Declan Dagger and Michael Veale are waiting to meet in the Art of Coffee, a coffee shop in the base of the Alto Vetro tower, a slim 16-storey building overlooking the Grand Canal Dock in Dublin 2.

Dagger and Veale are the founder and chief executive respectively of ETU, a learning simulation platform that has just been sold to Mission Spring Ventures, an investment vehicle led by American tech executive Katie Laidlaw, and Pacific Lake Partners, a fund that works with entrepreneurs like Laidlaw to acquire companies that it believes are on the cusp of taking off.

ETU certainly fits the bill. The Irish business doubled its recurring revenue in 2021 and is on track to do the same again in 2022. It has sales of more than $10 million, and its headcount has quadrupled in two and a half years to 50 people.

One million people use its products globally every year in blue-chip firms like PWC, IBM, Merck, Deloitte, Microsoft and Macy’s. ETU isn’t disclosing how much it is valued at, but based on its recent trajectory, it is a big number.

I’m meeting Dagger and Veale to find out how they built the business and to understand what happened in the last two years that caused Laidlaw and her investors to sit up and take notice.

Spinning out

The ETU story starts with Declan Dagger, an expert in optimising human behaviour and developing skills using a combination of neuroscience, data science, psychology and immersive technology. Dagger studied computer science at Trinity College Dublin before completing a PhD in adaptive learning at Trinity’s School of Engineering.

“We were trying to break apart traditional training methods, which was ‘I will teach you some facts, and then I will test if you know those facts at the end’,” he said.

Adaptive learning flips that rote-learning approach on its head – “It tries to determine where there might be knowledge gaps, and what remedial training is needed to fix those gaps,” according to Dagger.

Dagger was an early researcher in the area and, along with a team in Trinity, he started to look at how this more effective approach to learning could be commercialised. He had the support of Intel and later Enterprise Ireland (EI). From 2005 until 2010 he worked with others in Trinity on figuring out if there was a commercial opportunity in adaptive learning while completing his doctorate. 

In 2010, he founded a spin-out company from Trinity College along with Professor Vincent Wade, Professor Michael Gill, Dr Brian Fitzmaurice and two Trinity alumni, Dr Conor Gaffney and Gordon Power. The start-up was initially called Empowertheuser, but later rebranded ETU.

ETU got an EU research grant to develop a platform to teach so-called soft skills using adaptive learning. “Soft skills are things like communication skills, collaboration, decision-making,” Dagger said. “It is useful for salespeople, team leaders, anyone making decisions in complex situations.”

ETU worked on ways to teach people things like how to train people to on-board customers and design sales strategies. Initially, its route to market was via training vendors. The business quickly figured out it needed to go direct to companies, as its product was designed to cut out these middle people. 

So, in 2014, it changed its model and started selling to its end-users directly. “We shifted our focus too to the US as that was where our customers were based,” Dagger said.

PWC was an important early client and this success gave ETU the confidence to open a US office led by Austin Kenny (today its chief revenue office). “We now knew we had a valuable solution and a great product market fit,” Dagger said. 

Funds and sales

ETU has raised just under $2 million from external investors, a tiny amount to create a company with its initial scale and future ambition. Its first external funding round was in 2012 when it raised €500,000 from Leaf Investments, EI, and a group of private investors. Leaf Investments, an edtech fund backed by Folens Publishers, put the experienced John Caddell on ETU’s board and it made six investments in total in the business as it grew over the years.

ETU also raised money from the venture fund arm of City & Guilds and brought in angel investors. One of them was John Hearne, a former Apple executive who sold a business he co-founded, called Curam, to IBM in 2011 for €152 million. Hearne could see how brilliant ETU’s product was and he was impressed by its blue-chip clients, but they were small in number. He started to talk to Dagger, its chief executive, about how ETU could go to the next level. “John is a serial entrepreneur, and his view was we needed a really strong commercial chief executive,” Dagger said.

Dagger had been flat-out building ETU’s product while juggling international expansion, finance and all the other things required in a start-up. He listened to, and agreed with, Hearne.

ETU identified Michael Veale as a potential new chief executive. Veale was a former chief executive of Buy4Now, an e-commerce platform which he had taken from Ireland into the United States. In 2008, he had sold this business for a reported $15 million and then led the international arm of its buyer, the Vermont-based MyWebGrocer. He had decades of sales expertise and knew how to crack the difficult United States market.

It was the middle of Covid-19, but Dagger and Veale met – and crucially, clicked. In October 2020, Veale came in as chief executive. “From day one, we had a very positive relationship,” Veale said. “I did computer science a very long time ago, but my forte was always sales.”

Veale increased ETU’s team from 17 to 50 people, basing them in Ireland and the United States. “We needed more salespeople in the US and in the same time zones as our customers,” he said. “We started to double our revenues annually. We got traction with top brands, and this allowed us to grow.”

Dagger said he could see the impact of Veale not just on the business but also personally. “After Michael joined, I took a holiday in early Q1 (2021) and it was the first time in 12 years I only opened my laptop only once,” he said. “We didn’t miss a step. My strength is definitely in product and operations while Michael’s skills are on the commercial side. We gelled well together.”

With millions of people working from home during Covid-19, the market for learning stimulation accelerated. For corporations, it was a way of instilling company culture and improving key skills that users could tap into when it suited them. 

ETU was generating cash and was profitable. “We were going faster than anticipated,” Veale said. “We had the right product, but we knew we needed more investment. We had started to think about a series A but then we got an unexpected approach.” 

Deal origination

Pacific Lake Partners found ETU in January of this year. Its roots go back to the 1980s and Jim Southern, a pioneer of the search fund model, which partners dynamic entrepreneurs with emerging businesses and combines that with millions in investor capital to allow both to grow.

The entrepreneur Pacific Lake Partners was backing in this case was Katie Laidlaw, who previously worked in Boston Consulting and Palantir Technologies. “She found us,” Veale said. “She was looking for a company to take to the next level with an investment pool that comes in behind her. She found us and they looked at our business model and the opportunity and came in behind us.”

As a result, Veale, having put the business on a growth trajectory, is leaving the business in four weeks’ time. “There are pluses and minus to that,” Veale said. “Often CEOs hang around for a few years after an exit, but it can be good to have someone come in with a new energy too. Declan and the team are really energised about working with Katie in terms of going forward.”

Veale said the value of ETU was not impacted much by the global tech meltdown. “The dollar has gone our way (by strengthening versus the euro),” he said. “I think we are getting towards true valuations for tech companies rather than exaggerated valuations.” 

Dagger said there had been eight months of talks, so he had gotten to know Laidlaw and was looking forward to working more with her. He said ETU liked her approach and didn’t look at alternatives like selling to traditional private equity.

“We knew from second-hand experience that it can destroy company culture and change the focus of the business. We wanted to work with someone who would maintain and enhance what we had. That was a big attraction from our perspective,” Dagger said.

“It is business as usual, but this investment will also allow us to look at new opportunities. We are accelerating but if you look at the space we are operating in, the market is gargantuan. It is still early days for us, and the market is still only waking up to the impact immersive learning can have. It is about doubling down on what we can do.”