While there is no tech funding ecosystem anywhere like that of Silicon Valley, there is no reason why, anywhere else in the world, valuable technology businesses cannot be built to scale, says Jonny Parkes, co-founder of the learning technology hub Versari.
Before digital was known as digital, it was simply multimedia and, for Parkes, his multimedia odyssey began when he realised the future of computing meant dollops of video.
“I got an internship in Apple in 1992, when Apple wasn’t cool, and Steve Jobs had been kicked out and Sculley was in charge.
“I fell in love with multimedia and, when I discovered computers could do video, that set me on the road to e-learning.”
Parkes built up an e-learning business in the 1990s called Electric Paper, which he ran with Hugh and Jilly Skinner, the parents of a school friend.
Electric Paper grew to become a global business and, in 2003, the company was acquired by ThirdForce.
Parkes will be speaking at the forthcoming Bank of Ireland-backed StartupGrind in Dublin on 31 May at 6.30pm.
The scaling formula
After spending three more years with ThirdForce, Parkes set up Leaf Investments with Hugh O’Driscoll and Alan Maguire to invest in early-stage learning technology companies. Investments include StoryToys and Empower The User.
“It was while investing in young companies that the seeds of the Versari idea were sown. It was one thing investing in companies, it was another working with them to scale them.”
‘There is definitely an imbalance between here and the UK. And then there is more funding available in the US. We have to do something about that’
– JONNY PARKES, VERSARI
Versari is an accelerator on Mount Street in Dublin focused exclusively on edtech opportunities, built on the principal of building businesses that can scale.
Parkes says he has a formula that he sticks to when it comes to scaling companies, particularly those focused on enterprise sales.
“You need to build a decent product that people will pay for. We know and understand how to do that based on our own experiences, our ability to hire the right people.
“With Versari, we have the core expertise, finance and services. It is a holistic approach that hinges on getting companies to sell.
“It’s not rocket science. With the right structure and processes, there’s no reason why Irish start-ups can’t compete on the world stage. We get companies to the right size and structure. We aren’t successful unless we can step away,” Parkes said.
Compared with starting businesses in the 1990s, Parkes said he believes it is easier today to get a business off the ground and develop it to a certain level.
“But the litmus test is having a product that people will pay for. In the enterprise space, in particular, how do you get those businesses to scale? Once you get them to the first $1m in revenues, then you need to think about the next $10m.”
Parkes pointed out that getting to that next stage comes down to old-fashioned hard work.
“You’ve just got to be executing and building something that people are willing to pay for.”
Parkes continued: “The reality is the Silicon Valley ecosystem just isn’t here. The chances of doing what you can do there from here are slim, but there’s no reason why you can’t build a valuable piece of technology that you can sell to people and scale that way.”
Get rid of the friction
He said that, while Ireland has many of the components needed to compete against other start-up ecosystems, an opportunity was missed in terms of tax treatment for entrepreneurs in the recent Budget.
“There is definitely an imbalance between here and the UK. And then there is more funding available in the US. We have to do something about that.”
Pointing to start-up successes like the Collison brothers’ Stripe, he continued: “If I was in my mid-to-late 20s I wouldn’t stick around here if I had the option. As you get older, you get a bit more stuck. It is a great place to do start-ups on so many levels, but, in terms of funding, we have to do something. I know guys setting up in London and we even looked at it ourselves.
“If there is anything we need to do to keep banging the drum we should do it.
“The challenge of a start-up is capital efficiency and you are trying to balance that with hiring good people and then working hard and getting customers to engage. It usually isn’t rocket science, but good old-fashioned hard work that requires focus.”
Parkes’ next area of focus is growing the Versari footprint and establishing partnerships with other accelerators in the US and UK, so Versari’s stable of start-ups can leverage the network.
“It’s about bringing in new companies from those markets too,” he concluded.
“Also, we can’t scale if we just stay in Ireland or we can’t help businesses to scale if we just stay here, so growing our international footprint is the next obvious step.”