What's your name and what position do you hold?
Eoin Leonard, I am the Founder & CEO at i3PT Certification
What are your day to day responsibilities?
As CEO, I work across both of our core business units, one of which is our services business i3PT and the other is our SaaS business, CertCentral. I am the person most responsible for determining the strategic direction of both units, but I’m very well supported by a very mature and professional team.
My role is quite varied but a great deal of my time is spent on the R&D and innovation side of our business, as well as having direct involvement in the business development and finance groups. What drives me most is growth and continuous improvement, so I focus most of my time on projects that deliver results in these two core areas. This can mean contributing to the creation of new products for our SaaS clients on a Monday, to meeting with strategic partners and potential clients on a Tuesday and sitting with our board on a Friday. I love the variety and I genuinely jump out of bed in the morning!
How do you see the current situation affecting capital fundraising for businesses?
Firstly not all businesses have been negatively impacted by the current situation, in fact for some it has been a catalyst for enormous growth. That said, whether a business is effected negatively or positively by COVID-19, the impact is significant in terms of fundraising. When investors are trying to assess the performance of businesses in this period it’s really difficult to determine how real or otherwise current KPIs may be. Some very strong businesses may be disproportionately impacted for a short period of time, making the fundraising a necessity at a time when their value may be artificially low. Likewise, many investors are likely to be wary of a company realising exponential growth due (at least in part) to a temporary trend. The crux of the matter is whether or not some of these trends are going to be with us in the long term.
When might the IPO market recover?
Firstly, I think that we are beginning to see some positive signs of recovery after a protracted slump. There is an argument that there has been some pent-up demand. The reality though is that whilst high-performing firms from certain sectors and even companies with very specific business models will see 2020 as the perfect time to go public, for many, market sentiment is too difficult to gauge. The difficulty is that we do not yet have an end in sight for the current situation. Whilst the economic outlook is as uncertain as it is today, we are likely to see some recovery and even some “big name” IPOs, but many will remain cautious.
What are some of the new challenges growth-stage businesses encounter when they are on the lookout for new investors?
I don’t presume to be an expert and can only speak to my own experience, but it very much depends on the specific business and their growth/fundraising strategy. Some businesses are very capital dependent and they require regular rounds of funding to maintain their aggressive growth targets.
This challenge is most acutely felt by innovative companies which are pre-revenue and pre-profit. What I feel is a universal challenge is cutting through the “noise” and finding partners who are aligned with the long-term goals of the business.
I know a lot of entrepreneurs who have sold off too much equity too quickly when they may not have needed to e.g. where debt would have been a better option. Equally, many companies wait too long to raise funds which can result in lost momentum and lost market share.
It boils down to three key things; When should I raise funds? How much do I need? And who do I want to join me on the journey?
What can the government do to attract private capital investment in firms and make equity financing easier to access?
In the first instance, in order to attract capital we need to grow attractive businesses. The government does a fantastic job supporting innovative indigenous firms via Enterprise Ireland and I think everyone understands the impact that they have. What is possibly less well understood is the impact that the IDA has had on innovative Irish businesses, given that they are focussed on attracting foreign direct investment. As an Irish entrepreneur, I wake up and thank God for these two organisations every day of my life! The IDA supplies Irish firms with an incredible client base who set a sophisticated demand for software, products and services. Many FDI firms have also been responsible for cultivating business leaders who have gone on to build fantastic Irish businesses. Enterprise Ireland then guides and assist companies like mine to maiximise the opportunities presented by these FDI firms, both at home and abroad.
In a nutshell, they should continue to support the IDA and Enterprise Ireland, who create the eco-system which is responsible for driving high-growth innovative Irish businesses. That and tax-breaks.
What are the options to raise capital post-Brexit?
Whilst there are some obvious potential impacts to those who wish to raise capital from traditional UK sources, there are a number of other options available to companies. Again, given the diverse needs of different companies it is difficult to provide a succinct answer to this question but it’s fair to say that businesses will find other ways to raise capital if the legal and operational landscape in the UK becomes too problematic.
What’s next for your company?
I’m relieved to say that despite everything, 2020 has been a good year for both i3PT and CertCentral (our SaaS business). We are on course for approximately 30% growth for this year and regulatory changes in the UK have presented us with the opportunity to have a major impact in the coming 24 months. As such, we are currently assessing our own options for funding some of this growth, albeit we are lucky to have a business model which has been largely self-financing up to now.
Our SaaS business is facing into a very interesting and exciting period and we anticipate that this will necessitate a step change in our growth trajectory over the next 2-3 years. It’s hugely exciting for me and we are in the process of building our team to ensure that we grow responsibly.
Eoin Leonard is speaking at The Business Post’s Raising Capital Summit on Nov 4th. Visit www.capitalsummit.ie for details.