building an innovation economy was an important litmus test for how such companies can grow and survive in an environment where bank loans, venture-capital funding and government funding are all difficult to come by.

The panel discussion, featuring an impressive line-up of technology industry veterans including Havok co-founder Steve Collins, Iona Technologies co-founder Chris Horn, and venture capitalist Brian Caulfield, looked at how we can kick-start innovation, while addressing valid fears, challenges and roadblocks that we need to get rid of if we are to succeed in the future economy.

One of the biggest worries for early stage start-ups is securing bank loans. It may have been difficult in the past, but now it is becoming even more of a challenge.

As a start-up and audience member put it to the panel, getting matching funding can be an issue. Enterprise Ireland (EI) funding, Havok’s Collins said, can be a mechanism to drive financing from banks.

Collins also pointed out that the money Havok saved itself (€15,000) almost equalled the funding it received from the Government.

On the question of the Government driving small start-ups, some panel members felt that organisations such as EI were there to provide funding, but the main issue was feeding the market by consuming these products and services.

“There is a lack of interest from the Government,” said Horn of Iona Technologies.

“It needs to stop giving grants and start giving purchase orders. We need to start acquiring our own native technology. If you look to governments in Israel or Singapore, or other small economies, they are buying and using software from indigenous firms.”

Caulfield said while there is a great talent pool here in Ireland, we’re still lacking in higher-level commercial skillsets, such as product marketing.

“We need to work to develop these skills or find ways of importing this talent.”

Another interesting perspective on the greatest hurdles we must pass in order to build a strong innovation economy came from Paul Rellis, general manager of Microsoft Ireland.

“Our biggest challenge is a confidence issue. It is an emotional challenge more than anything because we have a lot of super-skilled people here.”

Our biggest challenge then, retorted an audience member, is that we are not German.

Not according to panel member and founder of technology firm PutPlace, Joe Drumgoole. He felt that while the funding is there, it is not being put to best use.

“There are incubator programmes out there, and while one end of the start-up spectrum is well-serviced, there is nothing for those who have progressed to the next level of development.

“We need to look at how we apply capital. It must be done in a timely fashion,” he stressed.

There also needs to be some measurement of the number of tech start-ups in Ireland, how long they have been in operation, how many died

and why this was so: “We need to track what is happening,” Drumgoole said.

While there are many challenges facing the start-up sector in Ireland, there are many proposed solutions, and discussions taking place at events such as BizSpark are clearly the first step in moving mountains.

By Marie Boran

Pictured: Dr Chris Horn, co-founder of Iona Technologies, in attendance at the Microsoft/Digital Media Forum BizSpark event