M & A Rainmaker

The Silicon Crossroads Technopolis based in Lichfield, Staffordshire, England has helped Inbound Marketing Megastars HubSpot decide on Dublin,Ireland as the location for their European Headquarters. The official announcement from Hubspot is here. Chris Windley, Managing Partner of the Silicon Crossroads Technopolis and of the Silicon Crossroads V.C.T. ( Just voted #100 of 1000 Tech. Investors globally by PeekIndex – full story here ) said ” Some time ago HubSpot asked our opinion on where they should base their European Headquarters – we highlighted as possibilities London, Lichfield itself  and Dublin, Ireland.”

The story of that early conversation with HubSpot is here . ” Whilst we would have been proud to welcome HubSpot to Lichfield and perhaps even the Technopolis itself, we are delighted that HubSpot decided on one of our recommendations. ” Chris said.

As highlighted in our early conversation above there are some compelling reasons why U.S. companies should base themselves in Dublin, Ireland . In all likelihood this will be followed by sales offices in Benelux and London. This is a well worn path that e.g. Google, Twitter and Facebook have followed.

You have to admire the Irish and Irish ( Inward Development Agency ) I.D.A. for the way that they have positioned ” brand Ireland ” and for the way that they handled this opportunity. There are many places where HubSpot could have based it’s European Headquarters but it chose Dublin, Ireland.

Chris said ” I have contacts within the Irish I.D.A. and they have a Boston office which has been communicating with HubSpot for a number of years . The Boston team of the Irish I.D.A. obviously did a good job in presenting the case to HubSpot “.

To me this just emphasises what we have said elsewhere – there is an unstoppable flow of fully funded companies coming from the U.S. to Europe and other countries. This is particularly true of High Tech and software companies.

4 years ago HubSpot was a small Boston based software startup. Today it is one of the fastest growing SaaS companies in the world. Probably second only to Salesforce.com.

When HubSpot received further funding earlier on in the year and investment from e.g. Google and Salesforce it was almost inevitable that they would open a European Headquarters soon. Around 300 companies in Europe are HubSpot customers but this is not enough. HubSpot needed a European base to compete against WordPress based competitors and new startup – The Six Figure Mentors – which is rapidly expanding across the globe from the U.K.

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In the last couple of days the news has emerged that Ireland won the race to get Twitter to site it’s European Headquarters there. Unsurprisingly this news emerged on Twitter itself – apparently after a concerted effort by Irish Tweeps  to persuade Twitter to come to the land of the Celtic Tiger.

It was interesting timing for me because a U.S. based Hi Tech company had just asked me for my opinion on where to base it’s European Headquarters and I was also reading this article here about some ” tinkering ” that the U.K. government is planning with start-up investment incentives.

http://eu.techcrunch.com/2011/09/25/for-better-or-worse-the-uk-plans-big-changes-for-startup-investment/

I am sure that IDA Ireland would have been delighted to know that my recommendation was to look closer at Ireland. I don’t have any real connection with Ireland other than the fact that I love Ireland and the Irish people – well doesn’t everyone ???

As a former Royal Navy officer in the 80’s Ireland was sort of ” off limits ” to me – especially Northern Ireland – but when I left the Navy and joined the Hi Tech world ( e.g. Memorex and then Fibernet ) the magic of Ireland started to pull me.

Memorex had strong representation in Ireland and of course the Irish Memorex salespeople were ” memorable ” !! Fibernet also did a lot of business  in Ireland ( customers included Bank of Ireland and Allied Irish Bank ) and M.D. Charles was always being ” led astray ” by the Irish – they delighted in trying to get him to miss his plane by having ” one more Guinness “.

Guinness is of course just one reason why you have to go to Ireland.

For me there followed about 3 ” Stay on a farm ” tours with the children with so many highlights it’s difficult to remember them all – being in a country pub when a  céilidh erupted; the visit to Bunratty Castle; the visit to the Irish National Stud; the visit to the Jamieson’s Distillery. An Irish wedding in Cork. A corporate event with the U.K. Sales Director of 3Com. The occasion that I took the whole of Voyager Networks staff to Dublin to celebrate the sale of Voyager. Staying in the Shelbourne Hotel when ” The Monkees ” walked in !

This is the problem with Ireland – it’s just too much fun !!!

In fairness the Irish really have their act together at a time when the U.S. Hi Tech industry is awash with venture capital investment and many U.S. firms are looking for a base for their European Operations.

According to IDA Ireland Ireland is becoming the Internet Capital of Europe

http://www.idaireland.com/news-media/videos/index.xml

and I am not going to argue with them. Even if all the tinkerings with the Enterprise Investment Scheme in the U.K. happen

http://eu.techcrunch.com/2011/09/25/for-better-or-worse-the-uk-plans-big-changes-for-startup-investment/

the issue is more about which country has it’s act together in terms of the whole package : Country Brand & Likability Factor, Financial Incentives, Communications infrastructure  etc etc

When I was asked my opinion on where to base I said Ireland off the top of my head. I also asked a friend of mine who has a business helping U.S. companies to establish themselves in Europe – he said the U.K. I also Googled the question and came across a Linkedin answer with a lot of recommendations for Ireland. Just trying to get back to that Linkedin answer I found this:

http://www.linkedin.com/answers/international/internationalization-localization/INT_INZ/7476-1213

Reid Hoffman of Linkedin asks Linkedin where best to place Linkedin’s proposed European H.Q. !!

The answer voted best to this question summarised as follows:

” My final choices as a potential company moving there? Luxembourg, Ireland, Switzerland. “

Linkedin eventually went to ………………………. Ireland !!

http://www.idaireland.com/news-media/press-releases/linkedin-establishment-of/

and note this:

Kevin Eyres, managing director of LinkedIn Europe commented, “We now have more than 14 million members in Europe and 60 million worldwide. As our membership continues to grow quickly, this is the right time for us to establish an international headquarters. Being based in Dublin gives us access to a highly skilled workforce and enables us to coordinate our business growth across Europe and beyond to deliver the best possible service to our members.”

But also see this ( hot off the press ) in respect of Tax:

http://www.joe.ie/news-politics/current-affairs/irish-move-to-save-twitter-53-per-cent-in-tax-0016130-1

and I quote

” That, in effect, represents a saving of €140,000 – or 53 per cent – from situating its European office in Dublin rather than London.

In actual fact, though, Twitter will probably save much more than that, if they’re clever enough to deploy tactics which exploit tax loopholes all over the globe.

It was revealed last year that accounting practices known as a Double Irish and a Dutch Sandwich – owing to similarly favourable tax conditions in the Netherlands – helped Google to reduce its tax bill by €2.2bn.

The 12 per cent Irish corporation tax rate which has contributed to the relocation of so many big companies to these shores has raised the heckles of the likes of France and Germany, who are adamant that Ireland should agree to a more uniform Europe-wide tax rate as a payback for the bailout provided by the (financial terrorists) good folk at the EU, ECB and IMF.”

and the point is that you need to have ALL your ” ducks in a row ” if you are going to win the ” which country am I going to base my European Headquarters in ” game.

If London wants to win in this game it had better put the sort of effort behind it that won the Olympics for 2012.

The Irish brand and the ” Double Irish and a Dutch Sandwich “ is going prove difficult to beat !!!

btw The Celtic Tiger awakening is not just about Internet companies the same is going on in the movie industry and healthcare sectors

http://www.irishtimes.com/newspaper/finance/2011/0923/1224304573989.html

http://www.telegraph.co.uk/finance/economics/8049212/The-hi-tech-miracle-rescuing-Ireland-from-a-banking-crisis.html