The shape of the Irish startup scene

Posted by kdow on May 31, 2016 2:15:34 PM

Dublin docklands

I’d love to get more involved with the Irish startup scene, but time is against me. Before I had my current job I was a regular at the various drinks sessions, meetups & tech talks. But then my job took ahold and I work too much to want to go to such events. That, and some of those events have stopped running (e.g. Pub Standards Dublin).

Articles like this one from The Guardian constantly crop up, reminding the world that Dublin is a viable tech hub. Not only is the city vibrant and defiant in it’s economic recovery, it’s got the talent within to sustain this persistent growth in startups — primarily based in tech. Dublin, unlike most other cities we’re told, is most poised to be Europe’s answer to Silicon Valley. Yep, Silicon Docklands is real.

Realistically Dublin isn’t competing with Silicon Valley. We’re competing with Berlin, London, Stockholm and others. Even at that scale, Dublin sits at the smallest city populous with the highest potential. Dublin is in a nice nexus, what with it having the youngest population in Europe. The Irish keep making babies & don’t die. 40% of Irish people are under the age of 30, and with an education system that’s spent a decade or two pushing people towards engineering & other tech-savvy disciplines, it’s no surprise that it can sustain this kind of growth.

Moreover, Ireland is the only nation within the Euro currency zone that speaks English as a native language. And, speaking of finance, Ireland has favourable corporate tax rates which are offset by high income & capital gains taxes (much to my chagrin).

Dublin even has a commissioner for startups to help drive the agenda ahead of Berlin, London & the other cities it competes with.

So what is the state of the scene? It feels vibrant, and there are real products on the market. On the high end you have Intercom, on the very early end you have Lumafit and somewhere in the middle you have ChangeX, all of which are joined by a plethora of interesting companies.

I checked about 40 companies against Crunchbase and a few other sources to build a mini data store to run some analysis on the state of the scene overall. Looking at companies founded after 2014 & who list as having funding, I checked out what’s going on in the scene. Most companies only have a few employees, ranging in the 1–10 range in nearly all instances.

But in the financing area we have an interesting delta in results. A lot of companies are excluded here because their funding amounts are undisclosed. Excluding those companies where data wasn’t available, the rest plot nicely.

Dots represent companies, plotted against total funding.

Obviously we have a small number of companies that have received huge amounts of money (in this case the top tier being Intercom), but the rest fall in much, much smaller amounts. If we just take the bottom quotient of funding then we get something more likely to be a true sense of the Irish sccene.

Again, dots are companies graphed against funding.

Here I removed any company that received more than €10m in total funding, which left the main portion of companies. It still has one or two outliers with serious funding injected, but you get a better sense of where the majority of companies lie with their venture injection.

Of these remaining companies, four of them had been through Series A rounds, and none had been through Series B rounds. One was acquired (Soundwave, by Spotify) and one had shut it’s doors (interestingly only 3 companies shut up shop, but the other two hadn’t listed any funding where I could find it).

Taking for granted that the data sample is small, it feels representative of the startup scene in Dublin right now. Most companies are getting a lot less than €2m in funding, and if they manage to hit that threshold it’s likely because of explosive user growth and/or revenue growth. Only 26% of companies received Series A or beyond funding, with most raising private equity, convertible notes or loans (or some combination of these).

Dublin is still a fledgling scene in the grand scheme of things, but by comparing it to London we’re going to find the cash injection is tight (London has a lot more cash from bankers around) and Berlin is likely to have far more consumer-facing products which feel anecdotally sexier. But I’d much rather take a potential money-making B2B product like Intercom representing the scene than an eternally-struggling B2C app like SoundCloud.