A big thank you to Enterprise Ireland! We received our “Innovation Voucher” this week.

From http://www.enterprise-ireland.com/innovationvouchers:

What is the Innovation Voucher Initiative?

If you own or manage a small company and you have a business opportunity or problem that you want to explore, why not apply for an Innovation Voucher worth €5,000?

The objective of the Innovation Voucher initiative is to build links between Ireland’s public knowledge providers and small businesses and create a cultural shift in the small business community’s approach to innovation.

The voucher allows us to approach third-level institutions (and a few more organisations) to see if they can help us explore some project ideas we have. We applied during the second phase which had a closing date of 31st of July 2007. The good news is that a third phase opens on 1st October 2007, if you didn’t apply before you still have a chance.

Conor O’Neill might have just have sparked something off in his post “How to get and Irish David Heinemeier Hansson” which was followed up by equally pragmatic post by Alan O’Rourke in “Encouraging entrepreneurship in Ireland”. In their posts they offer suggestions to foster entrepreneurship for students which is something I feel strongly about.

Conor describes a “just a job” mentality displayed by a majority of students/grads who wanted nothing more than a bank or multi-national job. Unfortunately very little options are open to those students/grads that would love to work in a start-up and develop their careers quite apart from working in large multi-nationals.

In March after attending a ShareIT event organised by Damien Mulley I sent him an email outlining my own thoughts about what could be done to help tech start-ups in Ireland and what some of the current issues were. In two sentences:

Issues: Not enough tech entrepreneurs completing cycles and re-investing within Ireland.
Fixes: “We” ourselves become the angel investors and develop a way of encouraging students in setups similar to Y-Combinator.

Unfortunately, after re-reading the email, nothing I said hasn’t already been mentioned (nearly a year and a half ago). The vital component is the ‘Brain Trust’ as Damien Mulley referred to it. As we’ve seen, despite sitting on millions, Enterprise Ireland can’t give the money away. They’re looking for the big knowledge companies to appear out of a tiny tech-startup eco-system. Damien Mulley had the first post which kicked off this conversation (in Ireland) by highlighting the fact that the traditional VC’s are facing stiffer competition from savy tech entrepreneurs often with not a lot of money, the most famous being Y-Combinator (now Seedcamp in the UK is following a similar model).

James Corbett picked up on Damien Mulleys post and wrote about “Fantasy business teams” which included references to points made by Paul O’Mahony about bloggers and programmers who could “form some sort of loosely bound structure/organisation to facilitate this kind of collaborative enterprise. With enough members we may even be able to boot strap our own ventures through membership fees”.

Personally, I think Conor O’Neills ‘Hothouse’ idea is excellent and he and Alan O’Rourke have obviously given it a bit of thought because I couldn’t add a whole lot more to what they’ve suggested. My contribution would be to echo Paul O’Mahonys point that there is possibly an entrepreneurial opportunity in helping to develop <€100K start-ups in our own community. The 'Hothouse' idea would be a great place to start - we'd be helping to develop the right environment for a start-up culture as well as giving Irish investors additional confidence in these start-ups particularly if they've essentially been peer reviewed and investment from tech entrepreneurs had already been given.

Though Joe Drumgoole might have the last word? “Populations of multi-millions trumps populations of 4 million everytime.”

Back in April Conor O’Neill (after reading Jeremy Fain’s blog) put up a post on the Web 2.0 Ireland blog about a trip (for tech entrepreneurs) to Silicon Valley. It’s a great idea and not surprisingly there’s lots of interest.

Damien Mulley had a post recently about the dates which are December 2nd to December 9th (2007). From the post

We’re still getting the itinerary together but we hope to meet various VC and tech people and also have one evening where the Irish companies present to an audience of investors and influencers. Suggestions for the itinerary are more than welcome.

I’m not entirely sure who the ‘We’ are but from the press release, apart from Damien, Conor O’Neill and James Corbett are listed as the organisers.

In fairness to the guys, they’re inviting anyone along who might benefit from the trip, so if you’ve any interest in Silicon Valley take a look at the PaddysValley blog.

Coincidence or not we’ll be arriving on the same day as the French group (who inspired the trip) are leaving.

Congratulations to Conor of Argolon on the launch of LouderVoice. LouderVoice makes it easy to write reviews particularly if you blog.

If you like what you see then how about voting for LouderVoice at TheNextWebConference (Amsterdam, June). And if you get that far Walter Higgins of Pixenate would probably appreciate a vote!

Most of you have probably seen the Tourism Australia ad that has been running over the last year or two? (If you haven’t seen it already it, check it out at www.wherethebloodyhellareyou.com.) Overall, the campaign spent over 100M Euro to promote Australia using an ad culminating with a bikini-clad model stepping out of the ocean asking “Where the bloody hell are you?”

That’s the question I’d like to ask Irish tech investors and support organisations: Where bloody hell are you?

Given the enormous increase in wealth in the country its astonishing how VC’s almost avoid investing in small or medium tech companies. A lot of those with money now got it from literally ‘bricks and mortar’ investments and it’s easy to see how potentially riskier investments in start-ups could even be beyond the skill set of traditional professional investors. Why? Well, because using any measure you choose they haven’t been doing it, never mind doing it very well.

The chicken and egg situation in Ireland is that investors don’t routinely invest in tech start-ups which means fewer start-ups. Fewer start-ups mean less chance of success and, hence, increased risk. We have the people with the skills in Ireland and we have the people with the money. Why aren’t we a Silicon Valley of Europe? One difference (out of many) between Ireland and the Silicon Valley is that entrepreneurs heavily re-invest their knowledge and finances back into the system; Irish VC’s have a reputation not unlike some of their probably Nordic ancestors.

Given Ireland’s economic success over the last decade it’s not hard to believe that there has never been more wealth in the country. The policy, of successive governments, of attracting Foreign Direct Investment into the country starting more than twenty years ago has been a big factor in how Ireland developed economically. The IDA and Enterprise Ireland deservedly have been acknowledged for their part in this.

However, we have become a victim of our own success: Ireland is no longer a low-cost economy. Other countries which have studied Ireland’s past tactics have played a blinder introducing flat or low taxes to induce multinationals to invest in their lower-cost economies. Ireland’s current policies try to support developing a knowledge-based economy but, in aiming to launch 100M Euro enterprise IPOs rather than supporting small to medium size companies focusing on actual knowledge innovation, they are almost expecting too much.

So, Enterprise Ireland and Irish VC’s what should you be doing?

Just take a look at these two posts taken from TechCrunch on April 25th:
Y-Combinators European Clone
Scribd Rumoured Financing

Y-Combinator is a private investment group who invest modest amounts of money among many young entrepreneurs. It’s a simple idea: spend a small amount on lots of potentially-great ideas in the hope that one will hit the big-time. The European clone (first link) are private investors who are going to take on 8 start-ups at an initial spend of 15,000Eur (5k per person up to three people) for a total of 120K. They don’t care where you come from (within the EU) as long as you work in Austria. How much money is EI sitting on waiting to give to one of their High Potential Start-Ups? Keep waiting…

Now, look at the second link. Scribd.com, following a similar investment model, is looking at financing at around 10M dollars. That company was probably kick-started with 10-15K dollars.

Enterprise Ireland - Encourage lots of small innovative start-ups. You’ve been sitting on millions waiting for the big tech IPO which doesn’t happen all that often. Any businesses started in Ireland will more than likely end up being taxed in Ireland. Don’t be too focused on Irish nationals for that matter. Ireland is too small a country not to ignore talent from other parts of the EU. Ireland could and should be the hotbed of tech innovation in Europe.

Irish VCs - Just. Start. Looking. It doesn’t matter if you don’t invest because investment is becoming a lot more mobile, Irish companies will just go further afield to get it. The fact that you’re not even actively looking tells its own story.

Nothing in this post is either original or hasn’t been said before. It should be a no-brainer.

[Updated] - Damien Mulley has a great post about credit unions as possible funding sources. Check out the link to Joe Drumgooles posts about EI offering 175 million to Irish VC’s!

As you can probably guess we only recently incorporated Waveson so I thought I’d share my experience. Once myself and Steve thought we needed to incorporate I asked a contracting friend, who I believed had a company, how to go about it. It turns out that he’s actually self employed so that forms the first question you should ask yourself: Do I need to setup a company or register as self employed (or a partnership)? My advice is to check on the Web for the differences and failing that seek professional advice.

This friend recommended I speak to his accountant who in turn gave me contact details for a formation agent. In the meantime I had checked out the Companies Registration Office website, www.cro.ie, which I have to acknowledge is actually very easy to use.

Setting up a company is actually very straightforward. Along with the registration fee only three documents are needed:

1. Form A1
2. Memorandum of association
3. Articles of association

In putting together the application you must also decide a few things about the company:

1. The type of company.
2. The name of the company.
3. The registered office of the company.
4. The activity carried out by the company in the State.
5. Who are the directors and secretary of the company.

Also on the site you will see that there are basically two ways to register a company: apply yourself or get a formation agent to do it for you. Since I had not done this before and in particular didn’t have any copies of the Articles and Memorandum of Association the formation agent was opted for. It also happens to be quicker.

How much?

The formation agent recommended by my friends accountant charged €345 (incl. VAT). At the time, May 2006, I checked a number of other agents who were charging more or less the same but quite a few were charging more.

What did we get?

1. Certificate of Incorporation.
2. Four bound copies of the Articles & Memorandum of Association.
3. Minutes of a Meeting of the Board of Directors.
4. Company Register / Minute Book.
5. Company Seal (Embosser)

Value for money?

Not great, we thought. Why? Well, now if you search for company formations you should see some cheaper prices now than what we originally paid. Some sites offer you just the documents for €75 (which you get download elsewhere for free – towards the end of this page, for example). The CRO charges €100 plus 0.5% of the issued capital but just check incorporation costs in the UK; far less than Ireland even taking the CRO charges into account. There are two reasons you should use a formation agent and even then try to get them at €260 or less:

1. You are in a hurry. (It’s faster for an agent by up to two weeks.)
2. You don’t have a copy of Articles & Memorandum of Association.

In the future this is what I’m going to do, it’s slower but cheaper:

1. Download, print and fill out the A1 form which is here.
   You also need to figure out which NACE code (which signifies the company’s activities) to use. The list is here.
2. Download these three files and adjust them for the new company (items to change are in yellow):
   1. Memorandum of Association
   2. Articles of Association
   3. Minutes of a Meeting of the Board of Directors (to be kept and not sent to the CRO).
3. Visit a Commissioner of Oaths to witness some signatures on the A1 form and Memorandum & Articles of Association. (For the extra cost, ironically, in our case, our agent had a very, very loose definition of witnessing signatures.)
4. Send the completed A1 form, the Memorandum & Articles of Association and fee (€100 CRO fee + 0.5%).
5. Buy a company seal embosser and Company register / minute book. You can find these on the Web for well under €100 including delivery.