An Irish startup’s guide to the fundraising process
Great you have an idea! Now, How do you fund it?
Raising money is tough. The language, the numbers, the conversations, the nuance — everything. Cash is king and your company needs money to grow, expand, and reach the potential that you believe it to have. We know it’s tough, we know it’s necessary, but let’s break it down and try to make it a little bit easier.
Let’s start with what most people know, angel investors and seed investment. From technocrats to sheep farmers, almost anyone trying to start a business is looking for an angel investor or some sort of seed investment. This is the Cinderella story for every startup but has been normalized by Silicon Valley. However, where most people go wrong is they believe this is the start of the entrepreneurial journey. Most entrepreneurs have the following as their plan: “I’ll get an angel investor and take that investment to Enterprise Ireland, Enterprise Ireland will match the funding, and I will be on my way.” That’s what we thought. We were young. We were naive. We were wrong. Let’s take a step and find out what we did to get on the radar of an angel investor and Enterprise Ireland.
Timing
If you’re planning on angel investment, assume it will take you between 18 months and 2 years to get there. What do you need to do to make sure your business can survive until you close your first round of funding? For most that means the ideation stage and research stage will either overlap with your current employment or schooling. This means late nights and sacrifices in order to build your business. For most businesses, this time period is filled with relatively low-cost activities. Market research, market segmentation, customer validation, client validation, mapping out your lean canvas, breaking down competitors, and eventually writing a full business plan. Six months is probably an inaccurate description depending on your current status. Rather, think about it like this: “I need to dedicate 1,000 hours of my time to fully flesh out this idea and create a viable business model.
Once you’ve refined your idea, it’s time to move to the execution phase. There are many ways to approach this — we’d recommend trying to get into an incubator, pre-accelerator, or accelerator, program if you’re farther along in the execution phase. Most universities will have some sort of program, but fear not if your college days are behind you. There are government-sponsored programs through the NDRC, Dublin BIC, Guinness Enterprise Center, and workshops through your Local Enterprise Office (LEO). We’ll dive into these a bit deeper later on, but just know that there is a program available for everyone. During your incubator program, you’ll have access to advisors, industry experts, and resources that will help you lay down the framework to build, grow, and sustain your business. Most importantly, the accelerator program will be most likely be your first introduction to the angel investor network. Angel investors like these programs because they make their lives easier. Angels are looking for great new companies to invest in, believe me, they are, but they don’t want to turn over every rock to find you. These programs put you in front of investors, and help investors narrow down their search process. Investors like to see progress before investing in a company, and the progress that you make while in an incubator program is a great indication of what you and your team are capable of.
Let’s look back at our timeline and see where we are.
We turned over every rock, did our research, and came up with a formidable business plan and laid out detailed strategies to execute (6–9 months). We went through an initial incubation program, Launchbox through Trinity (for 3 months) and got into our second incubator, New Frontiers (another 3 months). We had our first interaction with an investor during our time in Launchbox and our first interaction with Enterprise Ireland a little over a year after launching our business. It’s important to remember that the time between meeting an investor and getting investment can between 6 months and a year, so what do we do fund that gap?
Is the government is your answer?
The government can provide resources, workspace, mentorship, and funding to new businesses. We want to introduce you to the main players in the space and help figure out how to get started. The government has laid out the foundations for a path to profitability, but they’re not working alone. There are state-run organizations and private companies working together to create the Dublin startup ecosystem.
The main players (excluding university programs) are the Local Enterprise Office (LEO), Dublin BIC, NDRC, Guinness Enterprise Center, Dogpatch labs, New Frontiers, Social Entrepreneurs Ireland, and Enterprise Ireland. To help categorize them we’ll place them into clusters based on when you should contact them, and then highlight what each organization does in the section below.
Phase 1: (No equity required) Local Enterprise Office, Dublin BIC, Guinness Enterprise Center, Dogpatch Labs.
Phase 2: (No equity required) New Frontiers, Social Entrepreneurs Ireland.
Phase 3: (requires equity/debt financing) NDRC, Enterprise Ireland
The Local Enterprise Office (LEO) is your biggest ally early on. The LEO is made up of regionally run offices that provide grants to new businesses in their district. The grants are structured so that you front the costs and they reimbursed you for the expenses.
The Dublin BIC (Business Innovation Center) provides the infrastructure and support systems to help you get your company off the ground. They are the eyes and ears of the start-up scene helping you get investor-ready and giving you advice on finance, incubation space, and support groups.
New Frontiers (backed by Enterprise Ireland) is one of Ireland’s premier programs for startups. A two-part program spanning 9 months in total. Part 1 is an unpaid program helping you refine your idea and buttress your assumptions through market research. Phase 2 offers a 15K stipend and takes you through an intense 6-month program where you build out a full-scale business model and construct detailed execution strategies.
Enterprise Ireland is the most well-known entity within the start-up environment. In addition to funding, EI focuses on two main areas: international expansion and job growth. Their roots run deep both in Ireland and abroad, and their support can help open doors and expand your business across the globe. For most, the goal is to get HPSU status from EI (High Potential Start-up). HPSU status means you have a seat at the high table. You’re still a small fish, but you’re out of the fish-tank and into the wild. There is still a lot of work to be done, but you know have a powerful ally who has stamped their seal of approval across your brand.
The Startup Ecosystem
The Guinness Enterprise Center (GEO), Dogpatch Labs, and Huckletree all operate primarily as shared coworking environments. However, both of these organizations offer much more than that. Apart from working side by side with some of Dublin’s best new startups, these coworking spaces provide entrance into the startup ecosystem and access to industry experts, finance, mentors, and free conferences and lectures.
Social Entrepreneurs Ireland offers a similar program to New Frontiers, but is only available to Social Enterprises. They provide funding, support, mentorship and offer two top-notch programs in their “Awards Program” and the “Academy”.
NDRC is housed next to the Guinness Factory, and provides 100K in funding, work space, and access to industry experts in exchange for a 7% equity stake. This is a top notch program and well respected by the Irish angel network.
Our Journey
Now you know the players, and you have a rough idea of a timeline, but we know that it’s still hard to contextualize the funding journey. Here is our timeline from a funding and support perspective. The text highlighted in green were successful funding related applications, the text highlighted in red were applications that were denied, the text highlighted in black were supports that were not funding related.
September 2017 — Change Donations Ideation stage begins
February 2018 — Dragons Den Pitch Competition Finalists
June-August 2018 — Launchbox Accelerator program (€9,900) and Introduced to our first VCs
July 2018 — NDRC accelerator program (€30,000 for 10% — denied)
August 31 2018 — Won Launchbox competition (€3,500)
September 2018 — Best early stage startup — Responsible Innovation Summit (€1,000)
September 2018 — Joined Dogpatch Labs
September 2018 — New frontiers phase 1
September 2018 — VC and Angel discussions begin
October 2018 — TCD Tangent Programme in New York (€2,500)
October 2018 — Term sheet signed with Angel Investor
October 2018 — Initial outreach out to EI
November 2018 — Ladder Design sprint 7 weeks process
December 2018 — All Ireland Business All-Stars Accreditation
January-June2019 — New Frontiers Phase 2 (€15,000)
January 2019 — Startup Boost through BOI and Tech Stars — (denied)
January 2019 — Loan note deposited from Angel Investor
February 2019 — Feasibility grant from LEO (€8,000) (6 months after application)
February 2019 — CSF (€50,000 — denied)
February 2019 — Social Innovation fund (€150,000 — denied because we are not a charity)
March 2019 — Dublin BIC Ones2Watch Finalists — Photo shoot and Irish Times Article
March 2019 — Ones2Watch Winners. Futurescope — “Irelands Best Business Idea” (€2,500)
April 2019 — Dublin Tech Summit
April 2019 — EI CSF Second Application (€50,000 — denied)
April 2019 — Social Entrepreneurs Ireland Awards Programme (€40,000 — denied)
May 2019 — First contact with US investors
May 2019 — MVP Product Launch
June 2019 — EI CSF 3rd application (€50,000 — denied)
June 2019 — Ireland Funds Business Plan Competition (€15,000 — denied)
July 2019 — Google Adopt A Startup (€10,000 in Google Credit)
August 2019 — Verbal commitment from US investors
August 2019 — Approved for Priming Grant (€7,000)
September 2019 — Original Angel Investor converts on loan note to equity investment
September 2019 — EI officially engages with us
September 2019 — CSF 4th application (€50,000 — approved — We declined and opted for HPSU)
October 2019 — EI moved us to HPSU Committee
October 2019 — Written commitment from US investors
November 2019 — EI HPSU investment committee approval
December 2019 — EI official investment agreement received
February 2020 — Seed round of Investment closed
Recommended process.
Let’s map it out one last time to wrap things up.
- Ideation (May take months of refining until accelerator programs believe you have a well-formed idea)
- Identify a need and provide a solution
- Lean Canvas
- Write a business plan and provide structure around your idea.
2. Engage with your Local Enterprise Office and BIC
3. Apply to an accelerator program — Huckeltree, Launchbox, NDRC, etc…
4. Refine idea and focus efforts on customer validation
5. Apply for all possible LEO funding
- Feasibility grant
- Travel Vouchers
- Innovation Vouchers (through EI)
- Priming Grant
6. Apply to New Frontiers Phase 1
7. Join a start-up coworking space (if you can afford it)
8. Apply to New Frontiers Phase 2
9. Apply for the Trading Online Voucher (LEO)
10. Apply for the Priming Grant (LEO)
11. Apply for CSF (Enterprise Ireland)
12. Begin discussion with VC firms, Angel investors, other investors — (If you have interest from investors before this point, engage with them — find a way to get a warm introduction.
13. Apply for HPSU
In order to qualify for HPSU, you need to be trading and can show that your startup has significant user traction and adequate demand to operate at a sustainable level and scale accordingly.
14. Engage in Co-investment with EI and external investors.
Hopefully, this helps you take the first step in the long journey of fundraising. As you can tell this is a marathon, not a sprint.
The Irish government has laid out the infrastructure necessary for start-ups to thrive. Enterprise Ireland, Local Enterprise Offices, Dublin City Council, New Frontiers, and so many other great organizations are unbelievable resources that are here to help you succeed. So engage with them, help them, work with them, and use the tools they provide for you to help expand the Start-up culture in Ireland. Don’t get discouraged when you get denied or rejected. We were denied for CSF funding by Enterprise Ireland 3 times before we were accepted into CSF which acted as a catalyst to move to HPSU status. What you don’t see here is the number of angel investors that chose not to invest in us. We met with dozens of investors and VC firms looking for investment. One of the investors left us with this advice, “We meet with 300 companies each year and only invest in 9 of them. When I say meet, I’m talking about an in-person meeting. We go through hundreds of pitch decks, phone calls, and referrals before we narrow it down to 300 companies. And still, of those 300 we only invest in 3%.” The lesson? Stay determined, stay upbeat, and keep working hard.
