Boom time for Irish software startups as new €60m investment fund announced
The Dublin-based tech investment firm Frontline Ventures has announced a new €60m fund dedicated to backing early-stage business software startups.
Company directors say that they will use the money to invest in 8 to 10 early stage software startups every year for the next four years.
It’s the second major round raised by Frontline. A €50m fund raised by the company in 2013 was invested in 27 Irish and UK startups.
Frontline typically invests between €200,000 and €3m in early stage ‘B2B’ software companies. It has a nine-year cycle for the fund and typically looks to exit individual investments within six years, according to Will Prendergast, a partner at the firm.
The firm has already begun investing from the new fund, taking part in a €1m round to back Galway-based data firm Siren Solutions. Other investors in the NUIG spinoff startup include Enterprise Ireland, Atlantic Bridge and the Western Development Commission.
“Our first fund has shown us that some of the world’s most ambitious founders are right here,” said Mr Prendergast. “With this new fund, Frontline is positioned to be the investment partner of choice for ambitious software entrepreneurs building out from Europe to the US.”
Previous investments from Frontline include Dublin-based machine data startup Logentries, which was sold in 2015 for €60m to the US data firm Rapid7, and cloud data startup Orchestrate.io, sold to US cloud provider CenturyLink for an estimated €10m.
Frontline also has existing Irish investments in the foreign exchange transfer firm Currencyfair, adblocking tech firm PageFair and sales software startup QStream.
The company’s Fund II comes as venture development in Ireland continues to accelerate. Recent figures from the Irish Venture Capital Association suggest that Ireland in now approaching a €1bn run-rate for venture finance in Ireland. WIth a large chunk of that going to companies with bigger offshore offices than Irish ones, Frontline’s move will attract considerable interest from indigenous Irish tech startups.
The company’s investment capital was raised chiefly from a collection of banks, state agencies, pension funds and private family wealth. These include the €8.1bn Ireland Strategic Investment Fund (which is run by the state’s National Treasury Management Agency), Enterprise Ireland, the European Investment Fund and AIB.
Frontline is led by partners Shay Garvey, Will Prendergast, William McQuillan and Stephen McIntyre, who recently joined the investment firm after leaving his role as vice president and director of Twitter Ireland.
Mr Pendergast said that Ireland still lacks a developed ‘angel investing’ environment to complement venture capital firms, banks and other sources of funding for startups.
“If you talk to tech startups, they’ll tell you that there aren’t enough VCs investing,” he said. “But if you talk to venture capital companies, they’ll tell you that there aren’t enough companies to invest in. Typically what’s missing in Ireland is that there’s not enough of an active angel scene here. That’s developing, though. It’ll take time.”
Mr Pendergast said that companies such as Frontline are increasingly looking to Europe and beyond with the scope of their investments.
“Irish companies should be looking at Europe or the US,” he said. “Don’t limit your horizons.”