Looking for the next Irish Facebook
It's dotcom boomtime again as some of the hottest Irish tech firms inch towards the Nasdaq, writes Louise McBride
Published 20/02/2011 | 05:00
IT'S been 10 years and more since the dot com collapse wiped trillions off the value of internet and technology companies worldwide.
Many Irish tech companies -- as well as their investors -- were pancaked by that crash. Despite this checkered history, it looks like Irish techies could be amongst the best placed to lead our recovery.
With some of our hottest software companies now eyeing up stock markets, it could only be a matter of months before one of them floats on the stock exchange for the first time -- with more to follow.
"Over the last few years, stock markets have been quite volatile, so Irish tech companies have largely steered clear of them," says David Kearney, associate director with Goodbody Stockbrokers. "But more companies are now considering the move towards public markets."
It is the established companies that survived the dot com collapse of 2000-2001 that are the most likely to float, according to Fergal McAleavey, director of corporate finance with AIB.
He adds: "Many Irish tech companies raised money between eight and 10 years ago -- and the better ones have survived."
"You may see some of these companies starting to raise money now -- or becoming involved in IPOs (an initial public offering, where a company sells its stock to the public for the first time)."
So which Irish tech companies could be about to float?
The Irish software company Openet could be the next moneyspinner for Barry Maloney's venture-capital firm, Balderton Capital.
Openet, which manages iPad payments for the US network AT&T, is expected to be floated early this year. Valuations of up to €250m have been touted. Its revenues for last year were 60 per cent higher than in 2009.
Asked last week if it was about to announce an IPO soon, the company declined to comment. However, with Maloney being one of the main backers of Openet, the omens are good for this company.
Mr Maloney seems to have a knack for spotting technology companies that will earn his company a few bob. About three years ago, Balderton Capital sold its 15.7 per cent stake in the social networking site Bebo for US$140m (€90.8m) -- more than nine times the original sum Balderton had invested in it.
The British online betting exchange Betfair floated on the London Stock Exchange last October at a value of about €1.6bn. Balderton, which had invested in Betfair as early as 2000, made millions shortly after the flotation by selling some of its stake.
When writing the lyrics for Common People, little did Pulp singer Jarvis Cocker know that it would be an Irish technology company that would eventually allow him to sing along with them.
Last December, a music festival in Dingle used Intune Networks' technology to stream live footage of the gigs -- which included Jarvis Cocker -- to visitors who had been unable to get tickets.
Either an initial public offering or a sale is on the cards for Intune, which was set up by two UCD graduates, John Dunne and Tom Farrell, in 1999. However, it will probably be another three years before this happens, according to Intune's chief executive Tim Fritzley. He said last week that it would be 2012 before any valuations would be set for the company.
The billionaire Dermot Desmond is one of the investors in Intune.
"Intune Networks is an interesting company which has received a lot of financial support, so it's no surprise that it probably has ambitions to float in the next few years," says Mr Kearney.
Paddy Houlihan's mobile software company Newbay is one of the 500 fastest-growing technology companies in the EMEA (Europe, Middle East and Africa), says Deloitte.
Newbay, which has its headquarters in Dublin, was set up in 2002. Balderton Capital first backed the company in 2003 -- and the venture-capital firm Fidelity Ventures is also an investor.
It is tipped as another tech company that would do well if floated.
A spokeswoman for Newbay said last week that she was "not at liberty" to say whether or not the company had any plans or ambitions to float.
Other hot techies
Other Irish tech companies for whom an IPO could be on the cards include Curam Software, Movidius and Redmere.
John Hearne, a former manager with Apple Computers, co-founded Curam, a software-development firm, in 2000, along with Ronan Rooney.
Movidius, which brings high-definition 3D videos to mobile phones, is headed up by Sean Mitchell. He was part of the management team of Parthus Technologies, which was itself floated in May 2000.
Redmere provides high-end cables for mobile devices. One of Redmere's investors is 4th Level Ventures, a venture-capital fund set up by the internet pioneer, Dennis Jennings and Ray Naughton, a former managing director of Siemens Nixdorf in Ireland.
Dolmen Securities' Ronan Reid is managing director of 4th Level Ventures.
Some start-ups are also looking promising.
"There has been a huge volume and range of start-up tech businesses in the last few years," says Mr Kearney.
"Many of these companies were started by people who exited businesses recently. These people, therefore, have a lot of personal capital behind them and a reputation for building up successful businesses."
One such person is Iain MacDonald, founder of the telecom company Perlico. Vodafone bought Perlico for €80m in late 2007. MacDonald now heads up a social-network site called Skillpages.
Other start-ups to watch out for include the web-software firm Terminal Four, the social network site Worky, and the paperless billing firm Britebill.
Sunday Indo Business