Irish entrepreneur Illann Power (@illannpower) has just partnered with Pat Phelan (@patphelan), the founder of Trustev, recently acquired by TransUnion, to launch Nohovation, a NYC-based €25m super angel investment fund dedicated to supporting Irish startups going global.
In this interview, Illann answered our questions about the the firm, its strategy and targets, among a lot of other things.
FinSMEs: Hi Illann. First, can you tell us a bit about you?
Illann: I’m an entrepreneur & financier from Ireland. I emigrated to the US in 2010 in search of funding for my Whiskey company Dublin Distillers, which was acquired in 2015. I was also an investor and Managing Director for a US Bourbon Company which was acquired by Bacardi for an undisclosed sum in 2015. I currently serve as Managing Partner for Nohovation.
FinSMEs: Let’s speak about Nohovation. Can you introduce Pat Phelan, the other founder?
Illann: Pat is one of Ireland’s best-known serial entrepreneurs recognized internationally as one of the most connected men in the technology industry. Over the past 15 years, he has built a number of successful businesses in the Internet, mobile and telecoms sectors, most recently commerce fraud prevention software company Trustev, which was acquired by TransUnion (NYSE: TRU) for $50M in December 2015 .
Pat currently Serves as SVP for TransUnion and a Partner with Nohovation.
FinSMEs: Why have you created Nohovation?
Illann: I approached Pat in June 2015 as I wanted to do some angel investing in Ireland and the US. I noticed for foreign entrepreneurs entering the US Market at seed stage having a hard landing and many had under estimated things like C Level employee costs, taxes and the vast size of the market and waned to do something to change that.
Our investment philosophies matched and we originally decided to proceed with creating an angel group. When we mentioned the scope of Nohovation to other entrepreneurs and investors we were eager to jump in on the idea and we created our first Super Angel LP Nohovation Partners and the fund was born.
FinSMEs: Which funding need do you want to satisfy?
Illann: Given the fact that the bar for Series A financing has been raised significantly higher in the latest months, we are currently working with a number of companies who have fallen into the rabbit hole of either raising to much or too little seed capital and have not hit the revenues requirements to spark major VC interest and get a fair valuation for all the work they have put in.
Our goal is to take a reasonable position within the companies and assist them to scale up revenues in the US. We will also be announcing Nohovation Labs later this year for portfolio companies who want to open an office in New York.
FinSMEs: Which is your investment strategy?
Illann: Pat is very patriotic and part of the partnership agreement with me is that we dedicate €10m to Irish or Irish headquartered companies. As we both come from different backgrounds, we opened the scope of the fund to both technology and consumer goods companies.
As a “Super Angel” fund, we enjoy much more flexibility than a VC fund and also put in much more legwork. Our minimum investment is €500k and we are targeting non US companies seeking to enter the US Market.
We are long term partners with our portfolio companies, are very hands on and will continue to be over the lifetime of the investments.
FinSMEs: Personally, what do you like to see in startup founders?
Illann: Experienced business people is something that immediately sparks my interest followed by a clear route to market strategy, a view on where they would like to see the company in 2/3 years, and are not amateurs at the negotiation table.
I am also allergic to pivots, I despise the word and would rather lose all my money than have to deal with one.
FinSMEs: Is it easy to raise a vc fund in Ireland?
Illann: Seed capital in Ireland is difficult to raise domestically compared to the US. Although VC funding is at its highest level to date, the risk/reward factor for an Irish tax resident angel does stack up due to the high capital gains tax (CGT) rates 33%. A new scheme was brought in to lower the rate to 10% but it does not fit the remit of a startup and was a clear election ploy in response to the startup community. Taxation revenues in Ireland are driven by VAT and income tax which make up the bulk of the take, leaving plenty of room for flexibility on CGT and angel tax credits so not penalize entrepreneurs who risk it all in hope of a greater reward.
FinSMEs: Generally speaking, is Ireland a good place to launch a startup?
Illann: Ireland is a small country that has re-invented itself over the last forty years through the combined force of sheer determination and growing, vibrant ambition. Its young, highly educated workforce has seized the opportunity provided by Foreign Direct Investment and continues to transform Ireland into a dynamic, knowledge based economy for the 21st century.
As a traditionally exporting nation, due to the small size of the domestic market, it offers many perks including a very simplified company law structure, excellent tax practices (12.5% Corporation Tax, R&D Tax Credits and No Corporation Tax for the first 3 years in business) and a strong US double taxation and commerce treaty. In terms of international connectivity, Ireland was one of the first countries to implement US Immigration Pre-Clearance making day trips to the US possible for hungry cash conscious entrepreneurs.
Personally, I left Ireland during the downturn as Ireland was being portrayed in an extremely negative light, startups were an almost non existent thing and I also dreamed of becoming Irish American. After 5 years abroad, I am still in awe everytime I return to see the Silicon Docks and the ever growing startup community, which has now grown to include a Start-Up Commissioner who has pioneered the communities development.
Ireland also has a world-class inward investment agency, IDA Ireland, who assist later stage companies seeking to relocate or startup in Ireland. It’s an organization that never gets enough credit for the work they do in selling Ireland. They have brought in companies like UBER, Slack and Jet.com to name a few.
There are other state development agencies who support domestic companies in international expansion however I do not have much time for them as I don’t agree with how they do things.
FinSMEs: Personally, which tech trends do you follow?
Illann: I have and always will be fascinated by IOT and Healthcare technology. I have very little interest in marketplaces and subscription model based companies and HR tech as I believe the space is too crowded.