My article from today’s Sunday Business Post:
Six years after he founded online firm Pigsback.com during the dotcom bust, Michael Dwyer has scooped â‚¬4 million in funding for the firm and is eyeing an aggressive expansion in Britain.
Hotbed, a British private investor, provided the funds to Pigsback.com, which offers its members â€˜piggy pointsâ€™ for discounts on goods and makes its money from online advertising.
The company has now raised about â‚¬12 million since its foundation.
Dwyer said that the Pigsback.com brand was well established in Ireland and the company was now focusing on Britain.
â€˜â€˜When we started in Ireland in 2000,we raised a seed round [of funding] and 18 months later we raised a follow-through round,â€ he said.
â€˜â€˜In Britain, we are raising money in the exact same pattern.
â€œWeâ€™ve made very good progress in our first year but weâ€™ve also identified the challenges and the level of opportunity that is there in Britain.
â€œThese funds are there to see that through.
â€˜â€˜They will mainly go towards marketing spend and increasing the local management team.â€
Pigsback.com employs around 60 people, most of whom are based in Ireland, and Dwyer plans to hire another ten staff by the start of next year.
The companyâ€™s new British manager, Brian Harrison, will have a bigger team to meet its ambitious targets. Dwyer said that Pigsback.com had more than 340,000 active members in Britain and was forecasting 500,000 members by the end of this year.
â€˜â€˜To have things at the critical mass, we would require at least one million members to be attracting the very biggest brands,â€ said Dwyer. â€˜â€˜Weâ€™re on target to hit half a million by the end of the year and with a really big push we think we can be there or thereabouts by the end of 2007.â€
Since Pigsback.com launched at the start of the decade, Dwyer estimates the company has raised around â‚¬12 million in investment. Its Irish operation, which has 270,000 registered members, produced a profit of â‚¬700,000 last year, he said.
As part of the latest funding deal, one of the companyâ€™s original shareholders, XtraVision, has sold its stake.
â€˜â€˜I led a group of our current investors in purchasing XtraVision shares back for the simple reason that Blockbusters [the parent company of XtraVision] business internationally would have priorities other than Pigsback.com,â€ Dwyer said.
â€˜â€˜It was a non-strategic stake for them and they were prepared to do a deal with the promoter backed by other investors.â€
The exit of Xtra-Vision means that Hotbed is now the largest minority shareholder in the company, with only Dwyer himself owning more shares.
As part of the agreement, Hotbed will also take up one of the five non-executive director positions at the company.
Dwyer believes that the firmâ€™s method of advertising is unique because the customers choose to visit the sites instead of having the adverts brought to them.
â€˜â€˜I suppose the encouraging thing is that consumers have taken really well to the whole brand and the environment, which we think is one of trust and fun. As a result they are interacting really well with the brands we bring to them via the site,â€ he said.
â€˜â€˜Companies traditionally did all [their advertising] via TV or radio or outdoor, but theyâ€™re realising that they cannot rely on these media any more,â€™â€™ Dwyer said.
â€˜â€˜According to the IAB [Interactive Advertising Bureau] in Britain, 23 per cent of the media we consume is now online.â€
He said that new digital video technologies were also threatening television advertising.
â€˜â€˜Whether itâ€™s today or ten years time, the certainties that were before will no longer be.
â€œOur product is working, but we need to get greater reach and we need to bring more brands on board.
â€˜â€˜Theyâ€™re the challenges for the next 12-18 months.â€
As well as focusing on the British operation, Dwyer is considering the future expansion of Pigsback.com.
â€˜â€˜We are beginning to do a top line evaluation of a number of options, after which weâ€™ll resolve the best next move for us,â€ he said. â€˜â€˜Weâ€™re beginning to cast an eye on the wider opportunities.â€
He gave the example of a deal the company was linked to in its early years.
â€˜â€˜In the very early days, there were talks of an alliance with a big Australian company. While that looked ridiculous, it doesnâ€™t seem so ridiculous anymore.â€Â