Founded by Irish entrepreneur Ciara Donlon, Theya Lingerie designs bamboo underwear specifically for women to wear post-surgery. The company won multiple awards in Ireland and internationally, had deals with major hospitals in the US, and raised a total of €1.5 million from private investors and others, including Enterprise Ireland.

Last Monday, however, the company went into liquidation. Creditors gathered at a remote meeting to appoint Grant Thornton accountants Nicholas O’Dwyer and Colm Dolan to wind up the business.

It was not a surprise. Last November, Theya entered the Scarp scheme, the examinership-lite process designed for small businesses. The hope was to save the business through a restructuring of its balance sheet and the injection of new capital.

A deal was within sight. However, it all fell apart with the finish line in sight, and the Scarp process fell down. From then on, liquidation was inevitable. “Unfortunately the deal fell through at the last minute,” Donlon told Rosanna at the time.

Essentially, the company ran out of time and money.

And it is not alone in that regard. On Wednesday, a liquidator was appointed to Iamus Technologies, a hotly-tipped poultry robotics firm.

The company’s technology used artificial intelligence to assist farmers in their search for efficiency and was backed by Themvar, the family office of the Carton family office that sold the successful Manor Farm poultry processing business to Swedish-listed Scandi Standard in 2017. Enterprise Ireland also backed the company, as did Co Cavan-based feed manufacturer AW Ennis.

The start-up was selected to participate in prestigious international accelerators: Techstars Farm to Fork, backed by Cargill and Ecolab, in 2020; and SVG Ventures’ Thrive programme last year.

Ultimately, it was not enough. Once again, the business could not raise the new funds it required to keep going.

“We ran out of runway,” founder and CEO Shane Kieran told Thomas after Shane McAleer of Somers Murphy & Earl Corporate Services was appointed as liquidator. He said the process was not contentious, with investors present to support him at the meeting and no creditors opposing the liquidation.

In 2021, Kiernan sought to use some of Iamus’s technology differently, taking cameras out of a robot and placing them in a shed’s ceilings to apply machine vision technology separately. “We gave it a really good shot last year,” Kiernan said.

However, further investment would have been required to continue. “We needed that injection of capital to sustain the business and we couldn’t do it,” he told Thomas.

Meanwhile, tomorrow morning in Galway, creditors will gather to wind up Kite Medical, an early-stage medical technology company that was developing a “non-invasive, child-friendly solution to detect kidney reflux without the trauma”.

The company, which was founded by Sarah Loughrey and led by Joan Fitzpatrick, once employed six people and had ambitions of being able to screen 1.5 million children per year.

The company raised €1.5 million, and had a host of significant backers including Enterprise Ireland, through its High Potential Start-Up fund, and angel investors through the HBAN network.

SOSV, the VC fund led by Irish-American Sean O’Sullivan, was a shareholder, while it received further funding in 2020 from the European Commission, under the Horizon 2020 European Innovation Council Accelerator Pilot grant programme.

Speaking to Rosanna, Fitzpatrick was honest about the company’s troubles raising further funding.

“We tried everything that we could that was reasonable to try. We have worked very hard over a number of years. Sarah and I have devoted a lot of our time and effort,” Fitzpatrick said.

“The climate in regard to general investment and opportunities certainly had an impact. There is caution out there and it has got to do with the various influences over the past few years over the last few years.”

Theya, Iamus, and Kite are all early-stage companies, and they operate in different sectors. However, those sectors require deep pockets, and the capacity to absorb early losses.  

In each of their cases, investors were not willing to keep backing the projects. It highlights just how difficult it is to scale a sustainable business, but it also reinforces the current difficulties in the funding climate.

Over the past number of years, with interest rates low and growth rates high, there was a wall of cash for funds to invest. That wall of capital has been eroded over the past 12 months.

Companies that found it easy (well, somewhat easy) to raise funds two years ago are now finding it much more difficult. This is something that John has written about in some detail.

This is not unique to Ireland; it is a global issue.

But it will certainly impact business here. In comments previously reported by The Currency, Will Prendergast, partner with Frontline Ventures, suggested that the slowdown in European venture investing has already happened.

“We are going to see a material slowdown in all stages of investment in Europe over the next six months. It has already happened. It is just not hitting the numbers yet,” said Prendergast.

The Irish Venture Capital Association, meanwhile, has been raising concerns about the amount of overseas capital that goes into Irish start-ups and how that money can easily retreat in tough times.

All the data points to an increase in company failures this year. Lack of funding will be central to a sizable number.  

According to PwC’s latest insolvency barometer, released earlier this month, more than 1,000 firms could go bust this year if the economic downturn worsens, racking up combined losses of €4 billion. PwC said construction, real estate, hospitality, and arts businesses are the most at risk.

Sadly, start-ups will fail too. However, failure in business is nothing to be ashamed of. It is an inevitable consequence of trying to build something from the ground up, of endeavouring to build a business, create a product and generate employment.

However, after years of cheap credit and relatively easy funding, we are now on the cusp of a new reality and start-ups will have to learn how to deal with it.

*****

One company that has not had any difficulty raising funds is fraud detection start-up Inscribe. The Irish-founded, US-headquartered last week unwrapped a $25 million Series B round, bringing its total amount raised to more than $38 million. I caught up with co-founder and CEO Ronan Burke last week, who told me they put together the round – from start to finish – in just six weeks. “We spoke to a small group of firms that were close to our network. These folks are aware of us and that helps,” he said.

The property market started to cool noticeably at the end of 2022, while demand appears to have weakened further this year. And, based on the data, we are unlikely to see any upward pressure on prices over the coming months. That was the central theme of Ronan’s column last week which examined why the market is cooling.

Michael Halford has trained horses for the Aga Khan and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum. However, his operating company has summoned creditors to a meeting to install a liquidator. Johnny Ward and I had the details.

Five years ago, Nordic business leader Caroline Farberger barely entertained the idea that the workplace wasn’t an even playing field for men and women. But that was before she transitioned. She spoke to Rosanna about her journey.

Midlands-based businessman Thomas McNamara hit pay-dirt back in 2007 when he sold a 3.6-acre site in Tullamore, Co Offaly for €42 million. Last week, we told the story of how the deal triggered a dispute between the businessman and the tax authority over his capital gains tax bill.