Corporate innovation is challenging and at best short sided when it comes to delivering on corporate needs to innovate and stay competitive vs. quarterly results, earnings and hitting revenue targets. Traditional Venture Capital is also broken and is only looking for home runs and as a result put far to much capital in play resulting in extreme execution risk for CEOs and their teams. Internal innovative activity is often attacked and destroyed by “corporate antibodies” that are highly risk averse and steeped in corporate process. The other alternative for growth is acquisition, and even then companies are risk averse and tend to overpay for more mature startups that may not be a great technical or cultural fit for their organization- along comes Irish Acquisitions!!
WHAT WE DO Irish Acquisitions finds great technologies that are within distressed businesses that have the potential for growth within a large addressable market. We acquire the distressed business, recapitalize, incentivize employees and management, and ingrain a passion for success within the business combined with our powerful customer and partner eco-system that drives adoption of innovative technologies. We look at early stage disruptive companies who have developed novel technology and have validate and strong potential to deliver practical innovations aligned with the strategies of our ecosystem of large OEMs, industrials and firms that have a need to acquire innovation. Working together with our strategic community of partners - category owning F1000 companies, Irish Acquisitions validates these technologies with real customers and industry players, then converts those technologies into paying pilots and POCs, and scales them for larger commercial deployments and potential acquisitions.
Our strategic partners validate the need, provide market access, and are therefore natural acquirers of the startups. This combination addresses a main failure mechanism of startups, namely market accessibility and exit options. The bottom line is that Irish Acquisitions gives its strategic partners a way to, drive innovation, and nurture the progress and development of targeted startups to position them, if applicable, for rapid acquisition and integration into their business.
OUR UNIQUE APPROACH Irish Acquisitions combines elements of a sophisticated acquiror, an accelerator and a traditional VC, but is distinctly different from all three. While a venture fund is part of the Irish Acquisitions operation, it is an investment vehicle for us to place bets that we feel align with our “strategic partners”. We are an acquirer first. We provide an extremely efficient capital model greatly shortening the path to growth and successful exits.
Our accelerator is also very different and is also shaped more like an operational success methodology. We work with our strategic partners to identify key innovation, product gaps, and roadmap opportunities.
Our team’s strength is corporate go to market and operational excellence. We arrange for these startups to actively engage with our corporate partners to stimulate pilots and adoption of early stage technology. These interactions can also stimulate the corporate directly investing in the companies or engaging them to fill gaps within their lines of business. Also, while it may appear to operate as a venturs firm, our primary talent is in operational execution and mentorship that results in rapid success for early stage technologies.
The Irish Acquisitions Model consists of:
• Focus – Only Artificial Intelligence, IOT & Analytics: Industrial, Security, Financial Services, Healthcare and Manufacturing
• Acquire- Distressed Companies or Assets that need liquidity or execution “heavy lifting”
• Leadership – Experienced GO TO MARKET LEADERS
• Partners – Provide ideas, validation, support, and acquisitions
• Financing – Capital Efficient via our investment partner or Corporate Investment
• Turnaround Mojo – Hard to infuse excitement into something that is broken- WE DO!
• Process – Path to EXIT (90 Plan of Record with Steps to being acquired)
Recent valuations of successful companies in this space are in the multi-billion-dollar range. Some of our companies may achieve this type of “home-run”. However, if they don’t, the model allows them to take advantage of any early acquisition opportunities because of their visibility to the strategic partners. As a result, Irish Acquisitions will be well placed to take advantage of any buy vs. build decisions that result in acquisitions from $30 - $150 million while retaining an option to create billion dollar exits.
Multiplying these individual company results across our portfolio of companies should result in exceptional returns for the fund and our investors.
Working closely with strategic partners is a key element of the Irish Acquisitions Model. Our partners are the home for much needed validation and paid pilots, funding, investments side by side with the fund and channels to market. Most importantly, they are also potential acquirers of our companies.
We understand from our own experience that large companies often struggle to develop disruptive innovations as part of their overall product strategy. Typically, this results in them acquiring relatively small startups to fill in the gaps. This can be a somewhat random process, with mixed results. After all, a high-quality startup may simply not be available at the right time and price, and even if found, integration into the organization's product architecture and culture could be a challenge.
Our goal is to invert this process and make it much more intentional and efficient. We are actively engaged with our partners to clearly understand their roadmap and product gaps which shapes our acquisition strategy. Throughout, the corporate unit of the partner stays very close to the startup as it develops.
The end result is that the partner is presented with an opportunity to acquire a startup that fits nicely into its own product and strategic roadmap when it is ready to do so and at a sensible price. The second key to the model is in how we capitalize our companies. Key here is outcome alignment. Everyone involved participates in the outcome of each company - that includes our partners, all employees of our companies, and our execution team. We are able add fuel and accelerate market success of these companies by ensuring that every company we acquire has a commitment from at least 3 strategic customers/partners to perform a paid POC. We work with the CEO and team on the licensing models, the sales models, the execution models and jump in with a hands-on approach to helping the CEOs execute their dreams and vision.
Most acquisitions of enterprise software companies occur at valuations between $75 million and $150 million, with a typical return to a VC investor of around $25 million. Unfortunately, this reality is at odds with the needs of most large VCs. If a fund has raised $800 million, it must return at least $4 billion to be deemed a success. Which means it would need to invest in 120 successful companies with an average exit value. This implies that the fund would need to make several hundred investments overall, which is simply impractical. As a result, large funds are driven to ‘swing for the fences’ on every investment. In our opinion, this sets them at odds with market realities and is a key driver of the low success rate of Silicon Valley startups. Our goal with the Irish Acquisitions Model is to achieve a much higher success ratio, partly by ensuring our companies are built such that a $50 million exit is a great outcome for all concerned.
Key elements of this strategy include limiting the amount of capital invested and also making sure that other investors share our vision of what constitutes a successful outcome. Consequently, we maintain relatively small funds. We also believe this promotes good practice, as our growing portfolio companies require outside capital, and therefore validation – although we are still careful to ensure we pick the right investors and partners.
Lastly, since we have de-risked the product, IP and market access with our strategic partnership ecosystem, our focused acquisition strategy and execution process and methodology, the model should sustain a lower loss ratio. Hence, we believe over the long term we will provide a higher alpha with a lower beta than typical venture capital and when the opportunity arises, can hold the longer-term bets if appropriate. Deep industry and technical know-how, turn around expertise, CFO expertise and operational excellence is what the Irish Acquisition team is built on and will apply that learning and application to each and every company we acquire and provide services to through its lifecycle.
For further information, contact Future@IRISHai.com