The Irish VC Ep22: Gerry Maguire, Chair of the IVCA & partner at Atlantic Bridge

Hello, and you're very welcome to this Christmas episode of the Irish VC podcast. This is the last Irish VC podcast of 2024. And with that in mind, I am absolutely delighted to be joined today by Jerry McGuire, who is a partner with Atlantic Bridge and also the current chair of the IVCA. So Jerry, you're very welcome and thank you for joining me today. I'm glad to be here. Great. And Jerry, everybody will know of Atlantic Bridge. It's one of the leading Irish VC firms. But maybe if we take a step away from Atlantic Bridge firstly or a step to the side and you might share with us how did you end up in the Irish venture capital industry in the first place? Yeah, I suppose by accident rather than design. So I'm an engineer by background. So I spent a long time in the tech industry before I became involved with Atlantic Bridge. And I suppose my own background as an engineer was in the semiconductor industry and your prior to Atlantic Bridge, I'm with Atlantic Bridge now 20 years. So fond is actually going 20 years. So I'm one of the, I guess one of the founders of the firm. I became involved because I worked with a company. I was a vice president at the artist technologies, which was an Irish company. I joined them in 1993 was one of the first employees there. And I worked with them for 10 years up until the end of 2003. And you know, I saw that company go from the startup. And you know, very early stage and to an IPO on NASDAQ and London in in in the year 2000. So so it kind of experienced the journey there over a period of seven to 10 years of going from very early stage to and much later stage. And obviously you get to know the ecosystem there and you get to know the sectors very well. So so I'd actually left in at the end of 2003 I'd left a part of the technologies and that company is now still on NASDAQ actually it's company called SEVA. It's an intellectual property licensing company. So when I was there was in the semiconductor space and we developed a huge amount of technology. And in different areas. And so I after I left in early 2004 I was approached by Brian Long who was the original founder of a part of technologies. And he had set up a new phone. And wasn't called a landing bridge at the time, but the intention was to. Go on. The original name was Sir partners. Okay. It's actually bridges better definitely better. I can't remember it's probably 2006 when the landing bridge name came along. But Brian and you know, I guess once you want to use the expertise that we had built up over a number of years in the tech industry, not just with one company, but investing in. You know, in lots of companies in specific sectors and using the expertise. So the I guess the domain expertise that we've built up. And over the years, and where we could add value to those companies, but also the operating experience and actually running a business and you know knowing what to do and what not to do. So that's how it came about. And I joined, I guess Brian Long was there. I'm a cop and he was CFO, partisan and also P Mike Manon and he was. And who was CFO there and Mark Oregon, who would start another phone call mental capital. So that's the team got together at 20 years ago. And so this year where you also 20th anniversary, but I guess we were the upstarts at that time and they will become much more established. Yeah, and everybody will have heard of Atlantic Bridge, as I said, you're one of the largest Irish VC investors investing in Irish companies. How many funds, how many funds in our you 20 years on and tell us a little bit more about Atlantic Bridge and its investment strategy. So we've we've a total of eight funds actually not all of them are active now at this point. I'd say our main funds and we're just finishing investing out of fund for so it's our fourth funds. And that one we call a growth fund, which is investing probably serious B onwards. And so it's companies that have got a little bit of traction, you know, gone past technology risk. And we've also added to early stage funds and that is one of the university bridge fund one and two. And those funds are investing at seed stage, mainly in Ireland and doing spin out from Irish universities, you know across across the cross Ireland. So the growth fund we call upon European funds were investing in Ireland, but we're also investing across Europe and investing in the UK as well and and we've done deals in the US as well. The original Atlantic bridge model was to help you know strong European technology companies scale into the US, which obviously is still the largest from our business market for a lot of tech companies. And it's where you're going to find investors, customers and ultimately acquirers are still a lot of the big US companies. So so we built an office in in Palo Alto as well. But we've grown from Dublin is our biggest office, but we've grown across Europe, we've been off to London, Paris and Munich as well. Okay, I didn't realize actually that you had so many offices throughout Europe and back to you kind of personally. Did you find any particular challenges in that move from being an engineer to being an investor? I suppose you know the intention was to use the expertise that we built up over the years, but obviously you know in investing is you know it's not just a scale it's it's you know building a fund is like building a business and you build it up over time. And the timelines in in this business are you know are quite long because the funds are 10 year funds. So you're investing for the first five years in new companies and the second five years is really following on those investments, but also hoping to get some realizations so. So I get you guys you learn to be patient and because it is a long term business you're building a number of funds and obviously you got to bring investors into those funds and suppose we change from being. And in the early days more and you know we lot of high net worth investors to being more institution so bringing in institutional and peace over time. So there's lots of different skill sets and that we had to build up over time in terms of you know obviously there's the investment piece and being disciplined about your strategy and knowing when to invest and when not to invest so it's that kind of judgment that you build up over time. And but also you're building that business and building and you know relationships with our investors so we're a little bit like some of the companies that we have to fundraise as well we have to deliver returns to those investors and and we also it's all about those relationships with with the limter partners or all pieces we call. Brilliant and you touched on the that area there the discipline and you know when to invest and maybe when not to invest and I think people will be interested to hear you know are there any deals where you know you really made the right call on when to invest and and real stars that you're you know you're you're very proud of your participation with. And maybe on the other side you know any that you really wish to had made investment decision and you didn't or and where is it maybe went a bit wrong. Yeah yeah and I suppose to in an Irish context is supposed to deals kind of stand out for me and Movedius was a deal that we did in at invested in 2013 and it was bought by in town then in 2016 so quite a short investment period. And what that journey had started good few years before that and in that we knew the founders and so the founders were we of David and Lonie charm Mitchell who who found a Movedius I think it was probably 2005 when they found it originally and and we've been following the company and helping them where we close but our growth was probably too early and so we made the decision they had their second generation product in in 2013 and then we could see the market. Taking off there and they did they had developed this it was a chip company and and we knew the team very very well so we knew that the team was very capable and I guess we you know they they had put a lot of hard work in though before we decided to invest and I guess they you know they were on their second generation product and they developed this vision processor which you know is kind of the early days of AI really for image processing and and so one of our probably our first investment that we call an AI investment and. And that went very well in that they hit upon a market that was starting to take off in vision processing. And very strong team. We were able to help them grow the team, but also help them with introductions to customers and other investors. And so that's one that, you know, within three years Intel, obviously saw that it filled a hole in their product portfolio. And they bought that in 2016. Similarly, another company called Echo Wave, we, we, I think we invested initially in 2019. And, um, was, what's 2019 or we're in for about two years. We sold it just before. I think we sold it in January, 20, and, you know, to querva, which is a US listed semiconductor company. And they had developed a solution for cultural wide band, which is a radio standard. And actually that had been going for 10 years as well. The founders there was a guy called Mike and Mike Luffin, who'd also worked at partners back in the day. And the CEO's guy called Sharon Connell. And he, they had been going probably 10 years as well. So, so we were kind of lucky to get involved when, um, you know, provide the capital that, that, that spurred them on to develop their next generation product. And, um, actually one of the things that happened there was that happened, but that technology into their, um, iPhone. And, um, you know, you know, became a very interesting, and kind of must have technology for some of the, uh, acquires. But, um, in both of those, I guess the background in industry played a big part because we knew the teams and we knew the capability of the teams. And we knew that we could add value and help them, um, through those journeys. And, you know, kind of something strikes me there as you're, you know, you're talking through those, you know, those two, um, Diaz and those two examples. Almost, you know, the small scale of the Irish industry in, in semi-conductors. And, um, I think that's a lot of people have worked in, in a small-ish pool of, of companies and, and you maybe know each other over a long term. How has, is that a correct view? You know, is the industry in Ireland very small? Could it be bigger? Uh, does that actually, does the size and scale help? Investors because you do know people and you know teams, you keep very close to what's going on. Um, or are we missing a trick? You know, in terms of a really high value industry like semi-conductors and, and should we be doing more? Yeah, yeah, it's a good question. Um, you know, I think part is, and some other indigenous companies spawned a lot of other start-ups. So there was kind of, um, you know, there were people who, who wants to go and do the wrong thing, having, uh, spent a long time. You know, so, you know, you know, developing experience and, um, yes, you got to, if you take semi-conductor, the semi-conductor industry in Ireland as an example, you know, you've two sides, so you've got the multinational side with which is extremely strong. And, um, a lot of very talented engineers and others working in, in that industry, the indigenous side of it. Um, I suppose we've, you know, we've, um, we've had from part this and some of the other start-ups we've had. You know, people doing their second company, you also repeat entrepreneurs, comment with us. Um, I personally like to see more of it and, and, you know, um, obviously semi-conductor is not the only sector that we invest in, but it's one of the, um, ones that we still invested in, even when I was on fashion, we've become more fashionable now, particularly with AI, um, coming on board. And, and, you know, and we have one semi-conductor company in our own colleague, one, which is in the quantum space, and which is, which is really interesting, a very strategic sector for Ireland and for Europe in general. But I'd like to see it would be good to see more semi-conductor start-ups happening. Um, you know, I guess one of the things about semi-conductors is it's, you know, it requires a lot of capital to get off the ground, whereas you can get software company started for, um, for, for, for a lot less. Yeah. And obviously, Jerry, you know, we know each other well because you're the current chair, um, of the Irish venture capital association and that runs, um, from kind of the summer of, of 2024, um, through to the, the summer of 2025. Um, talked with a little bit about, you know, agreeing to be, to become chair of the IVCA and what you hope to achieve during, during the time of your term. Yeah, sure. Yeah, I guess it's a 12 month, 12 month stint. So, so it's actually quite short. And, um, you know, but obviously it's something I've been involved with the IVCA for a number of years and, um, you know, the chairman role is something that, you know, I was looking forward to and, uh, hopefully make, make a difference. Um, um, obviously a lot of what we do is around, um, policy and, uh, influencing government and, and helping our members. Um, and obviously a lot of the issues that we tried to address are common to a lot of, you know, a lot of the investment funds and members of the IVCA. So, um, so the timeline on influencing some of those government policies can be quite long. And I guess the big one or the big issue in the industry, um, currently is around private capital and access to private capital for Irish venture capital funds. Um, so this, this is a real problem in, in, in the sense that we, we've a lot of government money now, um, or access the industry has access to a lot of government money at European investment phone, for example, is, you know, is the anchor LP for, uh, probably most funds in Ireland and beyond in Europe as well. And enterprise Ireland and the Ireland strategic investment phone, I said are doing a great job of supporting them. And one of the, one of the issues there though is that you need state, you need private capital or you need access to private capital to match those government phones and there are state aid rules around us. So it's not just requirement by those individual phones, there are, um, obligations there. So, so, you know, one of the big things and I know Sarah Jane, you've been working on this for, uh, for, for a long time is to try and get private capital, particularly pension funds to invest in in our venture funds. And I guess in the past we've, we've had some, um, you know, so some defined benefit and pension funds that have invested in the past and in venture book for whatever reason of Jane strategy. So, so there's a bit of work to be done there to encourage more pension funds and a lot of other countries as you know, are, you know, the UK and Denmark, France, government initiatives to encourage, and pension funds to invest in. And in, in, in, you know, startups and technology companies. So there is a bit of that kind of a, you know, the government obviously has a role to play there. And you know, there are generous tax relief, obviously, foreign pensions. And so you can save that money tax free. Obviously you pay tax on it when you, and when you eventually start throwing pension down, but there should be some incentive there to use that money. And we're not talking about a huge proportion of assets under management here. We're talking about a small percentage to support Irish VC funds. Yeah, I think, you know, for anyone who listens regularly, you know, they will know this is the biggest area or the biggest issue for funds in Ireland. As you say, while it's policy can be a long road happily, we're starting to see some progress in, you know, on this issue and it'll be interesting, I think, to see the program for government that emerges from the current talks. And if some of these issues really achieve the, the prominence that I think everybody agrees they need to in, you know, when you look at the role that we play as well as to educate. And more people about the venture capital industry and how it works. Yeah, absolutely. And you know, during your term, you mentioned Atlantic Bridges is celebrating 20 years in existence. And next year in 2025, the IVCA will be around for 40 years. Obviously, the industry has changed probably, you know, more than 40 years than in 20 years for sure, but any reflections on, you know, that that timeline and the industry and your, you know, your observations on it, given that you've been involved for 20 years. Yeah, hello, I've only seen half of it. You're a whipper, Samper. So I can comment on what happened before I came into this business in 2004. So even in the last 20 years, I suppose it's changed a lot. And you know, I think it's improved in terms of diversity for a start. And you know, I think there are a lot more female founders and female partners in venture capital funds today. So it has it has changed and there are more funds coming coming online as well. And, you know, specific sectors. I think we've been very successful. some great exits are come out of some across the DC phone landscape and Ireland. So I think it is getting stronger and it has been getting stronger. The last couple of years have been tough for everybody. It's been a tough environment for the Quidditchy for venture capital funds. Globally, IPOs, the IPO window was closed and there have been a shortage of M&A transactions as well. So it's been tough for over the last couple of years. We're starting to see hopefully a recovering that coming into next year. And as I say, the likes of Enterprise Ireland and Isof and organizations like that have supported the industry and really got the industry off the ground over the last 20 years. So that I've been in this business and continued to support there I think is crucial alongside encouraging that private capital. Brilliant. And you know, just while we have you, we talk a lot about you and the industry but obviously a lot of people listening to this podcast will be entrepreneurs who may come across you in your professional capacity at some point in the future. What would be your top tips for anybody who you may meet in the future who's seeking investment and is there anything that you would really encourage people to avoid doing or to, you know, to not do? Yeah, well, I encourage people, I'm saying you need to be well prepared and you need to understand the investor. So, you know, a lot of investors have spoken or focused on specific sectors. They're focused on specific stage of investment. So you need to know the investor and a lot of it's based on personal relationships as well. So it's building those personal relationships even if you're not fundraising is get to know the environment, get to know the landscape and, you know, network and meet investors as much as you can. And obviously you've got to be, you've got to prepare a page that's going to attract an investor. So, you know, most of these investors will have a pipeline of deals and they'll be looking at lots of stuff. So you've got to stand out, you've got to try and stand out, you know, talk to investors that are investing in your sector but also, you know, that are, you know, where there's a, you need to build a bit of chemistry there as well. Investors need to know that they can work with the management team. But, you know, not come in with, I suppose, unrealistic business plans, but have milestones. Know what your milestones are, what defines success for your company and, you know, what's going to enable you to do the next funding round or get the company to the next level. That's really the questions. You know, we're asking, you know, what milestones are you going to have done if we fund this company for the next 18 months or 24 months. And, you know, you know, how are you going to build your team? What's your differentiation? How do you differentiate from the competition? Understand the competition very well. Understand your market and go to market. And obviously, it's very important as well. Brilliant. And just maybe as a final question for you today before we finish up, you know, we're towards the very end of the year. This is our final podcast this year for the RSVC. What do you think 2025 will hold for the industry and for companies that are going to be fundraising? Well, I think, you know, we believe the M&A market is going to take off or, you know, IPOs are starting to happen again already. And hopefully, we see more M&A, which means liquidity for venture funds and founders, obviously, and companies themselves. So, so hopefully the market's going to, going to prove, I suppose geopolitically, things are a little bit uncertain with, you know, new administration in the US and they've got a future proof. Companies got a future proof themselves to a certain extent as well. But I see it being positive, you know, hopefully next year. And obviously, some sectors are very buoyant, like AI, for example. And AI, I suppose, has been getting all of the attention from the last year or two. But hopefully, other sectors there as well. So, you've got other really interesting sectors and the likes of quantum and applications of AI, cyber security, you know, and a lot of enterprise software companies that we look at, very interesting as well. So, so I'm pretty positive going. So, we've got to end the year in a positive news. Brilliant. Well, listen, Jerry, thank you so much for your time today and thank you to everybody for listening and we will see you in 2025 and happy Christmas and have a great end to the year. Thank you. Happy Christmas to you.