Insights

Scale-up or sell out?

  • Written By: Paul Wyse
  • Published: Mon, 25 Jun 2018 11:03 GMT

Our annual breakout session at FutureScope 2018 entitled ‘’Scale-up or sell out? Identifed ‘scale-up gaps’ and explored scaling strategies.

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The panel of speakers included experienced and influential figures in the world of finance and entrepreneurship, including:

  • Paul Wyse – Managing Director of tax and business services and corporate finance expert at Smith & Williamson
  • Debbie Rennick - Director at ACT Venture Capital
  • John Morris - Scale-up Lead at Smith & Williamson London
  • Claire Carroll ; Senior Investment Advisor at Enterprise Ireland
  • Brendan Kiely – Managing Director and Co-Founder at ThinScale Technology,
  • Darragh Geoghegan - CEO and Co-Founder at Effective Software
  • Orlaith O’Brien – Co Founder and Partner at OBH Partners Solicitors

The session, hosted by our Head of Business Development in Ireland, Marc Lowry, looked at the essential factors for a successful scale-up; Finance, Access to Markets, Professionalising, Talent Acquisition and Transacting to Scale.

The leadership gap

The initial focus of the discussion was on management skills gaps that inhibit effective scaling-up. The panel were unanimously agreed on the importance of ensuring your business has the right leadership team and structures. For Darragh Geoghegan of Effective Software, filling the leadership skills gaps is a key enabler of growth. He advocated the need for entrepreneurs to put a strong focus on building the correct structures and protocols within a company before seeking funding to scale.

A key theme addressed at the discussion was the need for entrepreneurs to correctly identify what skillsets they have in their personal arsenal and what they must bring in from outside. Debbie Rennick of ACT Venture Capital backed up this point and added that the strength and balance of the management team was critical to attracting investment and a key criteria in their due diligence of prospective firms.

The talent gap

The second topic discussed by the panel was access to talent, and the difficulty firms have in hiring the people they need to succeed. For Darragh Geoghegan, there are opportunities for smaller companies to attract talent from the big IT companies such as Microsoft, Google, Salesforce or IBM, as scaling companies are often able to offer better job satisfaction, a sense of belonging, excitement and a more engaging and genuinely flexible working environment.

John Morris, Smith & Williamsons Scale-up Lead, believes that a company’s values and culture are extremely important in attracting talent, as people want to work for purpose-driven companies with good leadership. He made the important point that many companies spend a great deal of time and effort on hiring talent, but not on retaining the talent they have; ‘’The number one scale-up gap is skills and development. If you’re not developing your staff’s skills they will leave’’, he said.

Brendan Kiely of ThinScale Technologies believes that the strategic use of outside consultants is a good option for particular short term projects, fulfilling specific needs and often bringing a great deal of much needed experience and insight. However, cost is a critical consideration and this can be an expensive option for a small company.

The market gap

The discussion moved to another key enabler of scale-up success; access to markets. The panel agreed that the ability to sell to markets outside Ireland was the essential and critical ingredient in scaling-up. As Debbie Rennick explained, ‘’Ireland is a very small market. We (at ACT) are only focused on companies with European or international ambitions.’’

Claire Carroll of Enterprise Ireland explained that their local on the ground presence in critical markets like the UK, Europe and the US makes it an easier proposition than many think. Brendan Kiely and Darragh Geoghegan expressed the opinion that foreign buyers and procurement teams are easier to access and more likely to purchase from a start-up or scale-up than domestic Irish firms, a position neither was happy with.

The finance gap

The discussion on finance for scale-ups centred on what makes your company “investable”. Darragh Geoghegan believes Enterprise Ireland provide key supports and advice for companies seeking finance to scale. Claire Carroll, of EI, outlined the importance of being able to tell the story of your business and inspire investors to be involved. Debbie Rennick also said that founders must clearly articulate what is different, unique and compelling about their business compared to its competitors.

Advice and professionalising

To discuss the final topic of the event, the panel was joined by Smith & Williamson Managing Director of tax and business services in Ireland Paul Wyse and Orlaith O’Brien, Co-Founder and Partner at OBH Partners Solicitors.

The discussion centred on the importance of professional advisors and how they mitigate real risks and challenges. A common problem, discussed in some detail, was the reluctance or failure to put a formal shareholders’ agreement in place early in the life of the business. According to Orlaith O’Brien, this is a cause of huge legal and financial problems for businesses later on.

Paul Wyse went on to outline how professional advisors can bring a great deal of experience and insight to difficult situations, as they have often dealt with similar situations for other clients. “They are able to be unemotional and deliver insights and advice gained from extensive experience, helping you make better decisions or acting on your behalf in key negotiations.”

A lack of good data

The panel discussed how difficult it is in the market to find good data or benchmark Scale-up firms in Ireland. This is in contrast to the UK where the Scale-up Institute has invested heavily drawing on public domain data and private research to identify high growth companies on a region by region basis. UK policy now focuses on policies and supports focused on getting these scale-up firms to grow successfully developing employment and economic activity with positive knock on effects to the wider economy. Should we be doing this in Ireland – our panel thought so!

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