Hardware start-ups facing higher costs early on in their development should look beyond the venture capital (VC) realm and consider tapping into a wider range of funding options, according to Cian O’Flaherty, founder of Safecility.
The Dublin-based tech start-up is using the Internet of Things (IoT) to help facility and property managers manage on-site compliance at a lower cost.
To date, 35-year-old O’Flaherty has raised close to €110,000 in both European Space Agency and EU Horizon 2020 funding to help develop Safecility.
“The Space Agency side of that was a bit of a surprise to be honest, but they have a funding scheme called Kick-start specifically for SMEs and start-ups that will use their technologies in business applications.
“They’re basically trying to use what they call ‘downstream business’ to stimulate R&D, and applying for the funding doesn’t take a huge amount of work. You can get €60,000 equity-free, which could fund a year of product development for an early-stage start-up.”
By contrast, applying for funding from Horizon 2020, the EU’s Research and Innovation programme, was “as grim as you’d imagine”, O’Flaherty said.
“It’s a 30-page tender. It’s tough going, but there is value in some of it. It forces you to think things through and I think there’s definitely room to train more start-up founders about how to access money by tendering and writing proposals.
“Capitalising your business can be really hard and sometimes people see VC as the only game in town, but other routes can also be useful.”
O’Flaherty describes Safecility as a “virtual compliance concierge” for the property and facilities managers. The Kerryman established the start-up in 2017 after heading up an LED lighting company for close to a decade.
“At the time, smart technologies and wireless networking were ‘hot button’ topics in lighting, but the market was all about ‘selling boxes’, so there was no recurring revenue in it,” he said.
“It’s also quite price-sensitive though, so I thought it would be easy to disrupt. I wanted to make a product that would use some of this smart lighting technology, but also provide a service of genuine value to customers.”
The niche O’Flaherty hit upon was the emergency lighting that is a legal requirement in large-scale residential and commercial buildings.
“That market is actually really big. Any building that isn’t a walk-up domestic house will have emergency lighting, whether it’s an apartment block, a hospital, school or office,” he said.
“They all have a legal obligation to test that lighting regularly, quarterly in Ireland and monthly in the UK.
“Most of that testing is done by maintenance team members or subcontractors who carry out technical inspections. For the owners of lots of big buildings, the cost and paperwork involved can become really onerous.”
Safecility can halve the cost of testing emergency lighting to make sure it’s in line with legal requirements, according to O’Flaherty.
“We use IoT to control the emergency lighting and other critical services in these buildings, and our software handles all of the testing and compliance reporting obligations for clients,” he said.
The start-up’s customers in Ireland include Limerick City and County Council and Sensori, the Dublin-based facilities management company co-owned by John Sisk & Sons and Designer Group.
In Britain, Safecility is working with three housing associations: Vivid Homes in Hampshire, Halton Housing in Liverpool, and the Mid Wales Housing Association.
“We’re working with channel partners to reach customers in both Ireland and Britain. Our clients are in every aspect of the built environment, so channel partners help us to reach all of those different sectors,” O’Flaherty said.
“The price depends on the customer. It starts at about €100 per unit, but it’s an enterprise sale, so it varies a lot. We could have projects valued at hundreds of thousands of euro, but most are between €3,000 and €5,000.”
Safecility employs six people at the Media Cube, a start-up incubation centre at Dún Laoghaire Institute of Art, Design and Technology in south Dublin. It is a client company of Enterprise Ireland and secured €50,000 from the state agency’s Competitive Start Fund last year.
“We’re currently in the process of raising our seed fund. We’re targeting €300,000 and we’re hoping to close that early in the first quarter of 2021,” O’Flaherty said.
“Enterprise Ireland has been a phenomenal help to us so far. I think they recognised early doors that hardware start-ups tend to face a particular set of challenges.
“Some of that is down to needing the money to develop MVPs [minimum viable products] at an early stage. There is also generally a lot of intellectual property that needs protecting.
“Enterprise Ireland has given us valuable support on that front, helping us to begin protecting our intellectual property on the hardware and software side, as we look to move into markets beyond Ireland and the UK.”