Hi-tech firms failing

Despite technological and other advances, the city’s young creative technology companies trying to get to a stage where they can make money and employ staff are virtually all facing funding issues which prevent them from bridging a “gaping chasm”, according to Londonderry’s digital champion Mark Nagurski.

Mr Nagurski said he has worked with up to 47 new digital companies in Londonderry since his appointment in 2010 but hopes to have created as many as 100 new firms by 2015.

Mr Nagurski said the much-heralded Project Kelvin transtransatlantic cable with its telecommunications house at Fort George would not have a direct impact on the amount of digital start-up companies created in the city.

“Project Kelvin is a tremendous positive,” he said. “Will it have a direct impact on the number of start-up companies? Probably not. My position is that it is a fantastic potential attractor for larger foreign direct investment (FDI) projects, and some local companies may grow into it.

“However, I do not think that it is fundamental to the number of start-up companies. People have not looked at Project Kelvin and said that they must now start a business,” said Mr Nagurksi in a briefing session at Stormont.

Mr Nagurski has also helped organise Northern Ireland’s largest digital event this year - the Culture Tech Festival - which is due to take place in Londonderry during the last week in August.

But despite these positive developments Mr Nagurski admits many of the 127 digital firms operating here are “chronically underfunded” and accepts the need to find £50k from private investors for ‘seed money’ for every new company established. That’s £5m in total.

Mr Nagurksi was appointed as Londonderry’s official digital champion two years ago, after talks between the Londonderry Chamber of Commerce and Derry City Council.

Civic and business leaders - interested in finding out if there were any digital or creative industries in the city - established the Digital Derry project which he spearheads.

In a briefing to the Stormont Culture, Arts and Leisure Committee, Mr Nagurski revealed: “The evidence that we provided in December said that there were roughly 100 digital content companies in the city,” Mr Nagurski told MLAs.

“At this point, it is about 127. So, in the past two years, we have seen 47 new commercial organisations come into being...Some of them are fully fledged companies that are staffed, trading and making a lot of money, and some of them are very early doors. The one thing that they all have in common, realistically, is that they are, almost to a man, chronically underfunded, which is one of the areas that we are looking at in detail.

“It would be worth predicating all my evidence based on the fact that we work almost exclusively with start-up companies. We work with people who are in the first, second or, sometimes, third year of business. Therefore, the kind of issues that we see are consistently around funding, access to staff and creative talent.”

He told the Committee that trying to access the £25,000 necessary to finance a prototype was not easy and that there was a high failure rate.

Equally, ‘angel investors’ are apparently non-existent in Northern Ireland. Mr Nagurski said these are people who come in with £50k to £100k to get a company to a stage where it can generate profits and employ people.

“That is the gaping chasm that most of our companies are not crossing. If they do not cross it, we cannot get to a situation where they are able to sell, compete, generate revenues and, obviously, employ more staff.

“Typically, that would be fuelled by private equity investments or perhaps debt investment, but that is simply not the case. We need to look at that in great detail.”