two apartments in budapest and a web2.0 firm, please

conor o'neill, who is behind the web 2.0 start-up loudervoice relates his depressing  experiences with a dublin finance house yesterday. Link: Argolon � The quality of tech-crash scar surgery higher in mainland Europe?

my take on this is that with the returns that wealthy individuals in irelaned have been getting on property investments why bother with risky tech gambles? sure steeltrace, similarity systems, and stockbyte were beneficiaries of trade sales in the last year. while zamano, norkom and andor technologies all floated on the dublin and london markets in recent times. but the majority of those firms had mutliple funding rounds to get to that stage and it's questionable what return their early backers got.

i'd bet that the company conor visited yesterday was not goodbody stockbrokers. i don't specialise in the funding side of tech but from my experience with mark o'donovan, who heads up their tech investments for the corporate finance side of the house, he seems like someone who gets the tech industry locally and is a strong supporter. at goodbodys summit event last year he told journalists that even though there was a lot of m&a activity and the public markets were opening to tech firms it was still a stuggle to get irish investors to back technology plays. “I could raise €20 million for a property investment in a week but it could take six months to raise the same funds for technology companies,” he said.

he also said there was still pressure for the entrepeneurs backing start-ups to put up their own homes as collatoral - hardly the stuff of a knowledge economy.

given fianna fail's strong support base with builders and developers i'm not expecting brian cowen to make any changes in today's budget that will de-risk early stage tech investments. the irish software association has called in its pre-budget submission to expand the bes and seed capital schemes. that would be a start but i'd be surpriseed if he gives any concessions to the tech industry.

with the cost of establishing a start-up falling thanks to the web 2.0 model even tech-savvy us vcs are reportedly struggling with the thought of managing a massive portfolio of small investments. perhaps its time the tech industry started looking at new funding models.

Comments

[Conor O'Neill]

Good points John. I think the angle many of us in start-ups take is that if someone has made great returns on property then making a few small higher-risk investments won't hurt too badly if they go wrong, adds diversity to their portfolio and has a huge potential upside if they go well.

Interesting that you say
"its time the tech industry started looking at new funding models". My attitude is that it's time for the investment community to look at new models. One good example is the Quickstart scheme that Charles River Ventures has recently kicked off in the US. Even a clone of YCombinator would be a huge help to younger entrepreneurs.

One Irish VC I talked to a few months back said that he would always prefer to do one €1m investment rather than 10 €100k ones for cost and overhead reasons. I can see his point but he'll find a hell of a lot more 100k tech opportunities in Ireland than he will 1m ones.

I'm convinced that things will mature here, my big concern is that by the time they have matured, the great opportunities will have been missed.

Joe made some great comments on my blog post, particularly regarding the money injected by the government into the VCs. There'll be a lot of us watching the investment of our tax euros very closely.

[John Collins]

conor, when i say the tech industry i meant both financiers and start-ups. there are quite a few people in the finance world like mark o'donovan who have a tech background and entrepeneurs like brian caulfield (trinity vc) who are now vcs. it's in the interests of both sides of the funding debate to get some new models or the next wave of tech companies like loudervoice are really going to find it hard to raise investment at home.

[armidale]

Interesting article.Thank you for sharing your views about this topic.