Ep 21 - Darragh Gaffney - Business Lead Ireland at Leyton

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 Perfect Technologies and Leighton. Enjoy the episode. Hi, Dara, welcome to the Founders and Funding podcast. Thanks very much Philip. Delighted to be here. It's my delight to have you on Darren to go to start. Could you talk to me about your company and your role? Sure, absolutely. So Leighton is probably one of the largest companies that you've never heard of, to be honest.

0:44 Globally, we're 3 1/2 thousand employees active in 18 countries and basically we are a tax and innovation consultancy, uh, that operates across everything from where any tax incentives operate within, within a geography or a country, uh, within Ireland specifically, that is a primary focus of R&D tax credits, knowledge development box and grand funding services is what we, what we deliver. Uh, predominantly, Uh, so yeah. The company was founded as a group back in 1997 by UH-2 French guys, Francois and Olivier, still active in the business and still 100% completely owned by those guys.

1:31 So it's all been driven by organic growth and organic scaling across predominantly the Northern hemisphere, but now active in, in moving into Australia and New Zealand as well. So yeah, that's that's what we do, Tax, tax incentives, essentially. It's, it's an incredible story to grow like, it's very rare a company grows like that and is able to have that kind of global impact and, and have such a, a large workforce. It is absolutely. And and I think the two guys identified 2 pillars or two areas to prioritize very quickly. And back when the company was established, the first was they developed an absolute sales machine and Leighton, I, I always say that Leighton as a business could actually sell anything.

2:24 They just happen to sell or indeed tax credit service or tax incentives to businesses. But yeah, the, the SDO and the business development processes that they have set up in the business have absolutely been the pillar on which the business has scaled and, and and grown. The second one I would say is, is very early on the guys invested in tech, they built a software development centre of excellence in Casablanca and the Casablanca office has now scaled to nearly 800 software developers based in Casablanca, right next door to the to the African headquarters of Salesforce actually.

3:06 So yeah, absolutely. So it's that investment, early investment in tech and also in very clearly structured and defined sales processes to drive that growth. It's an incredible story, but I'm very familiar of Leighton, of course, because your response over the podcast, but also because I've worked with you in a very familiar with your work, particularly in the Rd. tax credits that you know have been massively beneficial to a number of different set of companies to help them to maximize their returns and the profitability, which is very crucial early on and very relevant to this conversation about a fund, the startups journey. It, it absolutely is. And I I just make one like you're absolutely right, Philip. We, we happen to sponsor this podcast, but in, in no ways or means is, is this a sales exercise? But if I give you a small bit of context and and I'll just give you maybe 2 points. 1 is Ireland actually has the second most generous or in the tax credit scheme in the OECDI think we're just behind Portugal and in 2026 that's increasing to from 30% to 35%.

4:15 And in fact, Mehal Martin was at a Scale Ireland event back in January and from the stage he actually referenced it and said I don't know what more we can do to incentivize Irish businesses to use the R&D tax credit scheme in Ireland. And in particular what he was talking about is the fact that of the 1.4 billion in OND tax credits that was that was claimed in 2023, I think 85% of that value was claimed by 15% of claimants. So it's very much has been the domain of multinationals and large entities, whereas there is a real push now for start-ups in particular to use the OND tax credit scheme to to their advantage because they are naturally carrying out research and development, uh, within their business. Because yes, absolutely it's something that's it's, it's one of those rare win wins where it's just it's kind of a no brainer for companies to do.

5:17 There's nothing to lose. And talk to me a bit more there. So talk to me a bit more about your role, uh, at Leighton and what does an average day look like right now? Yeah. So my role, I might give you a bit of context as to where Leighton Ireland and the Irish entity is at at the moment. So believe it or not, Philip on on the 28th of April this day last year I it was actually my first day with Leighton, believe it or not. How was it? Yeah. So, so and I was employee number one of of the Leighton Irish entity. So we were very much in start up mode ourselves as, as the Irish entity, albeit with the, with the, the back office and the shared support of of the UK business. And so at the moment or over the last 12 months, there's nearly no been no such thing as a typical day. I, but I have absolutely prioritized one obviously looking to generate new business. I think when I came in at first I, I looked to prioritize a kind of A702010 split. 70% was on that day-to-day scaled the business, grow the business, get new staff in and actually hire new staff, but also help them to actually leverage the network of, of naturally innovative businesses in Ireland. The other 20% was to, to try and change that dial in terms of stock being the largest business

6:48 that people have never heard of, to becoming recognised as, as actually a market leader in the, in the R&D tax credits and grant funding space. And then that third part was, was the, the thought leadership piece to see, you know, to, to be recognized then as an entity that isn't just delivering operational service delivery, but that can actually act as a, as a strategic partner. So these days it's, it's oversight of we have, we have a delivery team and we have a business development team. So, so it's oversight of that team. The team is now at 9:00 and I, it's looking to set the standards and maintain, maintain what I believe is a, is a, is a very excellent culture within the business and make sure that the client ultimately is at the centre of, of everything that we, that we do, you know, So my week at the moment is probably 2 days work from home, two to three days in the office or one of those days can, can often be on the road visiting either prospective clients or existing clients as well and helping them navigate different challenges.

7:59 So, so quite a mixed bag which which I have to say I love, you know? Yeah, I really like that. Well, first of all, it's great to have that kind of combination of I think working from the office home, a bit in the road, that's what everyone kind of strives for. But I love that, you know, putting companies at the center of the work that you do. I think that's I love, I love hearing that. I think it's always a good sign and to, to look at then a bit more than Dara. So you've, you've talked to me a bit already about how the, uh, how Leighton has funded its journey to date. But I suppose how have you helped, uh, do you have some examples of companies you've helped, uh, to fundraiser? You've helped them with their their only tax credits that they've benefited from working with Leighton. Yeah, ABS absolutely. And look, as you can respect, umm, we've, we work with a, a massive amount of companies across a many number of sectors and, and given a lot of confidentiality is at the heart of what we do, we can't always name check too many of them. Of course.

8:56 But, but absolutely if, if I talk about some of the, some of the general examples of, of what we can do, we often the value we bring is, is often twofold. One is, is actually from an awareness point of view, many start-ups in particular or companies that are in that scaling growth stage do not always realize actually one, that the R&D tax credit scheme exists or two that they can actually claim. So quite often they think that one, if they're pre revenue or two, if they're pre profitable, they don't qualify for their R&D tax credit where that's just not true.

9:36 Any company that is liable to file ACT one form may claim you're in the tax credits irrespective. The second thing then is that actually and and that then naturally generates actually a revenue line back into the business because it is, it is income because you can take it as a cash injection into the business from the revenue commissioners. And so it can go down as as a revenue line item. So that's that's the first one and that's often often the most impactful, impactful aspect. The second aspect then is, is what we call the hidden R&D is that companies may be go, but that's just what we do, you know, and then and we go, yeah, but that doesn't mean there's not R&D in there and you can't claim the tax credit for it as a result. So as a result, we have industry experts from people that have worked in industry in the different sectors that we service.

10:37 And so, you know, if you're in, if you're in fintech or if you're in software development and we've got guys that have been at the coalface of those type of businesses. So they know how to have a conversation with your tech leads and uncover that hidden R&D activity that's that's within your business. And we often find that even with a business that has been claiming or in the tax credits to date that we can quite often identify a significant uplift in the value of their claim as a result. So all about cash flow, you know. Really like that. It's it's a really interesting approach. I think trying to bring in an expert. I think it's one of the most small companies struggle to do is to bring in someone from the team that has expertise in that company's specific niche of their industry in their product or service and then be able to advise them accordingly. And that's a very valuable solution to offer solve as a problem of, you know, founders not knowing what is the only opportunity for them and to take things there. Then maybe a bit more broad and kind of back a bit to a more general and aspect looking at funding, like what is the best way to fund a startup journey in your opinion? Yeah.

11:51 I think that's actually, it's actually quite a tough question almost. It is. It is. I think there's and the principle has to be to choose the right funding mechanism for the right body of work that you need to do and at the right time. And with that being the ultimate goal. That's a lot easier said than done. And I, I think sometimes, especially in the Irish environment where the state agencies or VCs who often control that early access to money nearly want to see that you've bootstrapped and, and developed a proof of concept and, and put cash and skin in the game yourself. So, so that is, that is, it is a, it is a tough one. Outside of that, I'd say identify what do you actually need.

12:49 And that generally comes down to three things. Now every startup will probably just automatically say cash, I need cash, I need cash, I need cash, you know, but absolute actually if you look at it and go, well, do you need cash to fund internal resource within your own business or do you need access to capability that you don't currently have within your business? Or actually, do you need access to a skill set that doesn't currently exist within your business? And I think a lot of the time startups can end up being quite insular and go, it all has to be delivered in house and pay for nothing externally.

13:29 Whereas actually there is a massive amount of what I'd call enabling support that can be delivered within the business one way or one way or another. So, so yeah, I'm, I'm afraid I don't, I don't have the magic bullet answer. I'm, I'm afraid. But I, I think if there's certain principles and certain questions you can ask yourself, I think they will help you identify those those funding lines that are right for you. Well, I think that's, that's the right answer there because I don't think it, you know, I don't know if there is, it's, it's rare to say and it always varies by the company and, and the situation and what they're trying to achieve. So, but I think the perspective of you, I think if you can get that right and understand the criteria of what your business needs, business needs, and I think that will lead you to been able to get the right supports and funding in place and to look at the founding team then a bit as well. Derek and I know you work with a lot of different startups out of founders.

14:33 What skills should new founders possess? And you know, does that impact perhaps how they've they fund the startup or the types of mechanisms that they look for? Yeah, it it do you mean in terms of the the skill sets that I see and founders that develop successful startups or? Yeah, I suppose it's both the the skills that founders have the developed successful startups, but then also is there skills I suppose you find from companies working with Leighton that makes them a better fish for our new tax credits or for different grant mechanisms. Is is there if if you have maybe a more tech focused team or skill sets or do you find it kind of applies to anyone, any any founder avails of of these grants and these different mechanisms and tax credits that can support them? Yeah, yeah.

15:25 And so I, I kind of just reiterate the same point is don't chase bad money basically. And and that can also be grant funding. Do you know, because you may get the money, but you may end up spending more time making a square peg for the round hole. Do you know, go back to that point of look at grant funding. There is an absolute myriad of of grant funding options out there, but is it the right funding mechanism for the right project and at the right time of the business? And if you and if you cannot say yes to all three of those questions, well then you may end up actually just causing yourself more hassles in the medium and long term in terms of making that funding mechanism fit something else that is not core to your business.

16:15 You know as well as I do, Philip, that every founder needs absolute laser focus on what their commercial priorities are. Yes. It's a, it's a constant daily iteration of is what I'm working on this hour, this day, this week, this month, this quarter, fully, 100% aligned with the commercial priorities or the revenue generating activities of my business at the moment. And if the answer is a hesitation or a no, well then you have to stop it and get back on track. And it's absolutely the same thing when it comes to when it comes to funding.

16:55 So it is that that laser focus that's more at a macro level, at an operational level, there can often be or sometimes be the mentality of of kind of, you know, move fast and break things. And again, that can at times that can end up being a false economy. So what is really is, is getting your structures and processes and documentation foundation set early, get those standards set early because absolutely they are the first things that will fall over as the business starts to scale.

17:39 And why do I reference those? Well, I reference those because if you've set those standards and that operational framework from the start one, it will, it will absolutely help in terms of your R&D tax credits claim because the information is already there and you're not scrambling to try and to try and compile something. And, and absolutely, that's, that's quite often where we end up doing a lot of work with, with start-ups. But the second part is, is then when it comes to external investment, if founders and startups can already demonstrate that, that good governance and structure and process already exists, Well, that gives confidence in the investor that these guys actually know what they're at. Do you know and that actually do you know they have a scalable business that won't just fall over the 2nd that it takes off? Yeah, that's really interesting.

18:37 Like it, it, it always, it doesn't come back in part to the founders themselves and then the kind of work that they're undertaking. And then you know what, what is a fit in terms of grants or all the mechanisms they can apply for to come into the business to support them and the fit there and to look then more towards investors there are like how, how can companies attract investors effectively? Do you think is there, is there something you see from your work with companies that is a good signal to can be a good signal to outside investors? Yeah, I, I, I think the first thing and I'd go back to what, what is probably central to what I'm trying to do with, with Leighton Ireland.

19:21 And it's keeping your, your end client, your end user, basically the person who is going to pay the bill or respond to your product or services at the heart and at the center of your thought process for everything that you do. Do you know Otherwise you're going to be on a hiding to nothing. Do you know? Do you know? And something's only worth what somebody else is willing to pay for us, not what you think is its value or. Very true. Yeah, or, or the amount that it took you to build it. Do you know, again, can be, can be two very, two very different, different things. So you go back to the thing of, well, what is the problem you're solving?

20:06 What, what problem does your business actually solve? It's the old thing of you don't sell a mattress, you sell a good night's sleep. And it's, it's the same with ourselves. Yes, technically we sell or in the tax credit. Services, but actually what we sell is is compliance and Peace of Mind with the revenue commissioners. Do you know that's that's why companies are happy to to bring us in ultimately one one way or another. I think from a point of view as well as is I think a lot of founders can can struggle with delegation. I, I know I struggle with delegation myself at times as well, but just at the point where we feel ourselves, where you feel yourself retracting and when the pressure comes on and almost kind of closing in and taking everything all on yourself.

20:58 Actually, that's the time when we ironically need to open ourselves up and and start to start to delegate and trust those around us instead. Yeah, and I fully agree. I think it's a, it's a very difficult skill to get good at, but it's also increasingly important as the company grows. It's, uh, well, I think, I think you're right as well. They're like, you're not just selling our new tax credits. Like you're selling a lot of things. You're selling profitability and a positive year and, uh, you know, better growth for the companies. There's a lot of things I think it trickles down to and feeds into if you can get it right. And before we finish up there, if you'd one key piece of a key piece of advice to share on fun in a startup, what would it be? Umm, I think, I think I'd go back to that point of don't, don't, don't kind of get caught chasing kind of sparkly sparkly funding or or kind of sparkly money. Generally, if something is seems too good to be true, it often ends up being that case.

22:04 Do you know? The easier it is to access quite often the more problems it'll end up causing you in in the long run. Do you know? So I'd say I'd say exactly that. Don't, don't, don't look to access either grant funding or any kind of source of funding that could could end up acting as a false economy and bite new bite new in the medium to long term. Yeah, I think that's a very good point that I think most founders learn the hard way. Dara, thanks so much for coming on the podcast. That was a really great conversation. I think Late in Ireland is doing great work and I'm excited to see where it goes over the coming years. Fantastic.

22:46 Thanks very much, Phillip. My pleasure, Derek. Hi. Thanks for listening to this book's episode of the Founders and Funding podcast. If you'd like to be a guest or have a guest suggestion, please get in touch. Thank you.