A new Dublin-based venture which offers start-up technology companies early management expertise and routes to capital has just completed a $3.16 million (€323 million) fund-raising exercise for a US-based Internet company.
The US company's identity was not disclosed but it is understood to be Healthology, a content-rich website featuring input from a national network of doctors in the US, which was the brainchild of two practising doctors.
Irish company, Gorann, became involved in the project through its business which offers management, and sales and marketing services in return for a combination of fees and company equity. By providing initial business plan and sales strategy expertise Gorann introduced a US-based corporate investor to its client resulting in the $3.16 million investment for a stake believed to be around 20 per cent.
Gorann (the Irish word for incubate), began trading in late 1998, after three Irish-based executives with extensive experience in the technology sector devised the idea to operate as a "venture catalyst" company. Gorann's ultimate goal is to identify young Irish companies with products that have potential in the US market and guide them through their development process.
In December, Gorann received an initial £150,000 investment from Binary Investments. It is now seeking to raise $1 million from Irish or US investors to establish an incubation community for start-up companies in Dublin, and expand its business development team in the US, where five people are already employed.
According to Mr Phillip Matuschka, chief executive officer of Gorann, the company differs from a venture capital company by investing skills instead of money in start-up companies. Typically Gorann will become involved in start-ups for the first 15 to 18 months by setting out an initial strategic vision for the business, and then offering management and sales and marketing skills to bring the product to the US market. In return, Gorann takes an equity stake in the company ranging from 10 per cent to 25 per cent. This year it plans to take on one new company every six weeks.
"We probably see between five to 10 new ideas each week, and would consider establishing a relationship with around one in ten," says Mr Matuschka. "On the quality side a lot of companies lack a large enough vision and don't understand what is involved in the execution of their ideas. That's where we step in," he says.
Many of Gorann's clients come through Mr David Lehrer, a software industry veteran best known for establishing Point Information Systems in the Republic in 1989. Point spawned a number of technology entrepreneurs, and Mr Lehrer draws on this network and his experience in the industry to source new business for Gorann.
Mr Matuschka and Mr David Beatty then provide the practical business expertise. Mr Beatty is currently based in the US where he concentrates on the sales and marketing effort for fledgling companies.
Last year, Gorann worked with TPLG, an Irish company specialising in the development of software components for the computer aided design industry, when it raised £275,000 in private funding. Gorann will now assist it in a second round to raise £250,000. Another of Gorann's recent clients includes Tigeregister.com, a golfing related Internet project.
With revenues of $300,000 last year, Mr Matuschka says Gorann's business focus is on breaking even, and in the longer term generating substantial returns from early equity stakes.
