Stories
For Stephen McNulty, there has been a world before and after the 2015 Paris global agreement on climate change. Early in his career, the former laboratory engineer developed a sense that the way his industry was monitoring environmental risks was not ideal. He gives the example of a river where water is manually sampled for pollutants once a month, with no information available on what happens in between.
When he founded Ambisense in 2014, his idea was to bring this business into the era of the internet of things (IoT) and artificial intelligence. “What you need is a sensor that goes into the water, that’s measuring what’s happening in that water all the time, and then once you’ve got that piece of the jigsaw, you can apply analytics on top of that data, which tells you what’s happening in some depth. And that’s what we do,” he says on this week’s podcast.
Ambisense first applied these technologies to gases, helping the operators of complex environments such as building sites on contaminated land to manage the risk of harmful substances being released. Now its founder says it can monitor all kinds of emissions from noise to dust and water pollution.
The company’s focus is on the analytics end of the chain, using existing off-the-shelf sensors in most cases – though McNulty says his team is not averse to developing new hardware if the need arises. Today, this combination of emerging technologies and environmental problem-solving appears to tick all the boxes of an attractive start-up. McNulty says this wasn’t the case eight years ago, however.
“We found it very difficult to get the attention of investors in the early days. We had some exceptions to that, of course, which is why we’re here. But effectively, we applied the cleantech label to what we were doing,” he recalls. “With the generation of start-ups to call it that before us, investors hadn’t had a happy ride. A lot of heavy capex businesses hadn’t really worked.”
One of these exceptions, aside from family and friends, was an energy veteran who backed Ambisense and joined its board right from the beginning. “I was extremely lucky to meet a Dublin guy named Philip O’Quigley who’s CEO of Falcon Oil and Gas Phillip would have been one of our first angel investors and led that round,” McNulty says. Phillip was extraordinarily helpful and still is to this day – a really good sounding board and a great mentor to have.”
Another initial backer was DCU, thanks to links between the university and some of its founding team. The company remains based on DCU’s Alpha start-up campus.
To fine-tune Ambisense into a workable business, McNulty says its team has narrowed down the solutions it offers to those answering three questions. First, “is this complex enough to warrant a solution?” He acknowledges that machine learning (ML) is irrelevant in situations where traditional methods give good results. Second, “is it a global problem?” – and a growing one where technologies can be scaled up and rolled out to a sufficient number of customers.
“The third thing is where we can see some kind of competitive difference. So we can say, if we were to solve that problem and it was such a big market, we would have a good bit of daylight between us and anybody else,” McNulty says.
With these principles established, Ambisense was able to raise a €1 million seed funding round in 2018. Atlantic Bridge had just established its university fund and, again thanks to the DCU connections, the company was eligible. Atlantic Bridge partner Chris Horn joined the board at that point.
“Then in 2019, we met with Barry Downes,” says McNulty. Downes leads the venture capital firm Sure Valley, which was only two years old at the time. “Barry’s investment fund was very much focusing on IoT. And again, we brought those guys on board in 2019.” This follow-on round was, again worth just over €1 million, with existing backers re-investing too.
That same year, Ambisense got its big breakthrough – a contract with the Highways England agency for the £8 billion Lower Thames Crossing road tunnel project. “It runs through some heavily contaminated sites and so when they’re going to tunnel through those contaminated sites, there’s the potential to create a lot of environmental pollution,” McNulty says.
Ambisense offered a solution to get data from the site in real time, get it online and analyse it to determine what might happen and why. “Because the project’s just so big, that’s really the only way to solve that problem at that scale,” McNulty says, validating the company’s value proposition. “There is enough complexity and enough risk around what these folks are doing that technology can really move the internal project teams from getting data in, sticking it onto Excel, generating graphs and seeing what the graphs mean, to having an online data portal with a suite of ML tools that can tell them ‘Well, what relationship does this parameter have to this other parameter?’ That just kind of fast forwards and gets them much deeper into an understanding of risk.”
“Airborne pathogens are going to be very complex to manage and there was, therefore, a massive opportunity.”
Through 2020, McNulty says Ambisense identified two other areas where it can make a difference and grow its business. One was indoor air quality, which has been highlighted by Covid-19. “Airborne pathogens are going to be very complex to manage and there was, therefore, a massive opportunity,” says McNulty.
The other was flood prevention: “Again, a problem which is extremely complex, extremely topical, extremely expensive. We think that there’s a huge opportunity to look at the performance and behaviour of flood defence assets. Those are the assets that protect cities and towns from failure,” he adds.
This wider plan underpinned Ambisense’s latest funding round, a €3 million raise last August that brought in the UK-based Business Growth Fund through its Irish fund. “We knew that BGF had had other portfolio companies in this space, some of which were customers of ours. That kind of warm introduction allowed us to develop a relationship with BGF from kind of the start in 2020 onwards,” says McNulty.
The funding has allowed Ambisense to recruit and move on from a situation where it had “30 jobs done by 10 people”. The headcount has doubled to 29 in the past year and will grow again, though not as fast, McNulty says. Ambisense now has offices in the UK and the Netherlands, focused on developing sales in the British and continental European markets, while research and development remains based in Dublin.
The expanded team has been bringing solutions to its two new markets. In indoor air quality, it has just recruited Simon Jones, previously of ventilation firm Aereco. “Simon had been an advisor to Nphet and Sage [the Scientific Advisory Group for Emergencies] in the UK around the pandemic, and is just a real domain expert in terms of indoor air quality and how data analytics can be applied to solve that problem,” McNulty says.
On flood prevention, the company secured a contract with the Northern Ireland Department of Infrastructure to pilot its technology and McNulty expects the resulting product to launch in about a month’s time.
Then he gives himself until next year to sell these existing solutions to those customers Ambisense can reach with its existing funding. He is targeting €4 million in revenue this year, with all cash to be ploughed back into expanding the business rather than returning a profit just yet.
“Then how much more growth can we expect to deliver organically? Versus is it a time to double down and reinvest?” he wonders. This could be by either expanding deeper into the verticals already explored by Ambisense, or performing an acquisition to enter another one. “It’s definitely a 2023 question,” McNulty says.
Either way, he adds: “There’s never been a better time to be a global company in the environmental sector.”
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