“People come into incubators and very often it’s just for space, they are thinking ‘that’s what I need, a nice space would be good’.
But actually, by the time they exit what you find is that the real value they’ve gotten is the networking, the connections, the monies they were able to attract as a result of making connections and talking to people, and the advice that they got from one another, the pure learning that they have.”
Tom Flanagan is director of enterprise and commercialisation at NovaUCD, an incubation centre for new ventures and entrepreneurs that has supported around 350 companies that in turn have gone on to create more than 2000 high-tech jobs since 2003.
Flanagan has been in the role just over a year, and his own background is in engineering. After graduating from UCD he worked in the UK, then moved to Canada where he worked as an engineer and then found himself moving – up the corporate ranks and out into the wider world.
From Canada, he moved to San Francisco with Nortel Telecommunications. “That was a Canadian company that spread into the US at the time of telecom deregulation and I became vice president for sales and marketing for Canada and a central part of the US for professional services. It was a global job so I was doing work all across Asia and Europe as well,” Flanagan says.
“And then we had the dotcom crash and at that stage there was an opportunity to come back to Ireland. My daughter was four at the time so it was perfect time for her to meet the grandparents and for the grandparents to meet her, and it all worked out nicely – she’s 20 now!”
Back in Ireland Flanagan worked in consulting roles, “supporting people, helping people develop businesses”.
“I found that was really interesting, then I went into Dublin Institute of Technology as the industry liaison person and set up the first tech transfer office in DIT, expanding it out into Tallaght and Blanchardstown and built up the ‘Hothouse’ incubation facilities at the college.
“Then this opportunity [with UCD] came up and this is a great opportunity in terms of coming into an established incubator and tech transfer hub to see what we can do to grow this – I’m a year in now.”
The incubator in UCD works with two types of companies, what they call ‘spin-ins’ and university-grown companies.
Naturally he is a big advocate for the benefits of startup hubs.
“I have seen this before when I set up the first tech transfer office in DIT and in other colleges as well, researchers tend to do great research and they publish papers and they go to interesting conferences, but nothing comes of the research in terms of making new products and services,” he says.
“What the transfer offices do is look at the opportunities, look at the inventions, and see what applications they might have and develop what those applications into real projects, and either you can license it to a company or there is a need to put together a team around the technology and develop a business, and that’s new ventures, so that’s what we would do here,” Flanagan adds.
“There are [professors that set up their own business] but I consider them to be the exception, people that can transition from an academic environment to business.
“More often what we are looking for is the academic who will have a great technology or a great business potential project, then it is important for us to kind of marry them up with somebody that has the business experience, that has the commercial experience.
“We are all the time on the lookout for mentors or people who want to come in and be a CEO, and we would show them the different opportunities that might suit their area.
“They would have to meet with the researchers and the rest of the team and would have to like one another, it works out quite a lot, there are times when it doesn’t work. The researchers recognise the skill set that is needed and that there is a lot of heavy lifting in being a CEO to go get investment, to go convince customers that this is the right product for them.”
On average the hub would develop four or five new ventures a year from different research.
Success stories from NovaUCD include ChangingWorlds acquired by Amdocs in 2008 for over $60m, BiancaMed acquired by ResMed in 2011, and Logentries acquired by Rapid7 in 2015 for $68m.
In addition to the companies it develops, it has around 80-100 inventions that it sees every year, from which it files between 20-30 patents a year. On top of that it is doing 20-30 licences a year to different companies including the likes of Glanbia.
As well as the university founded companies, NovaUCD also has a lot of ‘spin-ins’. “Companies where the idea might have come from another university, or they might have come out of an industry with a business proposition and then they would come in here and we would support them develop that proposition and take it through to raising finance.”
With university-grown companies, UCD will acquire equity in the startup.
“We would typically have 15pc equity in the company on formation, which gets diluted over time as more investments come in.
“For a spin-in company we don’t take equity, we just support them. They pay their way in terms of paying for the facilities here and support services, and we will do everything we can to help them develop. The fees are based on the space that they want to take.”
Giving up 15pc of equity in a business is no small decision for a startup, and the discussion turns to the benefits for companies in being part of an incubator.
“It makes a lot of sense to be in an ecosystem like Nova here or any of the innovation units, where you are surrounded by people of a like mind.
“They learn more from one another than they do from anybody else and they have contacts and connections, so getting into the ecosystem of startups is really important. It will help you shape up your idea, give you access to talent, give you access to finance and plenty of advice to set you on the right direction.”
Flanagan adds: “If you set up a company today and you have a good business proposition and you could benefit from all the services that we provide here then we would interview you to see what the match-up might be; is there research going on that might help your company have a competitive advantage? Is there finance? Could we put you in front of the right kind of investors? Can we add value to your business plan?”
In terms of the type of businesses that NovaUCD is looking for, gesturing with his hand, Flanagan says “rockets”.
“We are not looking for ones that trundle along. It is about high-risk, high-reward, it is about looking at companies that would meet the kind of Enterprise Ireland High Potential Start-Up, the €1m turnover in three years.
“And we would have a mix of companies, it wouldn’t matter what the technology was because UCD has everything from data analytics and computer science all the way through to medical.”
Funding is obviously a big concern for the businesses.
According to Flanagan, most of the companies start out raising finance in Ireland through angel investment and Enterprise Ireland funding and then venture investments.
“Some of them go to the UK and raise money there as well, and some of them go to the US and raise money there through venture funds there. As then as they grow they might get additional investments from corporates also.”
With some companies in the hub looking to the UK to acquire funding, not to mention its proximity as a market for businesses, one imagines that Brexit is a concern for NovaUCD.
“Everybody is very aware of it and everybody has been thinking about it.
“Your suppliers may not be in the UK and they may not appear to be impacted by Brexit, but maybe their suppliers are, so there can be a ripple effect.
“Maybe the customers you sell to aren’t immediately impacted by Brexit, but their customers could be and therefore they will be.
“So, for companies it is about looking in both directions, looking at the impacts on supply chains that they are involved in and the opportunities that are there, the risks that are there, particularly for food and agri-tech companies where the initial market will be the UK.”
However, he says that a lot of the high-tech companies are more focused on developing their product here and selling it in the US.
“If they are doing that then Brexit has less impact on them.”
Before we conclude, the question of advice to entrepreneurs comes up. For Flanagan it’s simple: “Don’t keep your idea to yourself.”
“Talk to people about it because you will get lots of feedback and you need to get lots of feedback to shape up the idea.”
“There can be a tendency to hold off on telling people about it because somebody is going to steal your idea, but people don’t usually steal ideas because it is only the person who comes up with the idea that has that energy to put behind it and has that insights as to how it can be developed.”
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