'There's talk of tech clusters in Ireland, but they're not deep enough. This isn't Silicon Valley'

One of Ireland’s top VCs says our tech sector is still small compared to the likes of the US.

By Paul O'Donoghue

IRELAND’S TECH SCENE needs to fit in with the needs of the global industry rather than challenge other regions for dominance, according to one of the country’s most senior tech investors.

Several prominent people and media outlets, including the BBC, have repeatedly dubbed Ireland as the ‘Silicon Valley of Europe’.

People often point to the capital’s ‘Silicon Docks’, an area in Dublin’s Grand Canal Dock that hosts thousands of workers in some of the world’s biggest tech companies, as evidence of Ireland’s international tech credentials.

However, John O’Sullivan, who has been active in operating roles and investing for two decades, takes a more measured view.

Speaking to Fora at the InterTradeIreland Venture Capital Conference yesterday, O’Sullivan said that while people talk about ‘clusters’ of tech companies in Ireland, the scale of the industry here is still very small in comparison to the likes of the US.

“There’s a lot of talk about patterns, there’s a lot of talk about clusters. They’re nice ideas, but the clusters here aren’t deep enough,” he said.

“When the original economic work was done on clusters they were talking about tens of thousands of companies. Everyone took the lingo and thought ‘if we use that, it’ll be great’.

“There are pockets of companies in Ireland. Ireland’s longest heritage in software is a 25-year heritage in fintech (but) people should be under no illusions here, Silicon Valley is enormous. This isn’t Silicon Valley.”

Silicon Valley

O’Sullivan is a general partner with ACT Venture Capital, a tech-focused Irish venture capital firm.

The company recently announced a new seed fund worth €15 million, a successor to the old fund that invested in some of the most notable names in Irish tech in recent years.

This includes the likes of Storyful (sold to Newscorp), Pat Phelan’s Trustev (sold for $44 million) and Soundwave (sold to music streaming giant Spotify).

InterTradeIrelandVentureCapital2017-148 John O'Sullivan of ACT Venture Capital
Source: Conor McCabe Photography Ltd

Asked if Ireland could be regarded as a notable player in the tech industry, O’Sullivan said: “We are, but we have to fit into how that world works. We’ve done a very good job of that, but it is high risk to assume that you can be the same as somewhere else.

“The number of working people in Ireland is just over two million. How many people work in the north and south bay areas of California? 1.2 million in the north bay, south bay 1.3 million.

“Let’s take Silicon Dock and compare it to that. You could lose them in a heartbeat and no one would notice.”

Fitting in

He added: “Our journey is about fitting into it. The idea that we would be a counterbalance to it or have scale against it is a myth.”

Despite this, he said that the Irish tech trade does have many advantages over the industry in several other countries.

“Companies have been getting on with this. (Ireland) is English-speaking. Secondly. we’ve been doing this (tech) for quite a bit of time.

“There’s been a very substantial supply of capital locally and that’s been sustained for six or seven years. Pro-rata to nearly any other place in the world there’s an extraordinary level of early stage capital available.

“That isn’t great help to all the companies that can’t get any money, but outside of Boston, New York, maybe Austin and certain parts of California I don’t think there is anywhere that has as much money available in its region as Ireland does. That’s an amazing thing.”