Green glow shines in the west

TECHNOLOGY:Silicon Valley offers confidence and investment for Irish companies that are brave enough to make the move west

It weathers the occasional economic downturn, it gets giddy with excitement over incomprehensibly complex technologies, it's a place where even $10 million (€7 million) in the bank still leaves people feeling like a poor neighbour, but Silicon Valley's appeal rarely wanes for Irish technology entrepreneurs.

It's easy to see the attractions, if you have an idea, a company, passion, ambition, confidence and nerve.

Where else on earth do people seriously speak of the next "Wealth Curve" - meaning the next big technology angle to fuel investment, company growth and more millionaires?

Where else are the pickings so vast for start-up funding? The sheer size of venture funds in the Valley, with the vast majority going into technology companies, is mind-numbing.

In the first quarter of 2006 alone, some $12.9 billion (€9.1 billion) in venture funds were available in the US, according to the law firm Fenwick and West of which about 60 per cent flow directly into one small geographic region: Silicon Valley.

Last year, funds were growing at the fastest level since the dotcom boom period. This year, funding in the second quarter slowed - to put it in the bland language of the company's reports - "a continuation of the strong positive trend in venture valuations".

Individual cash investments per company were up by 74 per cent and overall investments are at their highest level since the peak of the boom in 2001.

So, the mood in technology's heartland is understandably buoyant at the moment.

Fresh opportunities and growing markets in new sectors, such as so-called Web 2.0 social-networking technologies, virtualisation and green technology, are creating a real buzz.

Even as the rest of the US worries about the national economy, the Valley is fairly confident, says David Smith, who heads Enterprise Ireland's Silicon Valley office in Palo Alto.

Palo Alto - with its proximity to Stanford University, historically one of the major engines for Valley innovation - lays better claim to being the Valley's intellectual and symbolic capital than anywhere else along the corridor of land running from San Francisco to San Jose, at the end of the San Francisco Bay, that constitutes the vague area known as Silicon Valley.

Regional economists say that optimism is based on a solid foundation of good trade figures, availability of capital and jobs growth vitality.

Economists say a major plus for the region is that the heavily globalised Valley economy is not reliant on the weakening US for growth.

"When we're talking to companies, they're saying how much venture capital money there is.

"The view is that there hasn't been so much money around in six or seven years."

Most of that funding is going towards software, biotech, medical device and manufacturing companies, according to PriceWaterhouseCoooper's annual venture fund survey.

That's good news for Irish companies, as many in Ireland who would be eyeing the Valley, and many already out there doing business, fall right into those sectors. Other hot areas, says Smith, are chip technologies, energy, telecommunications applications and green technology.

Smith says that once Irish companies are in the Valley and "have something interesting, we have no problem getting them in to see the VCs."

The only problem is that many of the VCs think in terms of $10, $20 or $30 million (€7-€21 million) individual investments, far too high for the average Irish start-up, but smaller amounts are available too, he says.

Where are today's Irish technology companies that venture west, emerging from?

Smith points to Irish universities and institutes of technology, where far more research and development is happening now than in previous years.

Several now have their own business incubators as well as closer ties to working with industry, thanks in part to investment and support from Science Foundation Ireland.

Then there's that eternal source of Irish entrepreneurs - the multinationals at home and abroad who hire them, train them up and give them the entrepreneurial bug.

"People are taking tricks they learned from the multinationals and then thinking, 'there must be a better way of doing this'," says Smith.

Coming from Ireland also is a good calling card in its own right, both with the centrality of the technology industry to the Irish economy as well as the presence of Irish multinationals.

Add to this, the solid reputation Ireland has developed over a couple of decades as a fruitful provider of skilled employees and managers to Valley companies, and Irish companies are well regarded.

"You go in to talk to Valley companies and they are aware of the Irish," says Smith.

"They all know what's happening in Ireland, they know all about the Celtic Tiger, and are very interested in what Ireland's done," he says.

That's not to say simply carrying an Irish tag is going to open business doors and seal deals, he adds. Coming out to the Valley is entering the big leagues and Valley business and Valley money have no time for amateurs.

"Companies need to have thought out the execution as well as the pitch before they get here," he warns. "It's all about the business planning, sales, marketing raising finance."

Enterprise Ireland works with Irish companies in key areas like the classic "elevator pitch", so called because an entrepreneur is supposed to be able to give a precise and compelling summary of his or her company in the time they'd get if they suddenly found themselves in an elevator with a big VC. It may seem hokey to someone outside the US system, but in the Valley, the elevator pitch still reigns.

"We work with them to figure out their key selling proposition. What's going to make the guys sit up and go, 'wow'? You need to get out the 'wow factor'," says Smith.

Smith says Enterprise Ireland is working harder with companies in Ireland now, before they even consider setting up a base in the US, in particular to teach them how to make a sales pitch and what US clients or customers want to hear.

Sales and marketing remain probably the top weakness of Irish companies, according to Irish companies familiar with the US market. If companies don't have someone actually on the ground in the Valley, says Smith, it is very hard to get any attention.

To this end, they established their Business Acceleration Programme two years ago, where Enterprise Ireland will find sales experts in a company's field in the US.

"They can hook up with you for 12 to 18 months. They're met and vetted by us," Smith explains.

They will both pursue sales for the company in the US using their established contacts and experience in the field, while also training in the Irish company to take over such work eventually itself.

Smith says this is also cost effective for Irish companies, who would need to make a significant investment to hire a permanent sales person in the region- upwards of $250,000 (€177,300) annually for salary and expenses, he says.

"That's a hell of an investment for a small company," he notes.

It's a good way of testing the waters before considering a Valley office. "That's still a big issue for Irish companies - when is the right time to set up an office here."

For many - with American companies buying up smaller companies, lots of venture funding around, and an active market to sell into - it might be now.

"I wouldn't even consider a different place to do business"

Joe O'Keeffe, Chief commercial officer, SensL

Irishman Joe O'Keeffe of SensL is based in Enterprise Ireland's incubation unit in Palo Alto, giving him a front row seat on Valley happenings.

SensL, which makes low light sensors that sit on silicon chips, is a three-year-old start-up spun out of UCC.

SensL's light detectors can be used in biomedical and life sciences applications, to detect cancer and for X-ray scanning. They can go into hand-held, portable units, meaning doctors do not need patients to turn up at the few hospitals that might have the large scanners needed before.

"We can put multiple detectors on a small piece of silicon," says O'Keeffe. The company's reasons for setting up a Valley office are simple. "Most of the customers in this space are over here on the west coast. This is an obvious place to be," he says.

SensL, which has 25 people in its Cork office, has been in a major sales and marketing mode over the last six to nine months, he says, as the company has shifted from a focus on research and development to getting the fruits of those labours out into the real world.

They have hired a sales manager, created a US arm of the company, SensL Inc, "And I just packed up and moved over here," says O'Keeffe.

"I wouldn't even consider a different place to do business," he says.

"Enterprise Ireland makes the office space affordable. Most of our workers over here work out of their homes. It's most important just to have the presence here and be available to customers."

Over the next year and a half they expect to hire representatives in major cities across the US to create "a deeper network of sales and tech support and to project a larger presence."

The company is also "starting a fairly decent ad campaign focused on the optics community", he says. "We have loads of big companies interested in us, but we need to heighten the perception that we're here and that we have a product to offer."

"People here are open and ambitious and willing to take the risks of a start-up"

Bob Quinn, Founder and chief technology officer, 3Leaf Systems

A self-described serial entrepreneur, Bob Quinn has been in Silicon Valley for 25 years. After taking an engineering degree at UCC, he went to work in Scotland, then came back to Ireland and set up the Irish arm of a Canadian electronics company in Galway.

"I left in the late 1970s for California," he says. "I needed to get out of rural Ireland." He got a job offer from computing pioneer Gene Amdahl's Valley company Trilogy out of the blue and at the same time he was offered a position in Canada. "I made the decision on the basis of the weather," he laughs.

Before long, he struck out on his own, founding iMODL, an Electronic Design Automation (EDA) software company, and Network Virtual Systems (NVS), which developed scalable architectures and chips for servers.

He is currently founder and chief technical officer of 3Leaf Systems, a company in the hot new area of virtualisation. The company - which has snagged over $32 million (€22.7 million) in venture funding - has been marked out as one of the top 10 virtualisation companies to watch by Network World magazine.

"I'm just not a corporate individual," he says. "Some have the DNA to succeed within a corporate environment but I'm a bit of a renegade."

What attracted him to the Valley?

"There's a tremendous resource of individuals, of people skilled in many areas. People here are open and ambitious and willing to take the risks of a start-up."

He says the Valley has come out of the "nuclear winter" of the dotcom crash. "There's a sense of enthusiasm here again . . . It's the place to go to now again, more so than five or six years ago. We're at the point where it's getting hard to hire people. It's an early warning sign," he quips.

For now the Valley is still a place to make money and one of Quinn's previous companies sold for €7 million.

"Companies come to Silicon Valley to show their products and have a presence, because of access to their markets, to customers, to funding and talent"

Jane Evans-Ryan, Moving Companies Ahead PR

When Jane Evans-Ryan came out to Silicon Valley 20 years ago with an interest in working in communications, she quickly realised the industry to focus on was technology. In particular, she has honed her knowledge and skills to serve the Valley's bedrock industry, semiconductors.

Evans-Ryan knows silicon and semiconductors inside out with a particular emphasis on the processing equipment needed for the highly secretive techniques for transforming sand - silicon - into the Valley's most famous product.

She notes that Irish companies working in the semiconductor area are gaining much visibility in the Valley at the moment. Many of these work in the area of microchip design and supply technologies that produce chips for specialised purposes.

On a recent trip back to Ireland, she notes, "I was amazed to find a thriving semiconductor value chain in Ireland."

She says there are obvious reasons for Irish semiconductor-oriented companies to turn their gaze westward, to the Valley. "Companies come to Silicon Valley to show their products and have a presence, because of access to their markets, to customers, to funding and talent.

"A lot of OEMs (original equipment manufacturers) are here. Irish companies not only partner here with them, but are also their customers in turn. It's very important for them, to come out here and establish visibility and get on the radar.

"You have to demonstrate that you have a tremendous market for your product."

She notes that financially and culturally, is much easier to establish a presence in the Valley than in the semiconductor industry's other main centre, Asia. Irish companies "work very well within the American system" of doing business, whereas it's very expensive to create any visibility in Asia, and the system is alien, she says.

After a severe downturn for semiconductors after 2000, the industry is doing well again and that in turn has the Valley economically upbeat, even as the rest of the US fears a downturn. "There's a very buoyant mood here now," she says.