Cloud firm InishTech raises €1.8m in venture capital

17 Sep 2010

An Irish technology company that acquired and successfully built upon Microsoft’s intellectual property in return for a minority stake has successfully raised €1.8m in private equity.

Kernel Capital today confirmed that the Bank of Ireland Seed and Early Stage Equity Fund has led a €1.8m investment in software protection and licensing services specialist InishTech. 

InishTech’s leading-edge service enables software companies globally to protect their code and maximise their product sales through the innovative use of licensing.

The company is based on technology provided by Microsoft under the Microsoft IP Ventures program in collaboration with Enterprise Ireland. 

This program enabled InishTech to acquire and successfully build upon Microsoft’s IP in return for a providing Microsoft with a significant minority stake in InishTech.

The syndicated investment consists of a €650,000 investment by the Bank of Ireland Seed Fund, a €400k investment by Enterprise Ireland, a €275,000 investment by the Halo Business Angel Network (HBAN) with the remainder of the funds provided by the company founders.

Established in 2009 by entrepreneurs Aidan Gallagher, John O’ Sullivan and David Smyth, Dublin-based InishTech has continued to enhance the original Microsoft technology, successfully launching a new release of the service and has built an impressive customer base throughout Europe, North America and the Far East.

“This capital injection from the Bank of Ireland Seed Fund underpins Bank of Ireland’s commitment to support dynamic, indigenous enterprise which will generate and sustain employment,” said Donal Duffy, head of Enterprise Ireland Relations, Bank of Ireland.

Commenting on the announcement, Padraic White, the Chairman of the Bank of Ireland Seed Fund, said: “The InishTech, Microsoft IP Ventures model is an excellent example of how Ireland can benefit through participation in international technology transfer. Irish companies have demonstrated their success in developing global markets for new, innovative software products.

“Combining these skills with state-of-the-art research and technology can provide a significant headstart for new Irish technology start-ups,” White said.

The cloud imperative

Software companies globally are facing challenges in terms of changing sales and revenue models. New platforms, such as cloud computing need a more dynamic approach to software licensing and also raise issues with IP protection.

The move towards software as a service (SaaS) and application marketplaces is changing the dynamics of how software companies bring their products to market. They need to be able to support “try and buy” models, multiple product feature configurations and options to provide customers with flexible commercial terms. This requires a state-of-the-art approach to product licensing.

“We are delighted to have Kernel Capital as our new investment partner,” the CEO of InishTech, Aidan Gallagher, said.

“The investment will allow us to further invest in innovative product development, sales, marketing and employment. The value of our holistic approach to software protection, license management and compliance is becoming increasingly relevant in today’s fast-changing marketplace,” Gallagher said.

He added that innovation in supporting new sales models through advanced licensing is key to its clients’ success in seizing and exploiting new market opportunities.

Paul Rellis, managing director of Microsoft Ireland, commented: “We are delighted with the continued growth and success of InishTech and to welcome investors of the calibre of Kernel Capital on board.

“This new investment, together with the growing opportunities presented in the marketplace through the shift to cloud computing, makes this a very exciting time for InishTech and positions it well to take advantage of the changing landscape in the market,” Rellis said.

InishTech has recently been appointed as Network Partners for the Microsoft BizSpark Program which is designed to support software start-ups worldwide.

“HBAN is delighted that the Technology Angel Investment Group, launched in June this year, has made its inaugural investment. This validates the syndication model of angel investment introduced by HBAN and, as we see in the completion of this deal, is a suitable vehicle for co-investment with the VC seed funds,” commented Diane Roberts, national director, HBAN.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years