Conor Sheridan has been scaling his tech start-up Nory for more than three years and, since it was founded at the start of 2021, the economic landscape has changed dramatically for fledgling businesses.
Nory, a tech business that provides restaurants with services used to scale and manage their operations more effectively, recently secured its largest round of funding to date, amid lingering inflationary pressures and high interest rates which have spooked many venture capitalist in the last two years.
The €15m investment was led by Accel and backed by existing investors Cavalry, Playfair, Samaipata and Triplepoint.
This was the second round of funding completed by the start-up, having previously raised around €7m.“When we were doing our seed round it was more challenging,” said Mr Sheridan.
Prior to when the European Central Bank (ECB) began its interest rate hiking campaign in 2022, which led to many private investors becoming a lot more cautious with their cash, start-ups seemingly found it easier to raise money at the conception stage.
“You could raise (money) on an idea,” said Mr Sheridan. He said the process was faster during Nory’s most recent fundraising round, due to the company’s “really strong metrics.”
“If you’ve got the right numbers you can raise, if you don’t you won’t because there’s just less capital being deployed,” he said, while adding that for some start-ups it can be more challenging depending on what sector they’re in.
Start-ups may get some relief this year as the ECB next week is expected to announce its first interest rate cut since it began hiking them in July 2022.
Figures published earlier this year showed the level of private investment deals into Irish firms plummeted in the first three months of the year as venture capitalists stayed cautious amid a volatile overall economic environment.
There were 17 venture capital investment deals in the period, worth around €31.7m, plunging 80% from €166m across 24 deals a year earlier, according to the latest Venture Pulse report published by professional services firm KPMG.
Anna Scally, head of technology and media and partner at KPMG Ireland, said investors remain interested in medtech, AI, and cleantech companies “despite a very slow start to the year”.
Meanwhile, Mr Sheridan said inflationary pressures have benefitted Nory which saw an “influx” of restaurants looking to save money be simplifying operations.
Now with inflationary pressures, wages and other costs, margins are leaner for our customers so they’re under more pressure to run their businesses efficiently and actually scale their businesses.
Nory’s main revenue stream comes from smaller mid-market chains. Mr Sheridan observed that “fine dining seems to be a bit more squeezed” in the current climate.
While growing Nory, the former Davy Stockbroker fund manager also owns a chain of Dublin based chicken eateries called Mad Egg.
Mr Sheridan was spurred on to create Nory through his own frustrations with trying to scale and grow his own restaurants.
In relation to his own restaurant business, Mr Sheridan echoed many in the hospitality industry calling for a lower Vat rate to curb the number of closures which has ticked upwards already this year.
“I think restaurants are probably bundled in with hotels in the broader hospitality sector, but the business models are very different,” he said.
Nory provides services to restaurants across the globe including the US, Middle-East and other parts of Europe, but Mr Sheridan said that “the UK and Ireland seem to be the two markets that are struggling more than any other market we work in.”
Elsewhere, a recent report from business representative group Ibec showed founders are finding it increasingly difficult to access other areas of funding to not only grow but to survive.