NDRC digital firms raised €152m in follow-on investment to end 2016

12 Jul 2017

From left: Minister for Communications, Climate Action and Environment Denis Naughten, TD, and Ben Hurley, CEO of NDRC. Image: Shane O’Neill

With an impressive figure raised in follow-on investment last year, NDRC’s Ben Hurley outlines the accelerator’s formula for successful investing.

“It’s all about focus,” said NDRC CEO Ben Hurley. “From the very start, you have to focus on what’s important.”

Hurley is explaining the accelerator’s modus operandi and you can’t help but feel that this is what he said to all of the 226 companies that have passed through the portals of the NDRC in Dublin.

‘You can always be entrepreneurial, but starting up should only be a phase’

Future Human

According to the latest annual results from the NDRC, companies backed by the accelerator have raised €152m in cumulative follow-on investment in 2016. That’s a 22pc increase on the previous year.

Former NDRC companies that have secured significant Series A investment this year include NewsWhip, Bizimply, Nuritas and SilverCloud.

NDRC, which was established by the State in 2007 as the National Digital Research Centre and is based at the Digital Hub in Dublin 8, has revealed that more than 800 people are now directly employed at companies that have emerged from its programmes.

Since its founding, NDRC has invested in 226 companies and, combined, these have an estimated market value of €427m. It also reported investment returns of €460,000 for 2016.

Last year, 32 digital start-ups were mentored and accelerated through NDRC, up 25pc on the previous year. These firms were selected from a competitive field of 442 applications. They straddle vital fields including fintech, healthtech and insurtech, to name a few.

Over its history, approximately 50pc of NDRC-backed ventures have secured next-stage financing.

Laying the foundations for a mature digital economy

NDRC digital firms raised €152m in follow-on investment in 2016

Ben Hurley, CEO, NDRC. Image: Shane O’Neill

Speaking with Siliconrepublic.com, Hurley said the mission today remains the same as it was in 2007: to “create a sustainable pipeline of Irish digital enterprises with growth potential.”.

He continued: “Are we still finding, supporting, investing in and building good solid companies? Yes. It comes across in the results.

“The hallmark is 226 companies in the last 10 years, and over half of them secure next-stage money. With that volume, there is not an institutional investor in Ireland that hasn’t invested in an NDRC company.

“Our guiding principle has been to support sustainable ventures with growth potential, and key to that is ensuring they are quality ventures when they first engage with angels and venture capitalists.”

Laser focus

If there is a secret sauce to what the NDRC does best, that is focus. “If you want to create real and internationally scalable companies, it means channeling all of your energy and focus in the right direction.

“Coming from experience, we know what is right and what is wrong and, as a result, there are less rabbit holes.

“On a practical level, these are all very real businesses and we are laser-focused on knowing your customer, engaging with the customer and converting promises into real offerings for customers.

“Focus is the key part. From the very beginning, you start with what is important, your core proposition. Nearly every single start-up that has come through NDRC has had to do some significant refinement to their offering. Not necessarily a pivot, but sometimes a pirouette to refine their offering.

“Essentially, it is down to understanding market dynamics and being serious about what it is you provide. Companies like SilverCloud have really strong business models underpinning what they offer.”

A decade of growth

Looking back on 10 years ago, Hurley said that at the time, the indigenous digital ecosystem was virtually non-existent and he believes there is still some way to go.

“It will take at least another 10 years to build a strong entrepreneurial base in the Irish economy.”

The NDRC appears to buck the trend when it comes to tech accelerators – the average age of entrepreneurs is 35 to 36 years.

Not only that, but the accelerator has been doubling down on diversity.

Research released earlier this year showed that between 2009 and 2015, the number of NDRC companies that had women in the founding team grew from 15pc to 29pc. This surged to 63pc in 2016, when the NDRC began a Female Founders programme in partnership with Enterprise Ireland and Bank of Ireland. In addition, 67pc of companies with women on the founding team went on to receive follow-on investment, compared with 51pc of firms with all-male founder teams.

As well as having greater age and gender diversity, the NDRC is going regional. Earlier this year, it went west, partnering with Portershed and GCID to bring the NDRC to Galway. Further regional expansions are planned for this year.

“It is a broader strategy,” Hurley explained. “It is about the west and not just Galway and we work closely with Enterprise Ireland as part of its regional focus. It is about building real businesses that will ultimately mature. It is not just a cool thing to do, it is a fundamentally important thing to do.

“Starting up should only be a phase. You can always be entrepreneurial, but starting up should only be a phase.”

The entrepreneurial future is bright

The next step for NDRC is also international as the accelerator is planning to work with more global venture capital firms in the coming years.

For Hurley, the ambition is to create a strong entrepreneurial – as well as a digitally and commercially minded – country.

“Not everyone is going to be an entrepreneur or should be. But they should understand entrepreneurialism. This transcends school, university and life.

“The reality is that every company is becoming a tech company in some way. In that spirit, understanding things like user experiences really matter,” Hurley concluded.

“We have some way to go to be an agile economy, but we are making progress.”

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