[00:00:00] Derek O'Doherty: Up until the end of September last year, so for the nine months to the end of September, 92 different international VCs led rounds for entities in Ireland, What it means is 92 Irish founders were crisscrossing the Atlantic to find these lead investors. That's a really inefficient way to source the capital.

[00:00:22] Derek O'Doherty: At the core of West x West, it was okay, well, the founders are here, let's bring the capital to the market.

[00:00:27] Pete Townsend: This is Money Never Sleeps, sharp riffs, big ideas, and real insights from smart people. I'm Pete Townsend, GP at Norio Ventures. Let's go.

[00:00:39] Pete Townsend: My guest today is Derek O'Doherty, founder of West x West

[00:00:43] Pete Townsend: Derek spent 30 years in capital markets across London, Sydney, and New York, and most recently, he spent a year inside Enterprise Ireland as a senior investment advisor, building the international VC relationships that Irish companies need to scale.

[00:00:58] Pete Townsend: So last week he left to go all in on West x West, a two-day tech venture and culture festival that he runs in Castlebar in Mayo, bringing Irish founders together with global investors.

[00:01:09] Pete Townsend: Derek, welcome to Money Never Sleeps

[00:01:11] Derek O'Doherty: Thank you for having me. Delighted to be here. Looking forward to the chat

[00:01:15] Pete Townsend: the nut that I want to crack here and crack open a bit is that

[00:01:18] Pete Townsend: the economy here in Ireland just isn't big enough to warrant local VCs who will carry a founder from pre-seed all the way to Series B. So

[00:01:29] Pete Townsend: at EI, you were building a global VC coverage model, relationships with funds in the UK, US, EU, and Asia, the international bridges that founders need because the domestic depth isn't here. Does that match what you saw? And why does an Irish company hit a wall on home capital as it scales?

[00:01:46] Derek O'Doherty: The first thing I'd say, it's not just an Irish problem. It's an EU and probably even global problem.

The VC Pecking Order

[00:01:51] Derek O'Doherty: There is a pecking order for VC investment, and not surprisingly, the closer those VCs are to you and what you're doing, the more likely it is that you're gonna get funding. So to quickly rattle through it, you've got your angels and family offices in Ireland and the Irish VCs.

[00:02:06] Derek O'Doherty: The next would be the VCs in the UK, then the EU to some extent, although that's quite dispersed, and then the US. And then even in the US, East Coast US is arguably easier than West Coast US. There's only been, I think it's 10 Irish tech firms that have raised a Series A or later round or had a Series A or later round, in other words, kind of five or 10 million, that's been led by a Silicon Valley VC in the last 10 years.

[00:02:32] Derek O'Doherty: They're the names you'd expect, like Tines, Stripe, Wayflyer and so on. So, people need to understand and founders it's useful to understand the kind of pecking order of VCs. It's harder and harder the further you get away. But you've got to go to the local VCs and the funds first to find out.

[00:02:47] Derek O'Doherty: You're unlikely to get any traction with international VCs if you don't have the answer to what did the local Irish VCs uh, say.

[00:02:57] Derek O'Doherty: There is unquestionably a, a huge amount of liquidity in the international market for Irish tech founders. Irish tech founders outside the US are second only to Israel in terms of the percentage of them that raise capital.

[00:03:13] Derek O'Doherty: We are phenomenal founders, and it comes with the creativity about being Irish. You go to VCs in the UK, Europe and the US and you say you have an Irish founder, you'll get more traction with them than you will dare say with a lot of other countries in Europe because we have the ecosystem here, we have the talent, and we got the track record.

[00:03:30] Derek O'Doherty: So that definitely works in our favor. But you need to kind of break it down into constituent parts, be it pre-seed, series A plus or or further on and where you're going

The Pre-Seed Funding Reality

[00:03:40] Derek O'Doherty: You look the VC market in Ireland. I mean, fifteen, say twenty years ago, there were very few VCs in Ireland at all. Now there's, I think the number is fourteen, maybe fifteen committed funds here, which is fantastic.

[00:03:53] Derek O'Doherty: Now, only about four or five of them have committed funding over a hundred million. So they face the same problem that VCs across certainly continental Europe have, and that I think the statistic is in the US, call it three, maybe four percent of all institutional capital, the flow of capital from the big institutional investors, the big insurance companies, pension funds, so on, about three or four percent goes into VC.

[00:04:16] Derek O'Doherty: In Europe, it's closer to point three or point four percent.

[00:04:19] Derek O'Doherty: If you look at all the Irish VCs, most of them get their funding from large family offices in Ireland or one or two institutional investors, including Enterprise Ireland and the government. So there's not that much institutional capital in the funnel on the way down. Therefore, the Irish VCs are somewhat hindered purely by the level of capital they have, not by the competency of the people in there.

[00:04:41] Derek O'Doherty: So therefore, they're kind of limited then, in terms of the number of founders that they can invest in.

[00:04:46] Derek O'Doherty: So for pre-seed investors here, the normal route, and to be honest, the normal route for founders, again, the world over is you start with friends and family and you bootstrap it, then you get into angel investors and family offices, then you get into VCs and VCs that specialize in pre-seed.

[00:05:00] Derek O'Doherty: There's quite a bit of liquidity for pre-seed here. It's not as much as maybe you'd like. But then you're up against how good is the product, how good is the market fit, so on and so forth. So I don't think there's any stat out there that shows that Irish pre-seed founders raise less statistically or struggle more than pre-seed founders, say, in Portugal or Spain or Belgium and so on.

[00:05:22] Derek O'Doherty: Up until the end of September last year, so for the nine months to the end of September, 92 different international VCs led rounds for entities in Ireland, and that could have been seed, Series A.

Bringing Capital to the Market

[00:05:35] Derek O'Doherty: So if you think about that for a second, what it means is 92 Irish founders were crisscrossing the Atlantic to find these lead investors. But to my mind, that's a really inefficient way to source the capital.

[00:05:49] Derek O'Doherty: There's great founders, great businesses. They're probably all on the same flights crisscrossing 45th Street in New York or whatever it is. But those VCs are looking for the opportunities.

[00:05:58] Derek O'Doherty: At the core of West x West, it was okay, well, the founders are here, let's bring the capital to the market.

[00:06:04] Derek O'Doherty: There's definitely, I think, a huge gap in the market for a international private growth fund to come and seed a fund here in Ireland that could act then as an accordion where you could- ... you could build a Pan-European fund.

[00:06:18] Derek O'Doherty: Like a large growth fund that starts your checks at five plus million. You base it in Ireland. But the key thing that does, it solves the problem of these companies becoming foreign-owned companies.

[00:06:27] Derek O'Doherty: It's an Irish fund that's here that expands into Europe.

[00:06:30] Pete Townsend: Just to, to dig into West x West a bit, you left to go all in, right? You left Enterprise Ireland to go all in on West x West. You had your 30 years in capital markets. Now with this one year inside the state scaling agency, you've walked out to build a founder festival.

[00:06:47] Pete Townsend: Obviously, this is in its second year now, but why now?

[00:06:51] Derek O'Doherty: Yeah, when you say it like that, it sound a bit crazy, all right, definitely.

[00:06:55] Derek O'Doherty: It was a pet, project really last year, a passion project. Just I realized there I knew a lot of great founders from the west, the likes of Colm Lyons in ID Pal or Paul McBride in Peroptyx, Fidelma in Payslip , on and on you go.

[00:07:07] Derek O'Doherty: And there was nothing to showcase them, so I thought it'd be fun to put something on. And it got a huge reaction. I had to turn away founders in the end, and I got great support from certain backers. Music was also in the DNA in Ireland. Well, it has always been in Ireland, but also in Castlebar.

[00:07:19] Derek O'Doherty: Castlebar has the largest indoor venue in Ireland outside Dublin, called the Royal Theatre, and I can't wait for people to come down and see the scale of this thing.

[00:07:26] Derek O'Doherty: So we had a very clear strategy in terms of having a number of dinners this year, C-suite dinners.

[00:07:31] Derek O'Doherty: We got phenomenal support from international VCs, and at the core of it was to try to get international VCs back.

[00:07:38] Derek O'Doherty: I realized that actually there was a huge gap in the market, not just for a premium conference that showcased founders from the west, but showcased founders from north and south in Ireland and brought the capital to them in a fresh, authentic, frankly, kind of edgy way.

[00:07:55] Derek O'Doherty: So that's what we set out to build. I'm delighted with who we have on stage, and it became obvious that there was a huge amount of support for it in the sector, and I thought now is the absolute ideal time to to give it my full energy and passion. Yeah, so I'm very excited.

[00:08:13] Pete Townsend: So tell me more about the showcase and connection and why that's better than just, more domestic capital and trying to bring in more domestic capital.

[00:08:24] Derek O'Doherty: and as I said, there, there's plenty of domestic capital here. I'm close to a lot of the VCs here. They do a phenomenal job. Is there room for more liquidity? I would say so. I think it's at the upper level, and there's funds at the moment in Ireland out raising their second and third fund.

[00:08:37] Derek O'Doherty: That'll be a great litmus test, and I wish them all the best.

[00:08:39] Derek O'Doherty: So Web Summit has come and gone and did what it did.

[00:08:41] Derek O'Doherty: That's fantastic. SaaStock was a European-wide conference that happened to be in Dublin. Dublin Tech Summit is great and it does a lot of great work. But to me, there wasn't one that really specifically focused on the founders, the Irish founders. We have this evergreen crop almost of amazing founders and it's like, well, if you build it and you bring the capital to it that's new and that's fresh and that should draw the crowd.

[00:09:04] Derek O'Doherty: And then by building that community, then in due course, given the background that I have in the capital markets, it would be interesting at some point to try to bring in some form of capital intermediation to help them. But honestly, that's not a focus. It's more around building something that pertains to the Irish market consistently again and again, and I'm hoping to, in the speech, announce an aspect of that that has nothing to do with the dollars and cents and the bottom line

Community & the Super Connector

[00:09:32] Pete Townsend: There's something there that, that resonates with me, Derek, in that there's a guy called Nik Milanoviċ in the US who

[00:09:38] Pete Townsend: he started off by running a newsletter, right? And that newsletter then gathered an audience, and he became the super connector in the middle of this network. And that by that, people started asking him, "Well, hey, can you introduce me to some of these deals that you're getting you're becoming aware of?" And then what did he do next?

[00:09:56] Pete Townsend: Well, he started a syndicate. And then after he did the syndicate, he started a fund, right? So there's a... you're right. It's It's, if you can get this thing going at the grassroots level and get that community built, and on top of that, you start looking for opportunities to connect people economically, right?

[00:10:10] Derek O'Doherty: It is that, that super connector role, I suppose. And it's, it's that thing where you put the molecules together, but you've no real control over what happens from it. You just have to stand back and wait and see. We had an amazing day last year. I knew there was so much more in it, so I'm super excited about it.

[00:10:28] Derek O'Doherty: It's just-- it's that unknown element where you bring it in an experiential way, which is why the West of Ireland is our secret sauce really

Event Details & Lineup

[00:10:35] Pete Townsend: Great. And tell people when it's on and who should be in Castlebar in October at West x West?

[00:10:40] Derek O'Doherty: Yeah. So it's Thursday and Friday, 15th and 16th of October. Two days, two nights. We have forty-eight founders on stage who between them are raising about $750 million in venture capital. That's from pre-seed right up to Series A and growth, including Bobby Healy from Manna and so on.

[00:10:56] Derek O'Doherty: So about $750 million in venture capital being raised. That's about sixty-five percent of the market. And then on the flip side, we have twenty international and Irish VCs with well over thirteen, probably fourteen billion at this stage, another VC added yesterday, to invest in Ireland. So it's the vast majority of the market.

[00:11:11] Derek O'Doherty: We have passes for founders out there, and I'm delighted to say we'll be running complimentary buses from all of the key incubation hubs.

[00:11:20] Derek O'Doherty: But outside of the capital side to it as well, there's a phenomenal cultural aspect. Now, there's nineteen amazing acts playing, and we try to get great bands in small venues. So we've got Bill Whelan, Liam Ó Maonlai, Sibéal Ní Fhearraigh, Bressie, and lots of other great acts over the two nights. So yeah really looking forward to it.

[00:11:35] Derek O'Doherty: Not to mention all of the C-suite speakers, which we've just announced, by the way, actually, that Rachel Ryan, the ex-global head of research and insights for TikTok, is gonna be interviewed by John Burn-Murdoch from the Financial Times. Rachel's a native of Galway, and she's recently relocated.

[00:11:51] Derek O'Doherty: So, so there's something for builders, operators, but particularly founders and those trying to get a foothold into their capital journey

[00:11:58] Pete Townsend: That's fantastic. And, you'll see me out there, Derek, and I was gonna drive, but now that you mention the bus, I mean, half the fun of a road trip is on the bus, right? So

[00:12:08] Derek O'Doherty: Totally, yeah. We'll have some interesting people on the buses. Yeah, there's great trades. It's phenomenal to me. We've got VCs coming in and people... For example, Mimi Underwood, who led the development of Gemini for Google flying in from Silicon Valley, San Francisco, not Silicon Docks in Dublin.

[00:12:22] Derek O'Doherty: We've got VCs from Nashville to New York to London. They're all coming in 'cause they like the West. nut to crack really is half the market's in Dublin and convince them that a, a two-and-a-half-hour drive to Castlebar is not all that far.

[00:12:33] Pete Townsend: Fantastic. Well, we'll see you in Mayo, Derek. Thank you, and appreciate you coming onto the show to tell us what you're up to

[00:12:41] Derek O'Doherty: Not at all. Thanks, Pete. Thanks for having me, and looking forward to having you with us in in Castlebar

[00:12:46] Pete Townsend: Thank you. And to all of you out there, thanks for watching and listening. Don't forget to follow or subscribe wherever you get your podcasts. It helps others to find the show, and it means a heck of a lot to me. Till next time. See ya

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