Tuesday 20 March 2018

'We're the matchmaker and dating agency for startups and investors'

Interview: John Phelan

John Phelan says that the exit strategy, or ‘divorce’, is vital for investors
John Phelan says that the exit strategy, or ‘divorce’, is vital for investors

John Phelan

Ireland's Halo Business Angel Network (HBAN) is doing well. The work of the organisation, which is responsible for the promotion of business angel investment countrywide, was highlighted at an Angel Capital Association (ACA) global conference in the US earlier this year.

With John Phelan at HBAN's helm, angel investments in Ireland were up 25pc year-over-year last year, with business angels investing €13.6m in 50 Irish startups in 2016.

But Phelan, who has 20 years of entrepreneurial experience, in startup and growth businesses behind him, believes that the profile of the organisation is not large enough.

"We are always looking for new business angels, we see just 10-15pc of all the angel funding on the island," he said.

"If investors saw the quality of the deals that are coming, they'd become more involved.

"That other 85pc that don't invest, a good bit of that will be investing in family businesses, which is great."

The HBAN team are not taking the drop in seed venre activity lying down; they picked up a prize in the European Business Angel Network Awards for their roadshow success in 2016 which pulled in 35 new angels.

The organisation has a huge network around Ireland with bases in all of the larger cities, all connecting locally to their specific region. This network invests huge energy in "creating that good quality deal between fund and entrepreneur".

"In practical terms, we are a dating agency, the matchmaker for startups and investor," said Phelan.

"It's a marriage deal which plans for divorce from the outset.

"You go to the altar, you get married, but the divorce is something that is really important to the investor. They need to know what the exit strategy is."

After setting up his first company, Giant Film Productions, in 1997 in London, Phelan went on to establish a further two companies in Ireland.

He has an MBA from UCD and is also Independent Chair of Animation Ireland, an industry which employs over 1,000 and boasts €100m in revenues.

In addition to his HBAN role, Phelan enjoys sailing and has completed two transatlantic trips, four round-Ireland races, four Fastnet races and several worlds in the SB20 class.

Through his engagement with Dublin BIC, HBAN, the AIB Seed Fund and Enterprise Ireland Phelan knows exactly what works in order for entrepreneurs to prove themselves to investors - and what makes a great business angel.

"The startup environment in Ireland has really matured a lot in the last five years," he said.

"A lot of them are recognising that they need to first, be able to prove technically that they can do what they say can do, and secondly, they need to be able to prove that commercially that the product will sell."

He added that the Medtech sector in particular is doing really well right now - a testament to the experience and knowledge of investors involved.

"Having those kind of business smarts behind you really helps a startup. It's more important than the money to have mentors like that," he said.

"I've seen firms get funding [without this guidance] and 50pc end up going off and spending it in the wrong direction." HBAN encourages the model where like-minded investors come together to create business angel syndicates - and it's a trend he believes is picking up steam.

"These individuals go in with other investors, with a lead who understand the particular industry in great detail. By sharing this knowledge, and the risk with small amounts of finance, angel investors are empowered at an earlier stage and the entrepreneur has the appropriate guidance and funding."

There are no fewer than 31 companies pitching to HBAN business angels at events across Ireland over the next four weeks.

Dr Rory Mooney from Class Medical, a medical device company that has developed a novel safety valve for the prevention of iatrogenic injury during urinary catheterisation, has presented to three separate HBAN investor groups this year to positive response.

"Since joining HBAN, our commercialisation strategy has really accelerated at a ferocious pace, with our first seed round of smart investment secured last July," he said. "Their support has been truly instrumental in executing our funding strategy to bring the safety valve technology to the market, by placing us in front of prominent angel investors and most importantly the right type."

Ex-Google customer acquisition specialist Killian Lannen co-founded an online business delivering luxury flowers nationwide, Bloom Magic, which received investment from a HBAN business angel following a pitch made to the HBAN Investor Forum group in January.

"Pitching at HBAN Investor Angel Forum was not only a lot of fun, but it introduced us to a lot of high-net-worth individuals who were interested in investing in Bloom Magic," said Killian.

"Ultimately, we completed our fund-raise through HBAN, and the angel who invested has added a huge amount of value to our business as we continue to scale things up."

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