Follow Your Valley of Dreams

Previously published in The Times & The Sunday Times:

‘Let’s go to San Francisco’ should be the mantra for Irish tech start-ups serious about making the big time, writes Sandra O’Connell

Kneafsey, left, and Jordan are happy to cross the Atlantic in the search for potential investors -LORRAINE O’SULLIVAN

It’s almost 8,200km from the Irish headquarters of software company CloudKPI to its US base on Montgomery Street in San Francisco, but founders Brenda Jordan and Maeve Kneafsey are more than happy to make the trip.

The experienced entrepreneurs have had the west coast of America firmly in their sights since founding CloudKPI, which provides analytics for software as a service (Saas) companies. They have been visiting Silicon Valley from the start and established their office in California as soon as they could.

“Half of the world’s Saas companies are based in North America, so that’s why we went,” said Kneafsey. “The traditional model for an Irish tech start-up is to start at home, prove the business model here and then take it to the US.

“But we felt that if we did that, we could end up with a product that was good for Ireland but not sophisticated enough for the US. This is the place to be.”

They signed up for Access Silicon Valley, an Enterprise Ireland scheme that helped them identify potential customers and investors before travelling. On the ground in the US, they recently secured a place on the Women’s Startup Lab, a one-year residential accelerator programme in Silicon Valley, which is helping them build their US networks.

The programme involves one-to-one coaching and sessions on strategy and funding. It also offers practical advice from senior executives of companies including LinkedIn, Apple and Evernote.

“It’s full on,” said Kneafsey. “There’s no theory, it’s all practical, and loads of introductions. They’ll tell you whom you need to talk to and they’ll set it up for you.”

The initiative is helping Jordan and Kneafsey to get in front of potential investors for a current funding round of €750,000. If they are successful, Enterprise Ireland will supplement the money with a further €250,000.

Paul Burfield, Enterprise Ireland’s senior vice president for the west and southern US, said Irish companies were increasingly looking at opportunities in America, particularly since the UK voted last year to quit the EU.

“Brexit has made a difference to early-stage companies thinking about where to go to get their reference customers,” he said. “Traditionally it was always the UK that Irish businesses looked to first. Now they are lifting their eyes and looking to the US.”

Given its reputation for innovation, Silicon Valley is a natural first stop for Irish tech companies looking at the US, said Burfield. Many of the world’s biggest tech companies have their headquarters in the area, and businesses in all sectors look to California for the next wave of tech disruption.

That has attracted a cluster of companies from around the world, hoping to make a big breakthrough. Within that, businesses such as Intercom and Stripe have helped raise the profile of Irish technology. “There is a recognition here of Ireland as a location of innovation, and of a connection to Ireland through the large number of US corporations here that have a base in Ireland,” he said. “That conduit is strong.”

Companies are also attracted by the presence of well connected venture capitalists, so-called smart money that can open up access to customers and contacts. Last year, 40% of the world’s early-stage funding deals were done in Silicon Valley, according to Burfield.

The benefits of Silicon Valley can also be its pitfalls, however. “It’s a wonderful place to come to raise funds,” said Burfield. “But that’s why there are 30,000 other start-ups in the valley all doing the same thing.”

Preparation is the key for any company hoping to crack California, said Burfield. He warned that companies needed to “bring their absolute A-game” to get in front of investors or customers.

“Your core value proposition has to be crystal clear and well differentiated from the rest of the activity. If not, you won’t get the meeting.”

Even then, many US funders will invest only in companies that are in the US. Founders may have to move to the area and there are practical steps to be taken, such as incorporating a Delaware company, which has tax efficiencies for investors.

Burfield added: “Our advice to Irish start-ups is to talk to people in Ireland who have US connections already and ask them for introductions. Your network is the single most important piece of collateral any Irish business coming to Silicon Valley has.”

That proved to be the case for Róisín Callaghan of events company Cogs & Marvel. After a decade operating in Ireland, it opened a US office last year, using its experience of working here for companies such as Google and Facebook to open doors.

The company is now winning new clients in America, and its California office, which employs 11 people, is growing fast. Callaghan predicts that the company’s US revenues will overtake its Irish revenues at some stage in the future.

To succeed in the US, whether at winning business or landing investment, confidence is key, she said. “You have to be able to talk the talk here but you also have to be able to deliver it. A really good track record will only get you to step one. There’s a sense of ‘just cut the bull and show us what you can do’,” she said.

When Michael FitzGerald founded OnePageCRM, which makes customer relationship management technology, in 2010, he considered setting up in Silicon Valley. After raising funds in the US proved arduous, however, he took a different approach. “I learnt quickly that US VC doesn’t like to invest outside of the US. And I learned that going after angel investment from the Irish American community wasn’t going to work either.

“I got plenty of meetings but most just wanted to tell me how well they had done since leaving Ireland. In the end I decided to build a Silicon Valley start-up, right down to the cool offices, but do it from here,” said Fitzgerald, who is based in Galway.

In the end, he found investment in Ireland. That hasn’t stopped his business, which employs 23 people and is profitable, from securing most of its customers in the US. “If you look at it crudely, one-third of our revenues come from the US, one-third from Ireland and the UK, and one-third from the rest of world. The US still turned out to be our biggest market,” said Fitzgerald.

By | 2017-10-23T08:55:48-07:00 October 23rd, 2017|Uncategorized|0 Comments

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