What start-up founders need to know before applying for funding

22 Aug 2023

Image: © Tierney/Stock.adobe.com

Anna-Marie Turley tells SiliconRepublic.com about the qualities that make a good founder and how they can bag the Enterprise Ireland Pre-Seed Start Fund.

Tech founders have been compared to scientists carrying out experiments in business. But the last few years have not been easy for entrepreneurial pioneers: first there was the pandemic, followed by rising costs and a lull in the funding scene.

Now, as the clouds continue to clear on the funding scene, revealing a sky full of opportunities, it’s a good time to hear from those that fund start-ups about what makes a good business. And paramount in this list is the ability to recognise a valid problem to solve.

“When you make decisions about your start-up, ask yourself if you are listening to the customer or yourself,” says Anna-Marie Turley of Enterprise Ireland, the state agency that was ranked as Europe’s most active domestic venture capital investor by PitchBook.

“Be able to explain clearly the problem that you are solving – not just the tech that you are using to solve the problem.”

Finding the right market and team

Turley manages entrepreneurship and high-potential start-ups at Enterprise Ireland, a department that focuses on the many Irish companies that have the potential to create 10 jobs and €1m in sales within three years of establishment.

According to her, one of the biggest mistakes founders make when starting companies is creating a product “they think people will want”.

“A business’s offering must solve a market need. An idea is great, but an idea needs to be backed up with robust market research. Learn to pivot to meet demand,” she tells SiliconRepublic.com.

Once the right product has been identified, start-ups need to ensure there is a product-market fit.

“It is considered a positive to have trial customers or beta customers, but you really need to have a customer who has demonstrated their willingness to pay for the service or product on offer,” she explains. “Only then will you know that you are meeting and solving a market need.”

And while working alone has its perks, for Turley, a business has higher chances of being successful if it is a team effort. “Find and integrate at least one person into your project — if possible, from a different discipline,” she advises.

“Start-ups are increasingly recognising the importance of diversity and inclusion in their teams. A diverse team brings a variety of perspectives and experiences to the table, which can lead to better decision-making and innovation.”

So being a team player is a skill to work on. But what are some other qualities of a good founder? For Turley, it’s all about passion, experience and resilience.

“If you don’t have that belief in yourself and your idea, then it will prove difficult to convince others to believe in you,” she says, adding that a good founder is also typically an expert in their field with “extensive” experience and knowledge in the sector.

“They also recognise when they need help and are aware of their own inabilities and knowledge limitations and hire others with different skill sets to complement their own. A good founder should encourage and motivate those around them to always strive for more.”

Hiring people with the right skillset is imperative given the pervasiveness of deep-tech start-ups that work with emerging technologies such as AI and quantum computing, which Turley thinks have the potential to disrupt traditional industries and create new markets.

Giving start-ups a head start

And to give founders based in Ireland a head start, Enterprise Ireland has what it calls the Pre-Seed Start Fund, which aims to accelerate the growth of early-stage start-ups that have the capacity and ambition to succeed in global markets.

Open to all sectors and entrepreneurs all year round, Turley says the Pre-Seed Start Fund was designed with extensive feedback from Ireland’s start-up ecosystem. It responds to “current market needs” and provides entrepreneurs with an “attractive financial offering” to help accelerate their start-up business plans.

“We have also modified the terms of our investment. Companies now receive investment through a simple convertible loan note, which has proven to be popular,” Turley says.

“Successful applicants will receive financial and non-financial supports. The fund offers investments of €50,000 or €100,000. The latter will be in two equal tranches of €50,000.”

But the benefits of bagging the lucrative fund don’t just end at financial help. Successful applicants also receive support from an Enterprise Ireland development adviser who gives founders access to mentoring and market research services.

Overall, the fund aims to help companies reach key technical and commercial milestones required to attract future seed funding within six to 18 months. Many companies featured in SiliconRepublic.com’s Start-up of the Week series have benefited from the fund.

And what makes a good applicant? Turley says it is, first and foremost, the ambition to succeed in global markets.

“They will also be able to clearly articulate both in the written application and in a short four-minute video what problem they are solving and what their route to market is,” she explains.

“An important factor is the team. A great team with the right mix of skills, experience and passion can overcome any challenge. The market is also critical.  A great team can only be successful if there’s a large market for their product or service.”

Because the fund aims to boost ideas that have the potential to grow from the get-go, demonstrating the ability to “reach key milestones” in time is also important, because, in Turley’s own words, a great team with a great product will only be successful if it executes well.

“They need to have a clear vision and be able to communicate and deliver on that vision.”

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Vish Gain is a journalist with Silicon Republic