Mobile Technology is one of the fastest growing markets and one entrepreneur is determined develop the technology further and develop and grow his business. In our ninth series Maree Morrissey talks to Ian Deakin founder of Pervenio, about his business’ crux at present. Later in the year we re-visit each entrepreneur for a progress update.

VITAL STATISTICS

Ian Deakin, Founder of Pervenio

Business Name: Pervenio Year of Set Up: 2003 Founder: Ian Deakin Location: Cork Business Type: Mobile Telecommunication

BACKGROUND

In a fiercely competitive market, Pervenio’s patented technology enables mobile operators to reach and retain their customers. Ian Deakin, Managing Director and Pervenio’s founder, worked in telecommunications for the last 20 years, including O2, Motorola and Logica CMG in senior technical positions before going out on his own in 2003.

Mobile operators face a challenge in providing mobile data services for thousands of handsets on the global market. Pervenio’s software product called the Reach Server is a patented solution, which enables mobile operators to detect what kind of handset their customers have. Reach Server will detect any change in handset used by the customer when it is switched on and will instantly configure the mobile network and the customer’s handset to receive all compatible data services. In the very competitive mobile phones market where the cost of voice services have been reduced, networks need to sell data services to maximise revenue says Deakin.

CURRENT STATUS

In 2004 Deakin started trials and testing on the Reach Server solution. He entered the InterTradeIreland Seedcorn competition and was the winner in the Cork region. The presence of Digicel chief executive Denis O’Brien at the award ceremony presented Pervenio with a significant opportunity, which Deakin made the most of. “A film on the company was presented at the awards– this attracted O’Brien’s interest and afterwards he gave us an order. Our software is now used in several Digicel networks,’’ Deakin explains.

Pervenio also provide consulting services and bespoke software services for other company’s, but now need to focus efforts on achieving more sales for the Reach Server. Pervenio are equally aware of the need to develop new functionality to improve performance and maintain a competitive edge in the sector.

FINANCING

Initially Pervenio secured a repayable grant from Cork City Enterprise Board. Founders matching funds enabled the company to develop the initial product and test the market of mobile operators. “We have been able to stay cash positive through providing consultative and outsource product development services. We could maintain the current business model by using services sales to prop up product development and sales, but this will not allow us to focus and we could miss out on the current market opportunity,” says Deakin.

Deakin is aware that in order to accomplish this the company will need to raise funds to encourage further growth of the Reach Server business. “We already have approval from EI to provide matching funds. So we are working to secure the private funds before Christmas,” he
explains.

EXPANSION

Pervenio’s expansion plans for the immediate future are to increase sales and R&D activities on the Reach Server. A direct sales person will be hired who has experience in the market and more specifically the ability to help with the closure of sales. “We are currently looking at resellers for specific demographic regions and solution partners who can apply our technology to better their own solutions. We are in initial discussions with resellers in India and Africa as these markets have a similar customer growth and development experienced with Digicel, but with no previous experience of this it is a daunting task,” says Deakin.

While Telecoms infrastructure providers can use the Reach Server as an enabling technology to increase mobile data service licenses with mobile operators, Pervenio are also in negotiations with a major provider to help them with mobile TV service uptake.

FUTURE PLANS

What is the Crux of the Matter for the business right now?

Should we focus on direct sales or partners and do we go for venture capital or angel investors?
Read below comments from our panel of experts about ways in which Pervenio can steer their business.

QUESTIONS FROM PERVENIO TO THE PANEL

1. As a small company at an early stage of in the product cycle should we focus on direct sales or partners? Partners may not allow us to understand the customers needs to develop the product tactically or strategically?
   
   
2. As we would like to close the funding round prior to Christmas, should we focus on Venture Capital funds or Angel investors?
   
   
3. As a product company, should we consider outsource sales to help with direct sales?
   

Kevin Sheehan, Partner, Owner Manager Group, Deloitte heads up the panel of experts below who give their advice on how best Pervenio can grow their business.
A must read for all aspiring entrepreneurs!

Pervino operate in a specialised market and have developed a niche product, which has a relatively small number of potential customers. GETTING TO MARKET Bringing the Reach Server to the market will be difficult and the prospect of developing an effective sales team in a short timeframe is not appealing and could be a costly exercise, with no guarantee of success. STRATEGIC PARTNERS A preferable route to market is to identify a strategic partner with global reach who would benefit from an alliance with Pervenio. A company with complementary telecom solutions would be ideal. There will always be a risk of not getting access to the ultimate customer through this channel, but if you identify a like-minded partner, the value of their contacts and customer base will far outweigh lack of direct customer access. FINANCING THE EXPANSION PLAN The company at this stage is possibly too small to attract worthwhile VC investment. Angel investors may not be prepared to hold their investment for a sufficient number of years to allow for optimum growth and can have unrealistic expectations in respect of return yields. A local corporate finance house could assist in identifying a small locally sourced group of investors who are looking for an alternative to property and like the product idea. Kevin Sheehan, Partner, Owner Manager Group, Deloitte. Head of Panel for Crux of The Matter.

Sourcing adequate finance to fund business expansion is a common problem. There are two options Pervenio should consider when seeking to raise finance and further expand the business: SOURCING FINANCE Debt – money lent to the business, which is normally repayable by a fixed date, for example a bank loan. Equity – money invested in the business normally in return for a stake of the company, for example venture capital fund or business angels. EQUITY OPTIONS When considering “equity options”, Pervenio should ask itself two key questions: Are we prepared and willing to let other people own a stake in the business? Business angels will normally seek to take an active management role. This can be a valuable business asset as it gives the business access to advice and expertise. However, Pervenio must decide if are they willing to allow other people influence the management of the business. What level of interest will the business attract? Both business angels and venture capital funds will seek to invest in innovative, high growth potential business. CONVINCE INVESTORS Pervenio must prepare adequately to make sure they convince potential investors that this is the case and secure the ‘right’ finance option to suit their company. Adrian Moynihan, Business Strategy, AIB

Pervenio has a product that is patent protected; it works and is proven in the international market. VALUABLE ASSOCIATES The company’s immediate objective must be to penetrate the International mobile operator market using its Digicell experience and contacts. I believe that direct sales to mobile operators are the best way forward. BE DIRECT Going for direct sales to mobile operators will also require the recruitment of strong sales personnel and marketing spend but this option may bring about quicker results. LITTLE ANGELS To fund this strategy I suggest in the short term, Ian contacts the National Halo Business Angel Partnership. The partnership already has a database of high net worth individuals seeking private investment opportunities such as Pervenio. They may bring much needed equity and could bring business expertise and contacts in the particular industry sector, which Pervenio is operating in. USEFUL CONTACTS An ‘angel’ investment will unlock the Enterprise Ireland match funding and will help the company penetrate its markets. The Business Angel Partnership is operated in Cork by BIC 021-2307005. Patrick Munden, Director of South East Business & Innovation Centre Ltd. (SEBIC)

Pervenio have managed to break in to a difficult market with a product that clearly adds significant value to the mobile operator. TARGET MARKETS One of the issues that should be considered carefully is the choice of initial target markets so that the team can maximise limited resources in terms of time and finance. It is very important at this early stage in development of the product and sales strategy to focus on direct contact with the customers, through direct sales or presence at key trade shows. MANUFACTURERS Handset manufacturers often promote products to operators, which will assist in selling more handsets, so it should be possible to leverage this. Subcontracting the sales function to a partner or agent may result in significantly less sales, if the agent is also focusing on other products generating greater revenue streams for them. FOCUS ON FUNDS Given Pervenio have a track record; VC funding would be quicker to access. However, the valuations will most likely be more aggressive. Ideally they would be able to raise strategic funding, from angels or companies that can add significant value. Pervenio need to raise enough funds to focus on one business model. Liavan Mullin, Founder of Celtic Hampers, OneMade.com and Chair of NFTE Ireland.

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