Funding young business growth after the incubator

Universities around the country provide much-needed support to budding entrepreneurs through incubator and accelerator programmes.

However, there is a gap between that initial funding and the startups going on to receive venture capital investment. That’s where Unifund comes in.

Founder Zack Dutton says Unifund is the next step in the startup journey, providing seed funding and bridging the gap between the college incubator and private equity investment.

Student talent is highly regarded in the corporate world, but undervalued in the startup scene, Mr Dutton says. Unifund’s mission is to have fledgling entrepreneurs use their talent to start a business, “instead of doing an internship in a bank”.

Unifund has linked up with the Trinity Entrepreneurial Society which Mr Dutton says is the largest entrepreneur society in Europe. Instead of launching a marketing campaign to generate leads, Unifund sponsors the society, so the money goes to the students, allowing the process to happen “organically”. Since setting up in March 2017, Unifund has had over 600 applications.

So far, Mr Dutton and his business partner David McGuinness have self-funded the company. Much of the capital comes from Mr Dutton’s other companies — record label Revive Records which he started at 16, and music promotions business Bad Apple. Unifund provides seed investment, taking equity from the startups that it supports.

Mr Dutton says this model has elicited some raised eyebrows in the startup scene, where the typical practice for college incubators is that investment is funded through sponsorship from corporate partners.

However, he says by taking equity they are showing they are taking companies seriously.

The businesses that Unifund invests in are at a “super-early stage”. Each case is different, and Unifund doesn’t impose set conditions.

"Every case is completely different. Of the businesses we’ve invested in to- date, some are revenue-generating, and some are just an idea; you can’t treat those two things the same way."

Unifund is running a three-month programme this summer for three startups as part of a partnership with Huckletree, a co-working space in Dublin and London.

The inaugural programme is full-time, and packages are tailored to the needs of the startup, with specific mentors for specific businesses. Funding and office space are also included.

While Unifund is “hands-off” about what the startups do with the money (“they can pay themselves a salary if they want”), Mr Dutton says that as investors Unifund is very involved.

“It’s going to be a very proactive programme, rather than a bunch of students sitting in a corner with whatever investment they get,” he says.

Though applications are now closed, Unifund is open all year to applications for general investment.

Unifund bases its investment decisions on the team’s experience working with the startups in the college incubators.

“It’s not that we see an application and say ‘yes’ or ‘no’, it’s a longer process than that,” he says, because the team is more important than the idea. “If you don’t trust the person, if you don’t think they can deliver, the business doesn’t have an opportunity at all,” according to Mr Dutton.

By the end of this month, Unifund will have invested in six startups. The diverse group includes Recroot, a video-based recruitment platform; Make A Mark which makes a sheep marking gun; Campus Advs, an on-campus advertising service for brands; and Applaud Events which simplifies the process of booking performers.

Unifund works with Trinity College-founded private equity consultancy business, One16 Partners, which connects student startups based in universities in the UK and Ireland with potential investors. One16 Partners has ambassadors at most university campuses in UK and Ireland.

The Company Backing Ireland’s Fledgling Entrepreneurs

It was spilling out of the heavens when I met Zack Dutton, co-founder of Unifund, which focuses on providing seed funding for Irish student startups. Unifund has quickly made a name for itself as a champion of student startups, and it is based in the creative co-working space “Huckletree D2” in The Academy on Pearse St, just opposite Trinity’s Science Gallery.

Dutton had just flown in from London where he is based, using a temporary working space with Huckletree when in Dublin. He is currently scouting out a more permanent office for Unifund in Dublin as its portfolio grows.

The traditional facade of the Academy building is quite deceptive, hardly having changed in form since the building was erected in the 1820s, but inside is a different story. Once in the front door and through the large reception area, one gets the impression that this building has been developed with the care and the needs of the modern tech startup in mind.

The mix of clients and sense of community are some of the key attractions of such co-working spaces. Huckletree D2 offers hot desks, cellular and open plan offices, a high spec boardroom, spaces for pitches, launches, workshops and breakouts. They even have a calm zen garden to allow space for thoughts to develop. In the new extension at the back there is also a large roof-top terrace suitable for receptions, with a spectacular view over Dublin city.

Speaking to Dutton, he explains he has been particularly impressed by the talent and ideas he has encountered in the Trinity Entrepreneurial Society’s (TES) Dragons Den competition, where he has participated on the judging panel: “TES are doing great work to encourage entrepreneurship among students.”

He sees the current and growing entrepreneurship culture in Ireland as an exciting and great opportunity. However, in some respects the incentives and supports are stronger in the UK, with Dutton highlighting the better tax breaks.

As the conversation continued, it became clear that Dutton brings a focus, energy and drive typical of an entrepreneur. While studying at Dun Laoghaire Institute of Art, Design and Technology (IADT), he took time out to follow his passion for music and entrepreneurship, regularly touring internationally to develop his skills as a musician and sound engineer. While still at College, he set up an international concert promotion and talent management business called “Bad Apple”, which he still runs. He also added that he was currently planning to tour with some bands across Europe from April.

So why did Dutton set up Unifund when he is already so engaged with lots of other successful initiatives? He emphasises that he enjoys dealing with a broad range of people and projects at any given time, and Unifund offers such an environment. “Looking around at the college scene in Ireland, I considered that student talent and student startups were some of the most undervalued and under recognised.” Hence the gap for something like Unifund was blatantly obvious to Dutton.

So what does Unifund offer? Essentially, when it encounters a student startup that it believes has potential and could be the right fit, it can offer seed funding from approximately €5,000 to €25,000 and access to a number of strong mentors. Quite a careful bespoke approach is taken with each startup, and a package is developed appropriate to their particular situation. In return, Unifund generally takes a small equity stake in the startup of five to 10 per cent.

An example of a startup that Unifund is currently supporting is Recroot, a video-based recruitment platform. Another is Campus Advs. As the name suggests, it is an advertising firm that focuses particularly on college campuses. A further example is Applaud Events, which recently won the TES Dragon’s Den competitionand was selected to participate in Trinity’s Launchbox accelerator programme this summer.

Dutton emphasised the importance of the person or team you’re investing in: “I can’t stress enough how much it is the person, more than just the idea, you invest in.” Of course, he continued, you have to have a feasible idea, but so much is about “trust and belief in the team behind any startup project”.

So what does the future hold for Unifund? “We hope to support over 40 startups over the next five years”, Dutton says. “A small number of these may go on to be quite successful and the intention would be that they would cover and make the whole venture worthwhile.”

In the meantime, Unifund would have equity in 40-plus businesses and would be supporting and encouraging as many of them as possible to fulfil their potential. Dutton emphasised that Unifund is open to listening to all inspiring startups from any colleges in Ireland. As a next logical step, Unifund plans to similarly support student startups in the UK.

It seems that Dutton and Unifund have spotted a niche opportunity in the student startup ecosystem and effectively acted upon it. The arrival of Unifund as a supporter of student startups is a very welcome development and an endorsement of the talent and potential of student startups.

Similarly, the development of such a creative co-working space on Trinity’s doorestep is a vote of confidence in, and a very valuable addition to, the entrepreneurial ecosystem developing in and around Trinity.

TES Dragons Den

We experienced a whirlwind of entrepreneurial energy, ideas, discipline and style on Thursday night in the packed Synge lecture theatre in Trinity. It was, of course, the final of the Trinity Entrepreneurial Society’s (TES) flagship event, Dragon’s Den, with a handsome prize fund of €10,000 at stake.

Six teams were lined up to do battle through six five-minute pitches, each to be followed by a questions and answers session by the panel of five highly experienced entrepreneurial judges. These included three from RTE’s Dragon’s Den, namely Sean Gallagher, entrepreneur, and former presidential candidate; Eamonn Quinn, former Deputy Chairman of Superquinn; and Alison Cowzer, entrepreneur and co-founder of East Coast Bakehouse. In addition, there was Gene Murphy, Bank of Ireland Entrepreneur in Residence; and Zack Dutton Co-founder of the venture capitalist firm Unifund.

When I took my seat down near the front of the auditorium, the looks of determination and concentration on the faces of the team members as they assembled in various locations around the front rows told it all. So much work and preparation go into each of these seemingly short five-minute pitches. This includes condensing weeks or even months of work into such a short timeframe, turning complex content into simple graphics and dividing five minutes effectively between team members.

On top of getting all this right, one has to come across calm, smooth and convincing to impress such experienced judges. It is quite a challenge, and all six teams rose admirably to the occasion based on the feedback from the panel and the genuine applause from the packed lecture theatre.

The first team up was Roundup, which is developing a clever app intended to make it easier for the public to roundup electronic payments to the nearest euro for donation to their favourite charities. The Roundup team explained that one could get a monthly update or statement explaining how much one donated through this method and to which charities, and one could change what percentage goes to which charity or turn off the facility at any time. The logic of the app is to provide charities with a more efficient mechanism for fundraising than many of the current traditional methods. It also gives the conscientious consumer a convenient means of donating, which they control and monitor.

The second team was Luminary Hub. Their initiative aims at tapping into the large network of tech-savvy undergraduates around the country to provide a quality yet cost effective web design service to smaller businesses. At the same time, it allows these young techies to hone their skills and build up an impressive portfolio. Clearly from the portfolio on their own website they are making good traction with this idea already.

Next came the Greener Globe team with a shower head designed to help with water conservation. It is a LED-timed shower head, turning the water from green to amber to red, with red indicating your time is up. One of the judges quipped “you would need to modify it with a flashing light and loud alarm when your time is up in my household”. The team is following up on patenting possibilities and exploring licensing opportunities.

The fourth pitch was from Muapp – a Beauty Solution. The app from the team will allow one to find a make-up artist to your taste nearby in a simple and convenient manner. For the make-up artist, it will also simplify the process of finding and billing clients, while the team takes a five per cent cut. The judges noted that it was two guys fronting this beauty solution startup, asked what attracted them to this idea. The reply? The “insane amount of money spent on hair and make-up” by some female friends.

The fifth pitch and overall winner of the competition was Applaud Events. This startup provides its customers with a network of quality musicians enabling one to source a suitable performer for one’s event, whether it be a corporate function or a wedding. It can provide for a broad variety of tastes, from a string quartet to a pianist or a DJ. The value it intends to bring is through streamlining communications in sourcing and engaging a suitable performer, and a certain security concerning payment for both the performer and customer. Applaud Events will earn its revenue through commission, and intends to start small with Ireland first, then also the UK. As the winning pitch, the judging panel clearly sees potential to upscale this startup. The well-deserved seed money will hopefully help in this process.

Speaking to The University Times after the event, the company’s founder, Luke Cullen, said he was very pleased with the result and what it could do for him and the team. Cullen is in third-year studying English literature and history. He is a talented musician, has a passion for music and now clearly also a passion for business. I asked him about what winning this competition meant for him and Applaud Events. “Winning this competition gives validation to the idea. It will greatly strengthen our hand when we approach potential investors”, he said. Regarding next steps, he hopes to do a business accelerator course over the summer and to “automate our MVP website into the equivalent of Airbnb or Tripadvisor”.

The runner-up pitch in the competition was Uniblock. It stood out from some of the other pitches in that the team consisted of only one person: Hanna Lynch. She is studying law and business and has identified a very real problem: the slow process around validating qualifications on CVs. Particular sectors such as the financial, legal and healthcare sectors often require strict validation of qualifications and this can be a slow process, resulting in delays and costs for the intending employee and the organisation trying to do the hiring. Uniblock is developing a system using Blockchain technology that will allow qualifications on CVs to be validated much more quickly through an accompanying public key. She believes the relatively small number of Irish higher education institutions makes it quite a manageable country to get all concerned on board with such a tech solution.

Speaking to The University Times after the competition, Lynch said she was delighted with the “additional validation” the competition gives her idea. She said she’s become fascinated by the tech world and the possibilities that technologies like Blockchain provide. “Until recently I never would have thought of working for myself, now I see it as a real possibility”, she said. She will spend the summer exploring more about the possibilities of Blockchain with a Deloitte Blockchain lab in Dublin, and looks forward to “further validating the idea, building a team and sourcing investors”.

Lynch participated in the LaunchPad Sprints in November 2017, as did Cullen with the winning pitch above. Lynch has also signed up for the recently launched undergraduate module in innovation and entrepreneurship. When you see the professionalism of the pitches, the thoughtful ideas, and in many cases small businesses actually up and running, it is clear that the emphasis on innovation and entrepreneurship in Trinity is having a very real impact on these students.