Latest / Founders and Funding / Ep 21 - Darragh Gaffney - Business Lead Ireland at Leyton

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Ep 21 - Darragh Gaffney - Business Lead Ireland at Leyton · Founders and Funding

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Hi, welcome to the Founders and Funding podcast.
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I'm your host, Philip Smith. On the podcast, I'll be
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interviewing founders, investors, startup advisors on
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how to fund the journey of your startup and some tips and advice
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they have for you along the way. This podcast is sponsored by
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Perfect Technologies and Leighton.
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Enjoy the episode. Hi, Dara, welcome to the
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Founders and Funding podcast. Thanks very much Philip.
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Delighted to be here. It's my delight to have you on
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Darren to go to start. Could you talk to me about your
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company and your role? Sure, absolutely.
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So Leighton is probably one of the largest companies that
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you've never heard of, to be honest.
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Globally, we're 3 1/2 thousand employees active in 18 countries
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and basically we are a tax and innovation consultancy, uh, that
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operates across everything from where any tax incentives operate
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within, within a geography or a country, uh, within Ireland
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specifically, that is a primary focus of R&D tax credits,
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knowledge development box and grand funding services is what
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we, what we deliver. Uh, predominantly, Uh, so yeah.
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The company was founded as a group back in 1997 by UH-2
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French guys, Francois and Olivier, still active in the
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business and still 100% completely owned by those guys.
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So it's all been driven by organic growth and organic
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scaling across predominantly the Northern hemisphere, but now
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active in, in moving into Australia and New Zealand as
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well. So yeah, that's that's what we
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do, Tax, tax incentives, essentially.
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It's, it's an incredible story to grow like, it's very rare a
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company grows like that and is able to have that kind of global
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impact and, and have such a, a large workforce.
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It is absolutely. And and I think the two guys
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identified 2 pillars or two areas to prioritize very
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quickly. And back when the company was
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established, the first was they developed an absolute sales
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machine and Leighton, I, I always say that Leighton as a
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business could actually sell anything.
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They just happen to sell or indeed tax credit service or tax
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incentives to businesses. But yeah, the, the SDO and the
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business development processes that they have set up in the
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business have absolutely been the pillar on which the business
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has scaled and, and and grown. The second one I would say is,
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is very early on the guys invested in tech, they built a
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software development centre of excellence in Casablanca and the
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Casablanca office has now scaled to nearly 800 software
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developers based in Casablanca, right next door to the to the
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African headquarters of Salesforce actually.
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So yeah, absolutely. So it's that investment, early
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investment in tech and also in very clearly structured and
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defined sales processes to drive that growth.
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It's an incredible story, but I'm very familiar of Leighton,
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of course, because your response over the podcast, but also
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because I've worked with you in a very familiar with your work,
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particularly in the Rd. tax credits that you know have been
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massively beneficial to a number of different set of companies to
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help them to maximize their returns and the profitability,
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which is very crucial early on and very relevant to this
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conversation about a fund, the startups journey.
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It, it absolutely is. And I I just make one like
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you're absolutely right, Philip. We, we happen to sponsor this
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podcast, but in, in no ways or means is, is this a sales
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exercise? But if I give you a small bit of
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context and and I'll just give you maybe 2 points. 1 is Ireland
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actually has the second most generous or in the tax credit
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scheme in the OECDI think we're just behind Portugal and in 2026
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that's increasing to from 30% to 35%.
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And in fact, Mehal Martin was at a Scale Ireland event back in
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January and from the stage he actually referenced it and said
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I don't know what more we can do to incentivize Irish businesses
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to use the R&D tax credit scheme in Ireland.
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And in particular what he was talking about is the fact that
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of the 1.4 billion in OND tax credits that was that was
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claimed in 2023, I think 85% of that value was claimed by 15% of
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claimants. So it's very much has been the
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domain of multinationals and large entities, whereas there is
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a real push now for start-ups in particular to use the OND tax
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credit scheme to to their advantage because they are
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naturally carrying out research and development, uh, within
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their business. Because yes, absolutely it's
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something that's it's, it's one of those rare win wins where
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it's just it's kind of a no brainer for companies to do.
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There's nothing to lose. And talk to me a bit more there.
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So talk to me a bit more about your role, uh, at Leighton and
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what does an average day look like right now?
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Yeah. So my role, I might give you a
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bit of context as to where Leighton Ireland and the Irish
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entity is at at the moment. So believe it or not, Philip on
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on the 28th of April this day last year I it was actually my
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first day with Leighton, believe it or not.
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How was it? Yeah.
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So, so and I was employee number one of of the Leighton Irish
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entity. So we were very much in start up
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mode ourselves as, as the Irish entity, albeit with the, with
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the, the back office and the shared support of of the UK
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business. And so at the moment or over the
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last 12 months, there's nearly no been no such thing as a
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typical day. I, but I have absolutely
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prioritized one obviously looking to generate new
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business. I think when I came in at first
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I, I looked to prioritize a kind of A702010 split. 70% was on
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that day-to-day scaled the business, grow the business, get
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new staff in and actually hire new staff, but also help them to
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actually leverage the network of, of naturally innovative
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businesses in Ireland. The other 20% was to, to try and
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change that dial in terms of stock being the largest business
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that people have never heard of, to becoming recognised as, as
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actually a market leader in the, in the R&D tax credits and grant
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funding space. And then that third part was,
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was the, the thought leadership piece to see, you know, to, to
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be recognized then as an entity that isn't just delivering
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operational service delivery, but that can actually act as a,
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as a strategic partner. So these days it's, it's
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oversight of we have, we have a delivery team and we have a
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business development team. So, so it's oversight of that
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team. The team is now at 9:00 and I,
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it's looking to set the standards and maintain, maintain
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what I believe is a, is a, is a very excellent culture within
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the business and make sure that the client ultimately is at the
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centre of, of everything that we, that we do, you know, So my
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week at the moment is probably 2 days work from home, two to
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three days in the office or one of those days can, can often be
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on the road visiting either prospective clients or existing
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clients as well and helping them navigate different challenges.
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So, so quite a mixed bag which which I have to say I love, you
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know? Yeah, I really like that.
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Well, first of all, it's great to have that kind of combination
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of I think working from the office home, a bit in the road,
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that's what everyone kind of strives for.
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But I love that, you know, putting companies at the center
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of the work that you do. I think that's I love, I love
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hearing that. I think it's always a good sign
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and to, to look at then a bit more than Dara.
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So you've, you've talked to me a bit already about how the, uh,
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how Leighton has funded its journey to date.
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But I suppose how have you helped, uh, do you have some
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examples of companies you've helped, uh, to fundraiser?
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You've helped them with their their only tax credits that
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they've benefited from working with Leighton.
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Yeah, ABS absolutely. And look, as you can respect,
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umm, we've, we work with a, a massive amount of companies
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across a many number of sectors and, and given a lot of
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confidentiality is at the heart of what we do, we can't always
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name check too many of them. Of course.
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But, but absolutely if, if I talk about some of the, some of
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the general examples of, of what we can do, we often the value we
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bring is, is often twofold. One is, is actually from an
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awareness point of view, many start-ups in particular or
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companies that are in that scaling growth stage do not
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always realize actually one, that the R&D tax credit scheme
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exists or two that they can actually claim.
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So quite often they think that one, if they're pre revenue or
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two, if they're pre profitable, they don't qualify for their R&D
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tax credit where that's just not true.
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Any company that is liable to file ACT one form may claim
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you're in the tax credits irrespective.
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The second thing then is that actually and and that then
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naturally generates actually a revenue line back into the
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business because it is, it is income because you can take it
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as a cash injection into the business from the revenue
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commissioners. And so it can go down as as a
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revenue line item. So that's that's the first one
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and that's often often the most impactful, impactful aspect.
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The second aspect then is, is what we call the hidden R&D is
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that companies may be go, but that's just what we do, you
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know, and then and we go, yeah, but that doesn't mean there's
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not R&D in there and you can't claim the tax credit for it as a
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result. So as a result, we have industry
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experts from people that have worked in industry in the
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different sectors that we service.
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And so, you know, if you're in, if you're in fintech or if
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you're in software development and we've got guys that have
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been at the coalface of those type of businesses.
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So they know how to have a conversation with your tech
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leads and uncover that hidden R&D activity that's that's
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within your business. And we often find that even with
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a business that has been claiming or in the tax credits
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to date that we can quite often identify a significant uplift in
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the value of their claim as a result.
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So all about cash flow, you know.
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Really like that. It's it's a really interesting
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approach. I think trying to bring in an
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expert. I think it's one of the most
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small companies struggle to do is to bring in someone from the
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team that has expertise in that company's specific niche of
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their industry in their product or service and then be able to
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advise them accordingly. And that's a very valuable
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solution to offer solve as a problem of, you know, founders
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not knowing what is the only opportunity for them and to take
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things there. Then maybe a bit more broad and
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kind of back a bit to a more general and aspect looking at
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funding, like what is the best way to fund a startup journey in
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your opinion? Yeah.
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I think that's actually, it's actually quite a tough question
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almost. It is.
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It is. I think there's and the
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principle has to be to choose the right funding mechanism for
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the right body of work that you need to do and at the right
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time. And with that being the ultimate
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goal. That's a lot easier said than
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done. And I, I think sometimes,
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especially in the Irish environment where the state
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agencies or VCs who often control that early access to
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money nearly want to see that you've bootstrapped and, and
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developed a proof of concept and, and put cash and skin in
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the game yourself. So, so that is, that is, it is
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a, it is a tough one. Outside of that, I'd say
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identify what do you actually need.
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And that generally comes down to three things.
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Now every startup will probably just automatically say cash, I
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need cash, I need cash, I need cash, you know, but absolute
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actually if you look at it and go, well, do you need cash to
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fund internal resource within your own business or do you need
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access to capability that you don't currently have within your
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business? Or actually, do you need access
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to a skill set that doesn't currently exist within your
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business? And I think a lot of the time
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startups can end up being quite insular and go, it all has to be
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delivered in house and pay for nothing externally.
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Whereas actually there is a massive amount of what I'd call
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enabling support that can be delivered within the business
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one way or one way or another. So, so yeah, I'm, I'm afraid I
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don't, I don't have the magic bullet answer.
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I'm, I'm afraid. But I, I think if there's
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certain principles and certain questions you can ask yourself,
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I think they will help you identify those those funding
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lines that are right for you. Well, I think that's, that's the
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right answer there because I don't think it, you know, I
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don't know if there is, it's, it's rare to say and it always
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varies by the company and, and the situation and what they're
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trying to achieve. So, but I think the perspective
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of you, I think if you can get that right and understand the
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criteria of what your business needs, business needs, and I
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think that will lead you to been able to get the right supports
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and funding in place and to look at the founding team then a bit
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as well. Derek and I know you work with a
14:30
lot of different startups out of founders.
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What skills should new founders possess?
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And you know, does that impact perhaps how they've they fund
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the startup or the types of mechanisms that they look for?
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Yeah, it it do you mean in terms of the the skill sets that I see
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and founders that develop successful startups or?
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Yeah, I suppose it's both the the skills that founders have
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the developed successful startups, but then also is there
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skills I suppose you find from companies working with Leighton
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that makes them a better fish for our new tax credits or for
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different grant mechanisms. Is is there if if you have maybe
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a more tech focused team or skill sets or do you find it
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kind of applies to anyone, any any founder avails of of these
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grants and these different mechanisms and tax credits that
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can support them? Yeah, yeah.
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And so I, I kind of just reiterate the same point is
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don't chase bad money basically. And and that can also be grant
15:35
funding. Do you know, because you may get
15:37
the money, but you may end up spending more time making a
15:41
square peg for the round hole. Do you know, go back to that
15:45
point of look at grant funding. There is an absolute myriad of
15:50
of grant funding options out there, but is it the right
15:54
funding mechanism for the right project and at the right time of
15:58
the business? And if you and if you cannot say
16:00
yes to all three of those questions, well then you may end
16:04
up actually just causing yourself more hassles in the
16:07
medium and long term in terms of making that funding mechanism
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fit something else that is not core to your business.
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You know as well as I do, Philip, that every founder needs
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absolute laser focus on what their commercial priorities are.
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Yes. It's a, it's a constant daily
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iteration of is what I'm working on this hour, this day, this
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week, this month, this quarter, fully, 100% aligned with the
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commercial priorities or the revenue generating activities of
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my business at the moment. And if the answer is a
16:47
hesitation or a no, well then you have to stop it and get back
16:50
on track. And it's absolutely the same
16:53
thing when it comes to when it comes to funding.
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So it is that that laser focus that's more at a macro level, at
17:00
an operational level, there can often be or sometimes be the
17:07
mentality of of kind of, you know, move fast and break
17:11
things. And again, that can at times
17:14
that can end up being a false economy.
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So what is really is, is getting your structures and processes
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and documentation foundation set early, get those standards set
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early because absolutely they are the first things that will
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fall over as the business starts to scale.
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And why do I reference those? Well, I reference those because
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if you've set those standards and that operational framework
17:48
from the start one, it will, it will absolutely help in terms of
17:54
your R&D tax credits claim because the information is
17:57
already there and you're not scrambling to try and to try and
18:01
compile something. And, and absolutely, that's,
18:03
that's quite often where we end up doing a lot of work with,
18:07
with start-ups. But the second part is, is then
18:10
when it comes to external investment, if founders and
18:15
startups can already demonstrate that, that good governance and
18:19
structure and process already exists, Well, that gives
18:23
confidence in the investor that these guys actually know what
18:25
they're at. Do you know and that actually do
18:28
you know they have a scalable business that won't just fall
18:32
over the 2nd that it takes off? Yeah, that's really interesting.
18:37
Like it, it, it always, it doesn't come back in part to the
18:42
founders themselves and then the kind of work that they're
18:44
undertaking. And then you know what, what is
18:47
a fit in terms of grants or all the mechanisms they can apply
18:51
for to come into the business to support them and the fit there
18:55
and to look then more towards investors there are like how,
18:59
how can companies attract investors effectively?
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Do you think is there, is there something you see from your work
19:04
with companies that is a good signal to can be a good signal
19:09
to outside investors? Yeah, I, I, I think the first
19:14
thing and I'd go back to what, what is probably central to what
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I'm trying to do with, with Leighton Ireland.
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And it's keeping your, your end client, your end user, basically
19:26
the person who is going to pay the bill or respond to your
19:30
product or services at the heart and at the center of your
19:34
thought process for everything that you do.
19:36
Do you know Otherwise you're going to be on a hiding to
19:41
nothing. Do you know?
19:43
Do you know? And something's only worth what
19:45
somebody else is willing to pay for us, not what you think is
19:48
its value or. Very true.
19:52
Yeah, or, or the amount that it took you to build it.
19:55
Do you know, again, can be, can be two very, two very different,
20:00
different things. So you go back to the thing of,
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well, what is the problem you're solving?
20:06
What, what problem does your business actually solve?
20:10
It's the old thing of you don't sell a mattress, you sell a good
20:12
night's sleep. And it's, it's the same with
20:15
ourselves. Yes, technically we sell or in
20:18
the tax credit. Services, but actually what we
20:22
sell is is compliance and Peace of Mind with the revenue
20:27
commissioners. Do you know that's that's why
20:30
companies are happy to to bring us in ultimately one one way or
20:35
another. I think from a point of view as
20:38
well as is I think a lot of founders can can struggle with
20:42
delegation. I, I know I struggle with
20:44
delegation myself at times as well, but just at the point
20:49
where we feel ourselves, where you feel yourself retracting and
20:52
when the pressure comes on and almost kind of closing in and
20:55
taking everything all on yourself.
20:58
Actually, that's the time when we ironically need to open
21:01
ourselves up and and start to start to delegate and trust
21:04
those around us instead. Yeah, and I fully agree.
21:09
I think it's a, it's a very difficult skill to get good at,
21:12
but it's also increasingly important as the company grows.
21:16
It's, uh, well, I think, I think you're right as well.
21:18
They're like, you're not just selling our new tax credits.
21:21
Like you're selling a lot of things.
21:22
You're selling profitability and a positive year and, uh, you
21:26
know, better growth for the companies.
21:27
There's a lot of things I think it trickles down to and feeds
21:30
into if you can get it right. And before we finish up there,
21:33
if you'd one key piece of a key piece of advice to share on fun
21:37
in a startup, what would it be? Umm, I think, I think I'd go
21:44
back to that point of don't, don't, don't kind of get caught
21:51
chasing kind of sparkly sparkly funding or or kind of sparkly
21:57
money. Generally, if something is seems
22:01
too good to be true, it often ends up being that case.
22:04
Do you know? The easier it is to access quite
22:08
often the more problems it'll end up causing you in in the
22:12
long run. Do you know?
22:14
So I'd say I'd say exactly that. Don't, don't, don't look to
22:18
access either grant funding or any kind of source of funding
22:22
that could could end up acting as a false economy and bite new
22:26
bite new in the medium to long term.
22:29
Yeah, I think that's a very good point that I think most founders
22:33
learn the hard way. Dara, thanks so much for coming
22:35
on the podcast. That was a really great
22:37
conversation. I think Late in Ireland is doing
22:40
great work and I'm excited to see where it goes over the
22:44
coming years. Fantastic.
22:46
Thanks very much, Phillip. My pleasure, Derek.
22:51
Hi. Thanks for listening to this
22:53
book's episode of the Founders and Funding podcast.
22:56
If you'd like to be a guest or have a guest suggestion, please
22:58
get in touch. Thank you.