Ep 14 - Alan Costello - Partner at Resolve Ventures

0:01 Hi, welcome to the Founders and Funding podcast. I'm your host, Philip Smith. On the podcast, I'll be interviewing founders, investors, startup advisors on how to fund the journey of your startup and some tips and advice they have for you along the way. This podcast is sponsored by Perfectly Technologies and Laden. Enjoy the episode. Hi all, and welcome to the Founders and Funding podcast. Thank you very much for having me. Pleasure to be here. I well, I really appreciate you taking the time and to start us off, could you tell me a bit about yourself and what you do? Sure. So I'm part of a team that's called Resolve Partners. We've been in various guises.

0:41 We've been operating with early stage start-ups in Ireland, in Europe, in the Middle East for nearly the last 20 years, primarily helping them to grow their part of market fit and grow into international markets, often with corporate partnerships. That's the work that we do and very often alongside were involved in helping them to raise funding be that precede or up to A and we've also been involved in some transactions at the far side of that story as well. So essentially we're we're here helping founders to interact with their market opportunities and maybe some of their partnerships and platforms in between there. Fantastic. And tell me about your role there. So the Resolve has three core partners.

1:23 Our team actually came together almost 10 years ago when we were the investment team of the NDRC and we, so we've been working together that long. We're not exactly finishing each other sentences, but not far off. And the role there is sometimes you're working with startups and vendors, sometimes you're working with partnerships. For instance, one of our big programs is called Accelerate Green that we run in partnership with with board and Mona around scaling climate companies and scaling climate founders. We do a lot of work with efforts on the universities as you'd expect. But primarily our work is, is with the founders at varying stages, helping them to, I suppose, position their value propositions, their growth strategies, their investment strategies, maybe acting as a sounding board or as a a white board that they can reflect ideas and strategies off. And we'll give push back and challenge. And sometimes we're right, sometimes we're wrong. But a lot of what we do, the way I see it is a little bit of knowledge transfer.

2:22 We've worked with hundreds and thousands of founders. We've seen lots of things that work and lots of things that don't work. And it's part of our role to try and translate all of those war stories into the most appropriate kind of learning mechanism for founders to be able to link into their problems, challenges and opportunities that they have today. Fantastic. But I think that's a really great addition to add, you know, forced out of fun is because I think it is hard trying to get that real market feedback and really try to refine that a proposition and and what does an average day look like right now for you? It's kind of busy, but good busy. So it, it feels a bit portfolio ish, our portfolio risk.

3:07 So today I was working with the founder to help them with their growth strategy and they're looking to acquire a company in the states. Then I was doing some planning for some events that were going to be running that's kind of putting out a little bit of learning and collaboration into the ecosystem, particularly around the climate and sustainability space. Then I'll be going on to a mentoring session with a company that's on the Accelerate Green program with us. So we're going to be chatting to them about, I suppose maybe not forensically, but pulling apart their existing business model and understanding it and seeing where there might be either growth opportunities, problems or maybe strategic shifts and pivots that we might explore.

3:54 This afternoon I'm going to be doing a mentoring session with the company that we work with on another program. And then I'll be going back to that founder and seeing where their financial advisors and legal advisors have got to on the transaction that I was talking about this morning. So it's, it's varied, it's very founder centric and it's, yeah, it's, it's being able to try and hold lots of different projects at once or during the, during the course of one day. But fantastically interesting for that. Like you're learning the whole time you're, you're going deep and experiencing business models and opportunities and the whole time really thinking about problem solution and problems being fixed and being opportuned or being opportunities out of a problem. So it's it's fascinating and very stimulating, but busy. Yeah, certainly sounds like it.

4:49 That's fantastic. But it certainly gives you a great opportunity to help those steps because you're speaking to so many founders and seen so many of the the challenges and put together the solutions for them. Talking about some of the startups you've seen in Ireland lately that have been particularly interesting. Yeah. And sort of at a high level, we, we, we would probably work with hundreds of founders at the ideation stage every year and through thing into contacts that we would have with say New Frontiers or Enterprise Ireland. We would work with dozens of founders every year that we work with more intensively through either our private engagements or investment engagements or the programs that we run through.

5:30 And so there's quite a wide breadth, but some of the companies that I'm really interested in and have been for the last number of years around the climate sustainability space. So there's a company out of Kildare called EV Acts who have some really interesting patent technology on combining HVAC systems with EV charging. So we're looking at a couple of big mega trends coming together and it's not, it's some of that is combining the physical hardware, but a lot of that is also about understanding the control systems around that and how power management happens either at the home or in the premises or in the industrial facilities. Or another company out of Galway called Connery looking at supporting fish farming by aiding the productive and sustainable and healthy growth of fish farming. So you think about that as being growing a new protein source and it's a high impact business, but affected by environmental concerns.

6:27 And what the guys in Connery are doing are finding novel technologies around helping the fish, but that scales up and to think about providing protein sources for emerging markets provide alternating between high climate impact protein sources like like beef and aiding at quite a significant commercial scale. And the large, very large commercial fish farms might have 1/4 of a million salmon swimming around in in a fish farm in a single cage. These type of solutions to help their health and well-being become really, really impactful both for for planet and for profit. And that's always, that's a useful bifocal that you can, you can take on a business having good positive impact, but that also makes good commercial sense. Another business again in the climate space that we've we've worked to, there's a company that's spinning out of TUW at the moment called Pyram.

7:22 And they're looking at all of the waste energy and the waste heat that's in very hard, difficult to climate impact businesses like cement and glass. And they've got hardware and software technologies that's going to make use of the waste heat and the waste energy that's been used in those processes and be able to turn those back into productive energies in the system. So a lot of the work we do and we can, we do go quite deep on the technologies at the right time. But on the on the 1st instance, you're just trying to think about that value proposition that is impactful, important and commercial and it just gives you great, great share of companies to work with. Absolutely, and those are some really fantastic Son of Irish companies.

8:05 It is absolutely correct. I think even from a public standpoint, people love to see companies that are both commercial, but they're trying to do good, you know, they're trying to make their lives better and to to look at the funding aspect of a startup's journey. What do you think is the best way to fund a startup's journey in your opinion, Ellen? So there are some biases here, I guess, sure in the world of, of, of this founders and funding podcast and the, the 2 or 3% of companies that ever raised private investment were kind of biased towards angels and VCs and that that's relevant and, but different. So yes, but the other 97% exists and they're also brilliant businesses and, and all businesses and all founders and all commercially successful businesses weren't that type of support and weren't that type of feel that so like for trying to bridge those kind of two stories.

8:57 And like we're always going to start with customer revenue. And I understand that, you know, if you're building a deeper tech or you may, your first customer revenues might be €20 a month subscription and that doesn't exactly pay for everything that a startup has to do. So there's this delta between customer revenue, cash flow and margin and cash flow positive capital efficiency versus then also needing to raise some private investment of whatever type. But the reason I'll always start with revenue is because I'm looking for that validation traction demonstration that there's something around problem solution fish or the beginnings of product market fish. Whether that's going to stand on it, whether the business is going to stand on its own revenue generating fees or whether that business is going to use a little bit of that revenue generation and customer impact in order to build a, a high quality investment narrative in order to raise investment from from private investors. So I'll start with revenue and then I'll look at some of the programs and support structures that are around here, things like the PSSF and it's predecessor Competitive start fund, They were, they are some of the best funding programs, opportunities that are available anywhere around. So these type of mechanisms where there's an open call, demonstrate your traction, show your vision, show the management team have had a great story and a great potential and there are support structures that are open for you. But I'll generally hover back to at least show me some type of some version of customer revenue

10:29 to get me on that traction story. Yeah, I think it makes absolute sense and and to look at the founding team a bit. What skills should founders possess? And you know, what is the combination of skills do you find? Yeah, so this is kind of interesting and I'm, I'm, I'm not going to bring something new to the story in this like I'll, I'll hone in so much on customer discovery, customer insights, spending time with customers. Yeah, I don't want to, this is sound disrespectful, but I I don't want to necessarily have some Maven hardware code or designer who's building and designing things absolutely the best potential product that's out there or the best made or the best designed or the most efficient code. And then they look up blinking for their customers or their market and it's not there.

11:21 So I'm going to hone in on founders that are very, very customer centric. That's not to say the customer's always right, that's a different thing, but who are customer centric about their needs and developing a value proposition from that. And then you layer on top of that something like insight founders who, who can by the know things, work things out or infer deductions from the market and from the customers that you know that which can't be found on Google. And so people are able to apply learning and have insight into. So what, why now? What's next? I can do that a little bit differently. And those, those kind of when you see that coming at you, it's, it's genuinely exciting and, and interesting and you're, you know, you're on a fast journey. You want to try and push some of the, the support structures or the, the, the business tools around that person because they're, they're the ones who are going to see things a little bit differently.

12:16 Yeah, I think that makes a lot of sense. And then to look at this from the founders perspective, how can those startup companies and founders attract investors effectively? I mean, they're let me think there's a high level tools and frameworks are, you know, be be talked about, be in the media, be get have some PR that they're interesting. I'm not going to, they're entirely valid, but I'm kind of old fashioned and I'll, I'll talk about going out and maybe doing some of the leg worker sells. So identifying what investors are going to be most useful, most relevant to you in the business and going out and trying to find your way directly or introduced to them. And what I'm getting out there.

12:58 Maybe a higher point is I think the first investors can mean the business, all investors should be bringing value. The first investors should be people who get what you're doing to get the business model, get the technologies that you're doing. And that's about finding them and finding a way to being introduced to them. And a, a VCs will have different tools and structures where they'll go out and find you, but that that's, you know, they're going to see if you're hiring someone on LinkedIn and that's going to set off a little signal for them in the, in the CRM. And that's, that's valid. Or for early stage founders, I think you're going to have to go out and find sectrally or service or structurally specific Angel investors were involved in your space. Ideally those who have been Angel investors a little bit and then maybe not first time Angel investors. And they're they're going to be gold for an early stage founder because they bring so much knowledge capital, yes, knowledge links, credibility for the later other and other investors that might be coming in behind. So that that's a little bit of legwork and a little bit of thinking.

14:03 And I think that's where founders probably have to start rather than manufacturing it too much. I think it's it's, it's do the hard yards. Yeah, yeah. And if you'd won't keep his advice to share on phone in a serpent and making it successful, what would it be? The one key advice I always come back to, and it's going to sound tweet, is go back your insight. And so let me give an example. I was working with the founder before Christmas and we introduced them to the concept of the mom test. This is the book by Rob Fitzpatrick. Lots of startups and we will know this book and it's kind of it's, it's a foundational stone for startup customer discovery. But we introduced it to him.

14:47 He leaned in hard. He introduced his, a couple of his team members to it. And between the middle of December and the middle of January, they did 80 mom test interviews. And they weren't a start up. They were probably doing a couple of million in revenue, but they probably doubled their revenue target for this year as a result of those mom test interviews being customer, being close to the customer, getting the insight, listening to the customer's voice, understanding what the problem was. And then those customer discovery interviews, if you can imagine, I'm doing air quotes on a bean market research. Of course they were sales pipeline. Of course they were developing those customer discoveries as as customers full stop. So I'm going to lean hard into those vendors that stay, that get involved with their customers, understand the problems that understand how to develop a value proposition around that.

15:36 That's going to be the so much else can be built and supported around you. That's not to diminish tech building, that's not to diminish marketing, branding, PR and sales support, financial supports. That's not to diminish the impact of early stage event investment capital, but being that close to your customers problems so that you can insight and develop a value proposition. Yeah, that's. A really fantastic advice. Alan, thanks so much. According to the podcast issued a lot of really great advice there from your experience. Thank you. Hi, thanks for listening to this weeks episode of the Founders and Funding podcast. If you'd like to be a guest to have a guest suggestion, please get in touch. Thank you.