Fast-growing and rapidly scaling companies — of which Ireland has many — face a bevy of challenges as they endeavour to navigate their often meteoric rise while facing legal issues concerning intellectual property, regulatory compliance, contracts, funding and investment.
Mason Hayes & Curran has extensive experience in helping companies just like this — including notable Irish “unicorns” (a start-up valued at more than €1 billion) such as Let’s Get Checked — get off the ground, while building a long-term relationship so the business gets the most appropriate legal counsel as it evolves.
Conall Geraghty, partner at the firm, says Ireland is internationally recognised as a business-friendly jurisdiction. Scaling companies benefit from excellent financial and other support offered by Enterprise Ireland and similar bodies. As a result, our prowess in advanced technologies such as artificial intelligence and machine learning means entrepreneurs are ready and able to translate that into a viable, global business.
“It almost goes without saying that AI and machine learning are everywhere,” Geraghty says. For example, in the fintech space, a notable hotbed of innovation, Geraghty says disruptive companies are leveraging AI to produce previously unobtainable insights.
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“Innovative fintechs are exploring a range of use cases. We are seeing, for example, generative AI and machine learning applied to stock market, investment and portfolio analysis. They are taking masses of financial data and coming back with useful outputs.”
This type of offering brings its own regulatory challenges. “Applying AI to financial information can attract a whole other regulatory aspect,” Geraghty warns. “You have to be aware of the customer protections in place”, he says, noting that there can be licensing requirements for firms offering certain types of services.
This is where solid legal advice at an early stage in the company’s journey becomes invaluable. Geraghty explains that his team can help such a company devise a compliant structure for their innovative offering that makes both legal and commercial sense.
“If a business is considering how to commercialise an AI model which provides insights into stocks or an investment portfolio, perhaps as a direct-to-consumer subscription service, we can work with the business to help it understand the regulatory implications and whether changes may be needed to operate in a legally compliant manner.”
This early-stage design input can be critical, he adds. “This kind of scenario is particularly emblematic of fintech. The risks of falling foul of Central Bank [of Ireland] regulation and financial regulation are serious so that it is really something you need to get right from the get-go.”
Another area where rapidly growing companies require legal backup is when they sail past the initial seed stages and need larger amounts of funding. This is when things can get slightly trickier, Geraghty says.
“Once you need to raise €5-10 million or more, it becomes noticeably more difficult,” he notes. Early-stage rounds of investment can typically be funded by Irish or Irish-based investors, but as the amounts get larger, the net must be cast globally, he says.
“We know that 90 per cent of the cash in funding rounds of over €10 million comes from international investors and it is the international investor typically leading the round,” Geraghty says. This is typified by GridBeyond’s recent €52 million Series C financing round, led by Alantra’s Energy Transition Fund, Klima, on which the firm advised.
Cognisant of the numerous challenges faced when rapidly scaling a company, Geraghty says the firm’s philosophy is to build a trusted and sustainable partnership with its scaling clients. “Ideally, we work with them from incorporation right through to exit or unicorn status. We want to build a long-term relationship with our clients and become the trusted adviser they need.”
A notable example is Kinzen, the media company founded by entrepreneurs and journalists Mark Little and Áine Kerr. “We were with them on the day they signed the papers to incorporate the company in 2017,″ he says. “We helped them from early stage funding rounds, ultimately helping them with the exit to Spotify.” (Spotify acquired Kinzen in late 2022).
Legal advice can range from the momentous to the more mundane, such as commercial contracts, IP or property advice, as well as the various regulatory pitfalls and legal landmines. When a close relationship has been established, the bespoke nature of this advice can be invaluable.
“It’s a full-service offering from incorporation to exit, and we understand that the unique aspects of each company require a different approach through the full trajectory of the business,” Geraghty says. “Entrepreneurs are on a phenomenal learning curve. We help them to manage the risks but also with the learning process of the legal aspects of scaling a business, and this invariably feeds into the commercial side.”
- Find out more about the Fintech and Fast Growth Companies teams at Mason Hayes & Curran