The NDRC, which builds and invests in early stage digital and technology startups, recently commissioned research – with support from Bank of Ireland – that shows that the uncertainty surrounding Brexit is far from a problem for many entrepreneurs.
A study into NDRC’s portfolio of companies shows that one-in-three startups are eyeing UK expansion in the next five years, with similar hopes for Australia and New Zealand as Ireland-based startups ramp up their business activities. Unsurprisingly, both the UK and US are cited as important markets for Irish digital entrepreneurs looking to scale, with current operations in the US very significant.
Challenges are plentiful when in the earliest stages of building a business, but education is no such obstacle, with nine-in-ten founders having achieved third-level education.
Interestingly, almost one-third of entrepreneurs have no formal education in business or technology areas, with just 39 per cent having a background in computing, according to the research.
Half of those who responded cited working for themselves as a key reason for starting their own business, while many entrepreneurs relied on their own savings to fund their businesses in the early stages.
The research showed:
- More than 70% of entrepreneurs were moved to start their business by having an idea they believed would sell after they had identified a gap in the market
- They described themselves as ‘always on’ and risk takers, with more than half wanting to work for themselves
- They noted that the challenges facing ventures changed as they made their way through the various funding stages, with hiring the right people a constant issue, and sales important throughout the startup process
The research of NDRC startups, undertaken by Behaviour & Attitudes, saw almost 70 NDRC entrepreneurs surveyed, covering those from Pre-Seed right through to Series A businesses, with fewer than one-fifth viewing Brexit negatively.
The results showed a stark learning curve for all involved, with the average entrepreneur spending less than one year researching his or her business idea before deciding to set up shop.
Ben Hurley, CEO of NDRC, said: “Discovering what makes up our entrepreneurs, and also what makes them tick, is of huge value to NDRC as we continue to seek out the best early-stage companies in the country.
“The findings show that a strong work ethic is a pre-requisite when building a business from the ground up. Meanwhile, Ireland’s education system helps, too, by providing a plethora of university graduates, something we’re seeing in the startup space to great effect.
“Perhaps the most surprising aspect of the research is how two-in-five founders have a background in computing, a figure lower than perhaps many people expect.
“NDRC sees this at its purest form, with founding teams that enjoy a mixture of skills and backgrounds often proving the most robust. NDRC invests at a very early stage, which is a time when such a strong backbone to a business is of paramount importance.”
Other findings from the research include the concern among Series A companies when seeking appropriate staff and attracting them to join a start-up company is quite a challenge.
“It’s difficult when you’re competing with the likes of Facebook and Google,” said one respondent. “They can offer much bigger salaries – you have to sell the dream.”
Michael Lauhoff, Director of Business Banking, Bank of Ireland said: “Through our partnerships with businesses across Ireland we have always found a resilient entrepreneurial spirit, so I’m not surprised to see the ambitious attitude of our startups despite developments such as Brexit.
“Bank of Ireland was delighted to work with NDRC on this important research. It’s only by truly understanding the aspirations, worries and needs of entrepreneurs and early stage enterprises that we can offer support which most benefits their business.”
NDRC has built and invested in more than 200 companies to date, which employ more than 800 people between them. Some of NDRC’s portfolio companies are Logentries, FieldAware, Wia, Tandem HR and Nuritas – the latter of which recently announced a €16.8 million funding round.
Over its history, around half of NDRC-backed ventures have secured follow-on funding, with the research finding that it takes startups, on average, two years to reach seed level and four years to reach Series A funding.
The lack of suitable Pre-Seed supports for globally scalable businesses one of the reasons behind NDRC’s creation by the Department of Communications.