Irish start-ups must burn bright on long road to growth, says ‘Spark of Genius’ firm

28 Oct 2010

A firm that has been integral to major Irish technology mergers and acquisitions, including Orbiscom and Hostelworld, has warned that tech firms and their backers need to realise it’s a long road for Irish technology companies to achieve their value and there are no short cuts.

Maples and Calder, an international full-service firm operating in eight financial centres worldwide, entered the Irish market three years ago to focus on finance, investment funds, litigation and corporate, and now employs 120 people in Dublin out of a global headcount of 700.

The company is sponsoring the ‘Spark of Genius’ competition, which takes place this Friday night at the Dublin Web Summit, to identify innovative web and web-related technology companies, with the prize being legal and corporate advice valued at around €30,000. The event will be attended by web luminaries such as Niklas Zennström, co-founder of Skype; Jack Dorsey, co-founder of Twitter; and Michael Birch, co-founder of Bebo.

Patience payoff

Colm Rafferty, corporate partner at Maples and Calder, explains that Irish firms like Hostelworld – which is responsible for up to €400m in accommodation, has annual revenues of €38m and was acquired last year by venture capital firm Hellman & Friedman – is the result of a long road where patience has proved vital.

“Hostelworld got its first venture around eight years ago so that gives you perspective. Most venture capitalists around the world usually give firms a five-year horizon, but the reality for Irish companies is it takes a little longer to maximise value. Some burn brightly but it is a long road that requires organic growth as well as acquisitions to achieve scale.

“While you could think about building Irish technology companies to sell them, building a healthy local technology sector of scaled companies that have a global market, are strong local employers and contribute to the ecosystem is preferable indeed.

“Look at Nokia, which scaled out of Finland. It’s not impossible. But you have to remember many entrepreneurs have gone through the first-generation cycle and many reach the point where they’d like to pay off their mortgage.

“But now there’s an emerging trend where many of the first-generation technology entrepreneurs who built companies and sold them are doing it again and there’s an attitude: ‘I don’t need to sell this company, I can scale it further.’

“That’s a very exciting possibility from our perspective, growing companies which internationalise their business and could potentially ignite an export boom. The web is a key opportunity given Ireland’s location and the fact that English is our first language,” Rafferty says.

The quality and sophistication of companies entering the Spark of Genius competition was very high, he says. The shortlist of companies that will pitch at the Web Summit are: web and smartphone firm GeoDealio; mobile telecoms software firm Vennetics; property and accommodation technology firm TripInquiry; retail analytics firm Profitero; and contact analysis player DataHug.

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