In our sixteenth series Niamh MacSweeney talks to Cronan McNamara one of the co-founders of CREMe Software Ltd, about his business’ crux at present.

VITAL STATISTICS

Cronan McNamara one of the co-founders of CREMe Software Ltd

Business Name: CREMe Software Ltd.     Year of Set Up: 2005     Founders: Cronan McNamara and Audrey Crosbie     Location: Innovation Centre, Trinity College, Dublin     Business Type: Online software, expertise and data for exposure assessment of chemicals

National and international regulators, safety authorities, and manufacturers of food, chemicals and personal care products use creMe’s unique high performance solution to actively promote health and wellness, since they can now accurately evaluate consumer exposure levels to additives, chemicals and pesticides in the food and cosmetic chain.

Background

CREMe was formed in April 2005 in Trinity College Dublin by Cronan McNamara and Audrey Crosbie to exploit the results of over six years of research of intellectual property in the form of software, data and know-how in the area of food safety exposure assessment.

The main product of CREMe is an online food, nutrition, cosmetic and chemical safety assessment tool which allows government regulators, industry and researchers to easily and accurately calculate the exposure or consumption levels of consumers to chemicals or food ingredients. This tool is delivered online with access to on-demand high performance computing for the extremely efficient computation of intakes or exposures over very large data sets. The CREMe team has exclusively licensed the intellectual property from Trinity College.

Current Status

CREMe now has three full time employees, the CEO, CTO and a marketing executive. CREMe is currently interviewing for a Global sales director who will work out of the headquarters in Dublin. They also work with a team of advisors and consultants who bring expertise in key areas. To date CREMe has used the services of 3R Sales and Marketing (www.3r.ie) to help secure initial sales and create their compelling customer value proposition.

CREMe is building a strong reputation in its field with blue chip client testimonials from industry, government and research and is delivering services internationally from its online tool served from a state of the art data centre in Dublin.

Financing

The company has grown purely organically to date by performing consultancy contracts, achieving up front payments for software contracts. The company has signed contracts of over €500K to date and is cash flow positive. The acceptable margins on sales have allowed CREMe to grow organically to date.

Expansion

The company has grown organically to date and with hiring a dedicated sales manager, the rate of growth will increase. The board of directors are currently considering if the rate of growth is not fast enough and are seeking investment in order to speed up the market penetration of the CREMe 2.0 tool internationally. The goal of the company is to become a truly global company bringing benefits to millions of consumers through the increased nutrition and safety levels of products.

The crux of the matter is the decision as to what level of investment is required and in what form the investment should take in order to turn this good company into a truly great global company.

Future Plans

The company’s short term goal is to grow the team with particular emphasis on increasing the marketing and sales capability internationally. They plan to have a full time presence in the USA, mainland Europe and Asia within the next 12 months. They also believe they need to build channels in order to penetrate the market in new areas more efficiently.

CREMe’s research and development goals aim to expand into related web 2.0 database applications and new application areas of their risk analysis technology utilising on-demand high performance computing.

Crux Of The Matter

CREMe have had a policy of very conservative spending to date with limited resources applied to the business of marketing and selling their solution. They have now validated their product and their price points in the three target markets. CREMe have a sense of confidence that if they invest in marketing and sales, they will be rewarded with a strong revenue stream. The crossroads the company face now is whether to continue to grow organically or invest resources aggressively in marketing and sales to allow them to build international awareness, sales and revenues and thus to grow the company as aggressively as possible.

QUESTIONS FROM CREME SOFTWARE LTD TO THE PANEL

1. How can CREMe ensure that they are hiring the right sales people to represent them in Europe, the US and Asia?
   
   
2. Would external investment help accelerate the company’s growth and what are the advantages and disadvantages of such an approach?
   
   
3. What criteria should CREMe use to select appropriate investors such as international reach, contacts, equity requirements etc?
   

Kevin Sheehan, Partner, SME Services, Deloitte, heads up the panel of experts below who give their advice on how best CREMe Softeare Ltd can grow their business.

Kevin Sheehan, Partner, SME Services, Deloitte. CREMe have an innovative product in the form of technical know how, a huge asset, but it is currently under-exploited. To grow to a truly international service provider, the company will need to think big and invest accordingly. Financing Growth The conservative approach to committing to expenditure and staffing levels should not be completely abandoned. In fact many IT companies have failed due to poor control over expenditure of seed or venture capital. Instead, plans should be made to commit expenditure to support growth and expansion, but every commitment must be justified with a cost benefit analysis. The Prospect Of External Investment CREMe may have to look externally for investment. An external investor can bring the necessary capital with a low service cost, but will only do so if they can see significant capital growth potential. There are many innovative ways to bring external investors on-board and the owners of CREMe should explore options with an appropriate corporate finance advisor. Areas to consider prior to approaching any advisor should include: the amount of capital required, the possibility of surrendering all or some control, the proposed exit strategy, the cost of capital they are prepared to pay, and the duration of investment. Don’t enter into any deal that you are not entirely happy with. Kevin Sheehan, Partner, SME Services, Deloitte. Head of Panel for Crux of The Matter.

Brian O’Kane, Managing Director, OAKTREE Press CREMe is in an enviable position: a validated product, with customers and clear price points in three markets, growing demand and cash in the bank. The question is not whether CREMe should hire a global sales director but how fast can they do it – and, most important, who is the right person to quickly grow their business internationally? Entice Subscribers With an online product, the key to sales is convincing large organisations to subscribe. CREMe’s ideal sales director will have extensive high-level international contacts among regulators, safety authorities and manufacturers. He or she won’t come cheap, but will be worth every penny of their salary (and bonuses and stock options). Finding Investors If CREMe don’t have the network to find such a person on their own, they should consider employing a headhunter, probably in the UK or US to ensure that they get the right person. External investors may be helpful here, not just for the funding that will pay for recruitment, but for their contacts. Again, international investors are more likely to be useful here than those with purely local contacts. CREMe should research the track record and investee companies of any investor they engage with because it’s not just money they are looking for! Brian O’Kane, Managing Director, OAKTREE Press

Mark Fielding, Chief Executive, ISME On the assumption that the management of CREMe have validated their product, price points and market then it remains for them to “get on with it”, which means tooling up to attack the market. Effective Exposure Most managers believe the basic issue in marketing is to convince the customer that theirs is the best product. Not true. The basic issue in marketing is creating and selling the perception that you are the leader in your class. Therefore it is essential that CREMe get it into the minds of their prospective clients that they are the leaders in the area of food safety exposure assessment. This needs to be done immediately and obviously costs money. In attempting to grow organically, management run the risk of being overtaken by metoo products from better financed operations who will have the advantage of first mover. Potential Investors If organic growth is too tardy, then the obvious solution is to take in outside participators with the required resources, be they cash, expertise or global reach. In assessing potential investors, management must list the areas of weakness in their business proposal and attempt to strengthen these areas through outside investment and equity participation. The founders need also to decide what exactly they want to be, researchers, marketeers or business managers and factor that into the final equation. Mark Fielding, Chief Executive, ISME

What were the main mistaKes that they made?

1. CREMe has been slow to hire new staff due to the uncertainty of future cash flow and the desire for conservative spending to ensure company survival. This may prove to have been something of a mistake as the company now have the confidence that investing in marketing and sales will reap substantial rewards and their overly conservative approach to date may have slowed the growth of the company.

2. CREMe currently have a very lean board of directors and it has proved very effective in making decisions, but bringing on a broad spectrum of Board members opens doors and adds a level of credibility to a company, and so their lean board may prove to be a mistake, or be an advantage in entering their first funding round.

3. As a start up company, CREMe have the tendency to chase too many opportunities, risking not focusing on the core products and services on offer.

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