Funding the future

Delta Partners’ Maurice Roche has Ireland’s next generation of tech unicorns in his sights with the launch of the VC firm’s latest fund, writes Clare O’Sullivan.

With the launch of its latest €70 million fund, Dublin-based venture capital firm Delta Partners is targeting the newest generation of promising seed and early-stage technology businesses across Ireland.   

Announced in April, the fund is the sixth to be launched by Delta since its formation in 1995. In the years since, Delta has backed over 120 companies, realising a mammoth €1.8 billion.     

The new fund is backed by limited partners (LP) including Bank of Ireland, Enterprise Ireland and Fexco as well as the family offices of successful Irish technology entrepreneurs. Bank of Ireland has been an investor in Delta’s previous funds and has a number of initiatives/products aimed at the technology sector. Fexco is a new LP to Delta and widely regarded for its innovation in the fintech sector.

Previous companies that have received investment from Delta include Clavis, the e-commerce company sold to London’s Ascential plc in 2017, Neuravi, the Galway-based medtech firm acquired by Johnson & Johnson in the same year, and SensL Technologies—sold to ON Semiconductor in 2018.

Delta’s current portfolio, meanwhile, includes Luzern, the Dublin-based e-commerce platform, and Sirius XT, a UCD spin-out developing the world’s first commercial lab-scale microscope.

It is a diverse portfolio—and necessarily so, according to Maurice Roche, General Partner at Delta Partners and a Fellow of the Institute.

“In a market as small as Ireland, you nearly need to be sector-agnostic as a VC investor. Our main focus is tech, but it makes sense for us to have a range of investments in the broader tech sphere,” Roche said.

With the launch of Delta’s latest fund, as many as 30 start-ups will be in the running for funding over the next three to four years.

“We will focus on a spread of early stage companies where we aim to be the first institutional investors , i.e. at the early seed stage (companies raising capital to develop the product and prove the value proposition with customers) to late seed (companies raising capital to scale on the back initial customer traction and have early signs of product/market fit),” said Roche.

Among all potential investees, a top priority for Delta will be the people involved. “The numbers are important, obviously, but it’s also about the people to a huge extent, the market and the opportunity,” Roche said.

“You want to be confident that the management team is capable of developing the product and getting early customer wins. The people behind the product really matter.”

A case in point is Richard Barnwell, who recently joined Delta as a partner from Digit Games, the gaming studio he founded in Dublin in 2012. A previous investee of Delta Partners, Digit was acquired three years ago by Scopley, the LA-based gaming company.

Another new addition to the Delta Partners team is Amy Neale, who is joining from Mastercard where she led fintech innovation teams globally.

“Richard has real start-up experience, and he has been successful, so I think he will be a great support to the entrepreneurs we work with,” Roche said.

“Amy is our first female partner and a very valuable addition because she has ‘lived’ in the fintech ecosystem through her role with Mastercard, and fintech is a sector we have invested in, and will continue to invest in, with our new fund.”

The fund has reached a first close with Bank of Ireland and Enterprise Ireland as cornerstone investors, supported by Fexco and several family offices. New investors will be added to the fund in the months ahead. “We are extremely thankful to our investors who have entrusted Delta with their capital to invest in the next cohort of Ireland’s early-stage technology companies” Roche added.

“This fund will be aimed at what we see as the funding gap for early-stage companies in Ireland. Great Irish entrepreneurs are succeeding across the technology spectrum and the main thing they lack is capital to help them achieve their ambitions,” Roche said.

“Our focus will be the start of their journey and helping them to succeed at that foundational level.”

A veteran of the VC sector in Ireland, Roche joined Delta Partners at its inception 27 years ago.

“I qualified in 1990 and spent some time working in corporate finance where I gained experience advising companies raising venture capital. I was interested in technology, and it was serendipity really that I met Frank Kelly, the founder of Delta, by chance one day playing golf. 

“Frank had come back from the States to set up a VC fund in Ireland and he was looking to hire. We got talking and I’ve been part of the Delta story ever since.”

In that time, Roche has borne witness to the Dot.com crash, the recovery of the global tech sector, the launch of the iPhone and the rise of the mobile app, and the transition from on-site IT to Software-as-a-Service (SaaS) in an increasingly digital world.

“From my own experience, I would say that Irish start-ups have done well in business-to-business (B2B) applications, particularly in fintech and payments,” he said.

“We have a very strong entrepreneurial tradition and a lot of very successful companies that have scaled internationally across SaaS and enterprise applications spanning digital health, customer data analytics, customer experience management and many other areas.

“We will always be looking at markets ripe for disruption because, where change is happening and new innovations are gaining traction, there is opportunity.”

Right now, cybersecurity is one such market rich with opportunity, according to Roche.
 
“If you look at what has happened in the last few years, businesses have become a lot more conscious of the need to protect their data,” he said. 

“We have seen a marked rise in phishing and other cyber-attacks. That has made people much more aware of data protection and privacy. As a result, we’re seeing a lot of money going into cybersecurity, particularly cloud-based offerings.”

Another big focus for Roche is fintech. “We have seen just how transformational fintech can be from the consumer point-of-view and person-to-person payments with the rise of digital banking apps like Revolut and N26.

“Our main interest here is on the B2B side, because the transformational effects technology continues to have in the enterprise space is enormous and there is a lot of potential there. 

“We’ve also seen the speed at which tech start-ups in Ireland like Flipdish and Wayflyer have achieved unicorn status.

“With this new fund, we want to find the very best tech start-ups out there waiting to be discovered and give them the funding and the support they need to achieve the global success they deserve.”