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3

Funds

2

About Odysseus Investments

Odysseus Investments is Reech Corporations Group's financial services and technology venture capital arm.

Odysseus Investments Headquarter Location

1 Knightsbridge Green

London, England, SW1X,

United Kingdom

+352 (0)20 88 04 69

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Latest Odysseus Investments News

Derek Foley Butler interview: ‘I was probably one of these well-intentioned, sort of crusading entrepreneur types’

Jun 2, 2022

Sign Up He threw himself into the campaign, helping pull together a coalition of 28 industry bodies including ISME, the Restaurants Association, Retail Excellence Ireland and even the Institute of Architects. Butler brought in former Department of Finance secretary general John Moran to chair the group. “We got the word subsidy in play. We got the tax warehousing into play. And that’s really what saves the SME sector. It was that breathing space needed to preserve cash flow.” Grid’s own US lenders were supportive and their funds were committed anyway. Payment breaks for borrowers were also effectively baked into Grid’s lending model – albeit unplanned – because borrowers would only make repayments as card income recovered. “So a lending break was implicit in the model but we formalised it because unless you’re generating revenue, we’re not getting paid.” As borrowers gained confidence and lockdowns eased Grid put money back to work, but tentatively. “Instead of one €40,000 loan we were doing four by €10,000 over four months. That worked for both parties, businesses were getting regular infusions of capital but we could mitigate our risk.” Ironically, once businesses were able to reopen the big shift away from cash during the pandemic meant much more of Grid’s café and retail customers’ income was card based, triggering faster repayments. Butler’s a passionate but somewhat unlikely champion of traditional SMEs. He qualified as a chartered accountant with blue chip financial services firm PwC before shifting into development work with Goal in northern Uganda and later Haiti. His own business is relatively small – for now – but tech focused and outward looking rather than a traditional family firm. He credits the interest to growing up with the family’s garage business in Castlepollard, Co Westmeath. “My dad’s a mechanic and the business was run from beside the house. It was a real insight into that cold, hard reality of getting customers, getting paid and just keeping the wheels moving.” Working later in Boston with PwC gave a window into an entirely different business world. “One of the big insights there was just how much capital there is in the world. You see billions of dollars under management but it’s incredibly tightly concentrated in the hands of a small number of people, that was one really formative experience.” Today Grid taps exactly that type of wealth to fund its Irish SME lending business. Goal provided a different perspective again, but it was just as influential in shaping Butler’s approach to business. “Micro-lending was a really powerful development tool in Uganda. And particularly village savings and loan associations. I could see that post-war northern Uganda was recovering, not really with loads of aid money but actually with these groups, typically of women, coming together to save and lend together for simple things like school fees, or if somebody was sick.” The grassroots model of a common savings box with two keys was achieving things institutionalised structures could not, based on mutual trust, he says. In Haiti, after the devastating 2010 earthquake, he saw something like the opposite effect. “After the earthquake there was an enormous direct transfer of resources into Haiti but it had nowhere near the impact that it should have. One of the main reasons is that so much of the resources just leaked out of the country. All the things that the NGOs were buying were made outside.” Local, small entrepreneurs with potential to power progress and long term development were outside that aid-funded economy, he says. Back in Ireland after the financial crash He saw an opportunity coming out of the banking crisis for alternative types of credit. “I was probably one of these well-intentioned, sort of crusading entrepreneur types who thought that you could just make success happen and that if you’re well-intentioned, that’s good enough,” he says with a chuckle. “I thought Ireland was still a wealthy country, there was actually no shortage of capital in the world. In Ireland it was just stuck in the banking system.” The initial plan was to launch platforms for gifting, rewards, invest and donations – hence Grid. But the focus narrowed initially to peer-to-peer lending, matching people with money to people who needed it. Through 2013 and 2014 Grid built out a peer-to-peer platform, funding the business by the bootstraps and once there was a platform to show people, raising €125,00 from a small group: Enda O’Coineen’s Kilcullen Kapital, Frank Doyle originally of Smurfit and Professor Eoin O’Neill of Trinity. Matching funds were secured from Enterprise Ireland. It was enough for a start, but not much more. “We realised very quickly we were just way too ambitious with peanuts in the tank,” he says. Ambitions were scaled back to match resources, including cutting back to just three staff and a period of drift before falling upon the cash advance model, then finding success in the US. “I said how can we get a minimum viable product going in Ireland, so worked with Fire Financial Services on the payments components and built a credit model and processing model and launched a test version in November of 2016.” Thiele Asset Management in the US liked what it saw and provided a funding line – adding a dependable underpinning to the peer-to-peer investors. Momentum was capped by a successful €3m equity commitment from Odysseus Investments, an investor in Luxembourg in 2017. “We got the first million in August of 2017, which allowed me to increase the size of the team from three to 25. But into 2018 that funding ran into financial trouble.” As Butler describes, drawing down funds became a real struggle. He’d beefed up his team but felt his backers were drip-feeding the funds he needed to pay them, a gruelling situation. ”One of the really big things at home was always make sure people get paid, don’t screw around, so that following year really from the middle of 2018, to the middle of 2019, it was very, very difficult for me as the founder. I had 25 mouths to feed.” There wasn’t a question of Odysseus being unhappy with its investment he says, the blockage was on the other side, but the result was that instead of expansion Grid had to let go much of the team, back down from 25 to eight staff and to focus on short-term profitability. “We lost €1m in 2018, we lost €750,000 in 2019. And then we made a profit in 2020. So that was a huge turnaround, but very painful to increase the size of the team massively, then to downsize it again.” Two of the people who left in 2019 had been with Grid from the start, he says. Odysseus remains a shareholder, though freed of its full funding commitment, and the episode is a stark reminder that securing a venture backer, seen by lots of startups as the holy grail, doesn’t mean plain sailing ever after. “It was just a very stressful, very painful time,” he says. Despite the pandemic, 2020 proved the real turning point, testing the resilience of the business without breaking it. In 2021 Grid did €10m of lending. This year it will be €25m. The analytics tools developed to assess credit quality have become a product in their own right, marketed to SMEs as Pulse, a service that offers insights into cash flow management and documentation, work traditionally left to external accountants or not done at all by owner-operated firms. Expansion overseas is now also on the agenda, which means going back out to find investment later in the year. Work to assess Grid’s equity needs will be done over the autumn, he says. He hasn’t tapped a corporate finance house yet to , but that’s coming. “We want to get the business into other countries so we will need financing for that,” he says simply. The UK is an obvious first export market for Irish businesses, but Butler is wary of the credit environment there – fearing a race to the bottom by SME lenders but does see a UK market for Pulse. For cash advance lending, target new markets will be mid-sized markets in Europe with populations up to 20 million. Grid will go into the equity raising process from a position of strength, he says. “We’ll have three years of profitability under our belts, we’ll have a team of 17. and I think we’d have shown that we can run a good business. It’s a good time to be going into a funding round.”

Odysseus Investments Investments

3 Investments

Odysseus Investments has made 3 investments. Their latest investment was in Bankify as part of their Seed VC on October 10, 2017.

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Odysseus Investments Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

10/30/2017

Seed VC

Bankify

$0.25M

Yes

3

Other Investors

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0

Other Investors

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0

Date

10/30/2017

Round

Seed VC

Other Investors

Other Investors

Company

Bankify

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Amount

$0.25M

New?

Yes

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Co-Investors

Sources

3

0

0

Odysseus Investments Fund History

2 Fund Histories

Odysseus Investments has 2 funds, including Insurtech Capital I.

Closing Date

Fund

Fund Type

Status

Amount

Sources

Insurtech Capital I

Early-Stage Venture Capital

Open

Odysseus FinTech Ventures I SCSP

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10

Closing Date

Fund

Insurtech Capital I

Odysseus FinTech Ventures I SCSP

Fund Type

Early-Stage Venture Capital

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Status

Open

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Amount

Sources

10

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