Thanks to Damien for quoting me in The Tribune yesterday. I thought it was an excellent article both on BarCamp and on raising funds. I’d like to explain my quote a little more here. Basically it concerned the €175m the Irish government have given to a set of VCs here. The VCs have to raise matching funds and then start backing businesses here. Many of us have a problem with this idea and my quote was in that context.
I simply feel that our taxpayers money would be better spent skipping the middle man, forgetting about direct ROI and focusing on helping as many small early-stage ventures get off the ground as possible. The idea of matching funds is clearly based on trying to avoid abuse but it locks out so many people who do not have access to funds like that. How many average wage-earners can find up to €32.5k to spend on an idea and give up their job in the process?
I talked to a French entrepreneur recently and he said that they can get unsecured loans of up to €60k via the government. I’m a big fan of this idea. Irish government agencies should allow every loon, whacko and dreamer to present an idea to them. If it sounds like they can build it then they get a €60k unsecured loan almost immediately. No financial predictions, no market analysis, just a simple “can you really build this thing?”.
For that money they have to build a prototype of their idea. They come back when they are done and if it works, then they get a another block of money. And so on up to a max of perhaps €200k. If they are successful, the loan is re-payed with interest and the ROI for the government is more high value employment and tax revenue. If they fail, then at least they still have a roof over their heads and experience which will be invaluable in their next job.
What County Enterprise Board would have given a penny to Woz and Jobs? Who would have thought a bunch of file-sharers could create a phenomenon like Skype? You want to do what with videos in tubes? There are tons of examples of ideas which on the face of it had no hope commercially. I’m happy for my tax Euros to be spent helping the crazies implement their visions. Most of them will fail honourably, a percentage of them will be gangsters and then we’ll have the ones who change the world. I think it’s worth the gamble and if it doesn’t work out then it has probably wasted less than an average day in the health service.
6 Comments
Good expansion Conor. Personally I know a couple of Enterprise Boards who would grant aid interesting tech business ideas
However €60k would never be on the cards as they have per job limits on what they can invest and usually €50k after multiple applications is the max.
And then (as I think was mentioned in the article) the pass-over from CEB’s to EI is the opposite of seamless.
keith
I mentioned the CEB’s as an example. For the bigger chunks obviously EI would be the agency. My understanding of the split has always been that if your prediction is for 12+ employees in 3 years then you go to EI, otherwise you go to CEB.
I know the post is focused on “building something” but obviously a similar process could apply to a service and the prototype might be the first customer usage of that service.
Right now we are starting the process to get an R&D grant and there is a big focus on “the first customer”. This is often used by VCs too as “validation”. Our version of that may be to ask the most active users on our site to give us formal feedback on how much they love it!
The other aspect of my quote in the paper was on “young uns”. We have to do something to get the kids who are straight out of college to give it a go and forget about getting a nice solid job in the bank or insurance company. The unsecured loan would be ideal for them who have zero money in the bank.
Getting them young definitely to be encouraged. Although from casual observation there are a number of start-ups around which were/are being funded by entrepreneurs from their previous/current employment so that is an equally valid option.
Having said that a seed/risk fund for pre-start up’s/pre-revenue businesses is an idea to be encouraged.
keith
> there is a big focus on “the first customer”. This is often used by VCs too as “validation”.
I’m doing the enterpriseSTART programme and am hearing a lot about this ‘first customer’. The implication being (to my simple mind) that this first customer can bankroll your product development for at least a few months. Fine if you’re a B2B and it’s a big contract. What if you’re selling to consumers or your product is in the sub $1000 category ? I must ask this the next time it comes up in the course.
My EI Dev Advisor mentions “first customer” a lot in the context of the R&D Grant we’ll be applying for. It appears the investment panel put great weight on it. However she knows it is problematic in our case and one idea we’ve come up with is to find a set of early adopters of the site to give formal feedback on why they use the site and how much use they’ll make of the advertising.
Not great but a start. I think we may have to show real advertising revenue matched to registered user numbers and traffic. Kinda difficult during closed Beta testing!
I talked to some great EI people at International Markets Week on Monday and some of them were happy to admit that Consumer Web is well outside their comfort zone.