Johnny Harte offers his advice on the various funding options on offer to start-ups and SMEs and the dos and don’ts of securing investment.

As the founder of True Fund Solutions, Johnny Harte advises companies on fundraising, from early-stage seed investment through to later-stage growth funding. The option best suited to your business will, Harte says, depend on what stage of development it is at.

“If you’re a very early-stage company, still running through potential ideas, my advice would be to get in contact with your Local Enterprise Office (LEO), which will offer a range of grants for product development, market esearch and sales and marketing strategy,” Harte says.

There are 31 LEOs operating within the Local Authority network in Ireland, offering support to start-ups and small businesses looking to expand.

Options on offer from LEO to early-stage companies include the Feasibility Study Grant, designed to help applicants gauge the commercial viability of, and potential market demand for, a new product or service.

The maximum Feasibility Study Grant amount available varies from 50 to 60 percent of the total project cost, depending on location, up to a maximum of €15,000.

The LEO’s Priming Grant, meanwhile, must not exceed 50 percent of the investment required by an applicant up to a total of €80,000. The LEO can, however, approve up to €150,000 in certain situations.

A Priming Grant is available to start-ups in business for up to 18 months, employing up to 10 people and trading both in Ireland and internationally, and can be put towards direct business costs or capital items, such as equipment, salaries, consultancy and marketing.

“These grants are a good starting point for a lot of young companies,” Harte says. “Because the funding on offer is grant-based; you’re not parting with any equity – but you will be expected to have some degree of market research already done when applying and to be able to match the grant with some of your own funding.

“The next step up is Enterprise Ireland (EI), which also has different funding options from the very early stages through to later-stage investments.”

EI is the State agency responsible for the development and growth of Irish companies in global markets. According to figures released in May, EI invested €24 million in Irish start-ups in 2023 and supported 156 early-stage companies. Investment was provided through the State agency’s High Potential Start-Up and Pre-Seed Start Fund programmes. EI also offers feasibility grants to start-ups and a broader range of grants, vouchers and business support options to more established companies.

Its focus is on manufacturing and internationally traded companies, with scope to scale and create jobs, however, rather than smaller locally traded service companies, micro-enterprises or sole traders.

Alongside EI, funding options will typically be in the form of angel investors and venture capital (VC) firms.

New figures released by the Irish Venture Capital Association (IVCA) revealed that VC funding for Irish SMEs fell by 48 percent to €258.5 million in the first quarter of 2024, compared to €502 million in the same period last year. The IVCA VenturePulse survey published in late May in association with William Fry, noted, however, that seed funding showed “resilience” in the first quarter, with very early-stage Irish companies raising €40 million.

While there was a downturn in funding across most deal sizes, the survey also noted that companies looking to raise amounts of between €1 million and €3 million enjoyed a positive first quarter with funding in this sector rising by 126 percent to €22.7 million compared to €10 million last year.

“There’s no doubt it’s a challenging time for those looking to raise investment but there is funding available in the Irish market and it is accessible. Good companies will always attract investment,” Harte says.

“Funding levels have dropped but a lot of that is down to fewer larger, later-stage deals. Angel investors are still slightly wary, but activity is picking up and they are starting to invest more again.

“On the venture capital side, we are also seeing some newer funds coming into the market, which is likely to boost seed and potentially Series A stage investment over the next few years.”

For those entrepreneurs seeking funding, Harte says resilience is key. “Founders take a lot of knocks in their business on a daily basis and securing investment is no different. There is always something that doesn’t go according to plan when it comes to the fundraising process and you’ve got to be able to adapt to that,” he says.

“What investors are looking for will differ, but all will be looking for founders who have an in-depth knowledge of their sector, some early traction or validation and they will want to see a strong team with a good track record and potentially a diversified skill set.”

Like so much in business, successful fundraising is often built on the foundations of strong relationships.

“One of the biggest mistakes I see companies make when they’re looking for funding is the failure to begin the process early enough. They almost always underestimate the length of time it will take to secure funding.” Harte says.

“Ideally, you really need to kickstart the fundraising process 6 to 12 months ahead of when you think you will actually need that funding, but it makes sense to be thinking about the relationships you will need to build to access funding from day one.

“Get out and meet with potential investors so they get to know you, your company and what your plans are for your business. Companies should treat raising investment like any other aspect of their business so there needs to be a funding strategy and process in place.

“You need to identify who your potential investors could be and start those crucial conversations and engagements as early as possible, before you’re actually looking for investment.”

Interview by Arlene Harris.