Sunday 25 September 2016

Comment: Why our capital is cornering all the tech capital

Published 02/04/2015 | 02:30

Adrian Weckler
Adrian Weckler

Is Dublin really the only place in Ireland to attract proper funding for a tech startup? Why is almost all of the substantial tech funding activity happening in Dublin and almost none in cities such as Cork?

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The IVCA figures suggest it's an uphill struggle for companies outside Dublin to get the same access or attention as city firms.

Money, services and critical mass all combine to create serendipity, a crucial element for any location looking to become a hub.

"That's one of the things that's most important and which is most difficult to create," says Paul Killoran, founder and chief executive of Ex Ordo, a Galway-based online conference management software company.

"People want to work somewhere where there's a bit of a buzz, particularly in a city, close to the heart of other things going on."

Killoran is one a handful of successful startup entrepreneurs outside Dublin. But the figures show that for every Ex Ordo out there, there are up to 10 successful startups setting up in Dublin.

"It's the ecosystem," says John Flynn, managing director of ACT Venture Capital. "It's simply stronger in Dublin. You're seeing startups that might have stayed in other parts of the country but now go to the Dublin because that's where the services and ecosystem are." That ecosystem includes infrastructure such as incubators and accelerators.

"It's very difficult to get the talent we need, like senior PHP programmers, in smaller cities around Ireland," says Mike Feerick, founder of Alison.com.

"That makes companies very constrained. Three or four years ago, I was seriously wondering whether was I limiting the company's growth by staying in Galway compared to San Francisco. We decided to stay and we're growing strongly now. But it was tough. You're trying to get talented, top-end programmers in an environment that's much smaller than a rival city like Dublin."

The concentration of activity in Dublin is building up a head of steam to take companies there to the next level.

Some global entrepreneurs are now arriving in Dublin to base their startups there. For example, the co-founder of taxi app service Hailo is setting up a drone startup in Dublin that aims to prevent the small flying machines crashing into planes and public places.

The startup, called Verifly, will locate engineers and operations staff in Dublin with other executive functions in New York.

"What we plan to do from Dublin is to create a system of verifying drones so that they don't enter zones they're not supposed to be in," said Jay Bregman, Verifly founder.

Bregman said that the "crown jewels" of the startup's engineering and research will happen in Dublin.

"All the intellectual property as well as the crown jewels of development, which is all of the geospatial engineering, will be in Dublin. We're putting operations there, too. Not just support, but ground-breaking work."

Similarly, home-grown startups, such as the newly-funded online-education company Fishtree or the mobile billing firm Britebill, are now using Dublin for research and development while opening satellite sales offices abroad.

But why is the disparity between Dublin and the rest of the country so sharp? Doesn't Cork have tech giants such as Apple, EMC and others employing thousands of people? Where are the spin-outs?

The IVCA figures indicate that for all our crowing about Ireland being a tech centre, many of the big companies here are little more than supplementary financial, sales and HR operations, with relatively few design or high-end engineering roles. PayPal may have over 1,000 people in Dundalk, but that doesn't mean Dundalk is a tech town: most of its staff are in administrative or customer support roles.

But in Dublin, the picture is slowly starting to evolve. A sub-tier of smaller tech multinationals are starting to base more advanced engineering operations here. TripAdvisor has recently set up here and is only employing engineers. Other recent arrivals such as Nitro are trying to make Dublin a base for mobile engineering within the product lineup.

There are some outliers to the Dublin tech funding narrative.

This week, a Waterford technology startup company announce 65 new 'high end' homegrown software jobs in Tramore. Nearform is only three years old and is self-funded.

"There are lots of innovative enterprise-tech companies outside Dublin, like us, that have grown hugely with little or no investment over the last three years," said Cian Ó Máidín, the company's co-founder and chief executive.

Staying in Waterford as opposed to Dublin wasn't the easiest of decisions, said the company's other founder and chief technical officer, Richard Rodger. "We were urged by many parties to relocate to the US," said Rodger. "We chose to stay here and build our company in a place where we wanted to raise our families. We now have 35 staff and are hiring many more." Its software design technology has landed it contracts with Condé Nast, Universal and LittleBits Electronics. "Many would have been called it a weakness that Waterford didn't have a high density of programmers, yet we have collectively turned that around and created the density ourselves," said Rodgers. "We turned a weakness into a strength. With a small local market, we had to build businesses that would be exporters from the word go. We had to get out there into the big world or starve."

A major factor for Rodger was a stable, pleasant quality of life in seaside Waterford. This was also one of the motivations for Niall Ó Tuathail, a high-flying McKinsey consultant whose expertise took him all over the world but who has recently settled in Galway to grow his new company, Mobile Clipboard.

"I grew up here and I love it," he says. "My partner is from Portugal and likes it too. We have a young child and it's a really nice place to grow up in."

Mobile Clipboard recently landed a big deal to help the UK publishers The Independent and the Evening Standard increase revenue return from their websites. Ó Tuathail, whose company also specialises in healthcare online metrics, is able to employ developers remotely.

But the lion's share of all activity and funding is still heading eastwards. And the pace shows no sign of easing. In Dublin's docklands office areas, rents are rising at 30pc per annum.

And the coming weeks look set to see even more tech attention, as a handful of firms get set to announce new funding rounds.

Among them will be Cubic Telecom, which will close a round expected to be over €15m in size. The round will happen against the backdrop of deals with HP, Walmart and car companies and is driven by the company's strong performance in connecting computers, cars and machines to one another using its own mobile networks and software.

Dublin is dominating the Irish technology scene. It looks set to continue for some time to come.

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