A Phorest clearing: €20m is a windfall for angel investors

2 Aug 2018

From left: John Phelan, national director, HBAN; Pat Garvey, chair, Phorest; Ronan Perceval, co-founder and CEO, Phorest. Image: Philip Leonard

Buyout bonus is 10 times the original investment for smart investors who took a punt on Phorest.

A number of the original angel investors in salon software developer Phorest were bought out for a sum averaging 10 times their initial investment.

That’s according to the Halo Business Angel Network (HBAN), which said it was the first ever deal involving two HBAN syndicates, Bloom Equity and Boole Investments.

‘Investors often tell you the cliché that they bring more than money, but in this case it was true’

Siliconrepublic.com reported in June how SaaS player Phorest had raised €20m from US investment firm Susquehanna Growth Equity (SGE) in a move that has spurred talk of a potential IPO by the company.

The company has grown to become one of the biggest cloud-based scheduling platforms for beauty salons in Europe, with large shares of the UK and Irish salon markets. It is deployed in 4,500 salons in 10 countries worldwide.

Dublin-based Phorest was co-founded by Ronan Perceval, Dylan Collins and Sean Blanchfield while students at Trinity College Dublin in 2003. Perceval has continued to run Phorest ever since, while Collins and Blanchfield went on to create Demonware, a multiplayer games platform bought by Activision for $17m.

Smart capital at work

The €20m investment by SGE will buy out existing investors, including Enterprise Equity and angel investors.

According to HBAN, the SGE investment facilitated a buyout of and substantial return for eight of the initial HBAN investors.

Three investors were fully bought out while the remaining five opted for a partial buyout, meaning that they received a return on some of their original investment but still hold shares in Phorest.

“The Phorest deal was the first ever co-investment between two HBAN syndicates and has yielded one of the largest returns for angels in HBAN history,” explained John Phelan, national director of HBAN.

“It is a real indication that the angel investing market in Ireland is maturing. We are seeing deals where our members are now getting substantial returns on their investments, particularly in the information and communications technology (ICT), medtech, life sciences and healthcare sectors.

“These industries continue to be attractive to investors; in 2017, of the €12.8m invested by HBAN angels, €10m was invested into companies in these sectors,” Phelan said.

One thing is clear: angel investment is about more than just money.

Pat Garvey, chair of Phorest, said: “It is fantastic to have the support of the HBAN investors, who are all successful entrepreneurs in their own right and brought not just capital but their experience, expertise and business development nous to Phorest. This is why the company is able to grow and serves as a great example of ‘smart capital’ at work.”

Ronan Perceval, co-founder and CEO of Phorest, added: “Investors often tell you the cliché that they bring more than money, but in this case it was true. Many of the angels brought unrivalled expertise and invaluable advice in relation to structuring and scaling the business from €1m revenue to €13m.

“Pat Garvey was our main point of contact with the HBAN investors, and his guidance has been so vital that he is now our chairman.”

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