Enterprise Ireland’s PSSF Propels Your Startup From Promise To Powerhouse

The Enterprise Ireland Pre-Seed Start Fund (PSSF) provides investment of €50,000 or €100,000 (in two €50,000 tranches), plus access to a Development Advisor and supports from the agency such as 10 sessions with a mentor from the Enterprise Ireland panel, access to their Market Research Centre, and other appropriate supports to develop your business.

I spoke to Anna-Marie Turley, Department Manager for Entrepreneurship & HPSU Operations at Enterprise Ireland, to learn more about PSSF (which recently replaced Enterprise Ireland’s Competitive Start Fund, or CSF) and why it is of particular interest to New Frontiers alumni.

PSSF is a springboard for ambitious startups

First things first. CSF has been retired, but PSSF is not simply CSF with a new name. There are four main differences worth highlighting:

1. PSSF is not a competitive process. With CSF, you were scored across several areas and only the top scorers won funding. This is not the case with PSSF.
2. PSSF is open all year round, unlike CSF which had a defined series of ‘calls’ which sometimes targeted specific groups or sectors. Applications to PSSF are accepted at any time and there are no deadlines. This is a really important difference because PSSF is all about timing, as we’ll discover below.
3. You can apply for either €50,000 or €100,000 (which is split into two tranches of €50,000) in investment (CSF was €50,000).
4. The funding is in the form of a convertible loan note (CSF was for a 10% equity stake in the business). Convertible notes, or CLNs, are a form of hybrid debt finance, where funders offer investment as an interest-bearing, repayable loan that converts into equity under certain circumstances (most commonly at a future qualifying funding round).

These are the differences, but the fundamental purpose of the fund is based on a similar premise to CSF, as Anna-Marie explains.

“PSSF is designed to accelerate the growth of early-stage startup companies with the capacity and ambition to succeed in global markets. The fund covers operational costs – development of market-ready products/solutions, market testing, building mission critical skillsets, etc. What we’re looking for is those fledgling innovative businesses that have the ability and drive to really scale.”

The money can be spent on salaries, travel, consultancy fees, and other expenditure, but not direct export aid costs such as sales and marketing and only a capped amount in legal fees. Startups can initiate the application process at any time, but Anna-Marie underlines that the timing must be right for the business.

This is not about getting the cash as quickly as possible and you’re not in a race to obtain this funding before someone else gets it. The absence of a ticking clock means that you can choose the optimal time to go for PSSF, at the moment it can do the most for the company and get you ready to raise significant seed funding.

The PSSF application process

The application process involves completing an application form on the Enterprise Ireland online application system and the submission of a video pitch.

The video pitch must be in PowerPoint format with a maximum duration of four minutes. That means slides plus a commentary, as though you were presenting in person. A really impactful pitch will take a while to prepare, so I recommend you start working on this in advance. Workshops are being organised to support you with this (see below). The PowerPoint should address:

• Overview of the business and the opportunity (problem, solution, team, financials)
• Management team (skills, gaps)
• Use of the investment monies (specific technical milestones and commercial milestones)
• Your future funding requirements and timelines for fundraising

It’s crucial that your application is clear on your technical and commercial milestones. The funding should get you to the point – ideally within 12 to 18 months – where you are able to attract further seed funding. Milestones will be how you know you are moving in that direction.

The online form will be fairly quick to submit, but remember you need to also upload the PowerPoint presentation within the 48 hours the system keeps your application open. Allow time to run into technical issues and fix them so that you don’t have to start all over again.

Formal assessment of the application is similar to the process used for CSF. Expect the panel to consider areas such as:

• Company and promoter/team profile
• Product/service and market opportunity
• Business proposition
• Product/service innovation
• Ability to deliver on the key commercial and technical milestones

Although re-applications are possible, you are limited to three applications in any 12-month period.

Tips for the PSSF application process

You’re not alone on this journey. Business Innovation Centres (BICs) around the country and Furthr (formerly Dublin BIC) are running regular PSSF application support workshops and actively helping startups with the new application format. You can attend workshops in any region but will need to register. Upcoming workshops are listed on the Enterprise Ireland site.

What is Anna-Marie’s main advice for founders thinking of applying? “When preparing your application, pay a lot of attention to the technical and commercial milestones. These define how you’re going to get to the next stage, so they are really important in helping the panel assess your application. What are you going to spend the money on and over what timeframe?”

Companies with a minimum viable product (MVP) or Beta are going to have an advantage over those that are still at the idea stage. This is why PSSF is the ideal next step for companies coming out of the New Frontiers programme and where we expect many of our alumni will turn next. Since this fund was launched, 40% of successful applicants have been New Frontiers alumni. The programme is an excellent preparation for this stage of startup growth.

“Work with Local Enterprise Offices, apply to programmes like New Frontiers, and get your startup to the stage where you are ready to push forward towards a seed round within 18 months. That’s the sweet spot that PSSF is for. But be clear on what your steppingstones are and plan ahead so that this funding comes at the right time.”

Anna-Marie explains that the assessment is not weighted against first-time entrepreneurs.

“Track record is one thing, but knowledge of an area or sector is another. If you’ve come out of a multinational in that area or have applicable academic expertise, for example, that is considered as part of your track record. You don’t have to be a serial entrepreneur. But we are looking at the team as a whole and not just the promoter, so your collective accomplishments matter.”

What is an ideal PSSF company?

While this is not a competitive process, there is of course a very serious evaluation of each application to ensure that the startups getting funding have a strong likelihood of becoming Enterprise Ireland High Potential Start-Up companies (HPSUs).

HPSUs have very strong export potential and are capable of generating revenues of over €1 million per year within three years and/or employing more than 10 people. Therefore, HPSUs typically have a strong element of innovation in their product/service, a team with strong domain knowledge, and the kind of business plan that means they will very soon need to raise significant investment as they accelerate their international growth.

The company must be classed as a manufacturing or internationally traded services business, within which criterion a wide range of sectors are included. As with any Enterprise Ireland support, there are some excluded sectors such as gambling, adult entertainment, tobacco, and military. To apply for PSSF, the company must be less than four years old and revenues should be under €150,000 that year or in any previous year.

What would preclude a startup from being able to apply to PSSF? There is also a ceiling of €150,000 in funding raised from external sources. If you have raised more than this, you may not be eligible to apply. A comprehensive list of all the qualifying and disqualifying factors can be found on the PSSF page on the Enterprise Ireland website. There is also an FAQ downloadable from the EI website.

Get ready for PSSF investment

PSSF is a welcome bridge for those startups that are still early stage but need investment to really start flourishing. At that point, raising private equity can be a huge challenge. If you have the ambition to take your startup global, it makes sense to build PSSF investment into your strategic roadmap. However, don’t be pre-emptive with your application! Make sure your MVP is strong, that you have a great team around you, and that you have identified your international expansion and employment potential.

If you’re interested in the PSSF, it’s a good idea to start by having a conversation with your New Frontiers, Local Enterprise Office, or Enterprise Ireland advisor. Interested in reading more? Check out this recent article by Anna-Marie Turley in the Independent and the full fund details on the Enterprise Ireland website.