A Fund of experience

12th October 2008

By the time Irish start-ups approach venture capitalists in search of funding, most are well established with some private investment already in the bag.

According to Gary Carroll, Chief Executive of high-tech start up EpiSensor, this is because a significant amount of time is required to secure funding from the big venture or seed capital funds – time that can detract from the day –to-day running of a new company.

EpiSensor manufactures products based on wireless sensor network technology. Earlier this year, the Limerick based company won €500,000 in venture capital funding from AIB’s Seed Capital Fund.

“In EpiSensor, we looked for funding at a very early stage in our development, which made the process more difficult, but we had the advantages of having a very experienced team, of operating in a good market area and of having leading technology”, said Carroll. He said that each member of EpiSensor’s core management team had more than 20 years’ experience in high-tech industry. It was this experience that gave them the confidence to seek funding early on but there had to be some track-off, said Carroll.

“We recognise that achieving profitable sales is the life-blood of any business venture”, he said. “Any fundraising process is a huge distraction from a day-to-day running of a company”.

“The process typically takes about six months and the financial cost in terms of fees and time can be very substantial. I respect the process could be streamlined without impacting on the quality of the evaluation process”.

Carroll said the long-term goal was to make EpiSensor a world-class company, with an annual turnover of between €20 million and €50 million within five years. “We will be Irish-based, but will sell globally particularly via OEM (Original Equipment Manufacturer) relationships and distributorships,” he said.

“Growing a sustainable and profitable company is the priority, but considerable employment opportunities will result when we achieve this growth. We may seek further funding to accelerate our growth”.

That said, Carroll pointed out that the most desirable situation for any venture was that it would not require venture funding. “All funding for a business venture must ultimately come from the market in the form of sales”, he said. “For a company, there must be no higher priority than achieving profitable sales, but venture capital very often allows the achievement of business objectives faster than if it were not available”.

Carroll advised companies seeking venture capital to treat the process as another form of selling, where the commodity for sale is not the company’s shares, but its product. He recommended a sales-oriented approach from the outset.

“Considerable time and financial resources must be allocated to the fund raising process in a planned manner so as not to put the whole venture at risk”, he said.

The Sunday Business Post