Researching ROI at the National Digital Research Centre

I recently found myself rummaging in the online records of the National Digital Research centre. This body is a workplace neighbour of mine, and describes itself like so;

NDRC is an independent enterprise dedicated to accelerating research from idea to income.

Which description left me nearly none the wiser. Was this a State quango? It says it is Independent, but independent of what? It says it is an enterprise. Does that mean it is being run for profit?

The answers to these questions seem to be, Yes, Unknowable and In Theory, respectively.

It is a joint effort by Dublin’s universities to commercialise their research, with money supplied by the Dept of Communications.

This is a good idea.

What is peculiar is that (as Antoin O’Lachtnain mentioned on Twitter) the Annual Report 2011 for the NDRC don’t include a balance sheet. The return on investment in 2010 is cited, in a single pull out box not referred to in the text, as “1.2x”.

Now, I’m barely numerate. This puts me in the front rank of most solicitors. But that figure seemed a bit light. But what do I know? I thought I’d check what normal looked like in the world of early stage investment- also termed Angel Investing (unless I have that wrong. Please let me know if I have.)

Poking Google, it disgorges information from the University of New Hampshire’s Centre for Venture Research on angel investors in tech businesses.

In what is described hereas a “rather modest ROI perspective” the typical technology Angel Investor reportedly expects seven-in-seven. Or, in other words

They require seven times their investment over an expected holding period of seven years…

The NDRC hasn’t been running that long. But there are also figures for returns based on earlier exists. Successful angel investors, after 3.5 years produced 2.6 their invested capital.

There is no reason why the NDRC, with the potential resources of Dublin’s entire academic community, shouldn’t expect to be successful generating good returns on public money.

But, as far as I can see, at “1.2x” citizens are not getting the return on their investments they might have expected.

6 Comments

  • Donal Cahalane says:

    Totally agree with you that any bodies receiving state funding of any description should be fully accountable in terms of their financial matters and I’m sure that NDRC are in every way. I’ve never personally had any dealings with NDRC but know many small businesses and researchers who have and they couldn’t speak more highly of the help, assistance and finance they’ve received.

    Different investment models have wildly varying rates of return on their capital depending on the investment stage and level of investment. Angels are a particular kind of investor that wouldn’t be in the same league as NDRC’s efforts. NDRC provides a badly needed resource in Ireland for the initial seed capital and information resources needed to take an idea past its initial stages and into some form that has future business potential. It invests at a level that many angel investors might consider “too early” and as such as often the first outside investment in a project is often playing the long waiting game in term of returns.

    From what I’ve seen NDRC seem to very open and active in terms of information about their activities and the many events/open days they host. I’m sure there’s full information available about their activities/returns somewhere but you’re very right in asking the questions about that information being easier to access.

  • Simon McGarr says:

    Hi Donal,

    Thanks for that. Not questioning the NDRC’s skills or the quality to their services to recipients of investment. I’m just trying to see the return to the public purse. If it is “1.2x” in an area where the norm would be 2.6, then the issue would be more than simply making that information more accessible.

    It would be the actual fact that would reveal which would be significant.

  • 1. Hmm. “National” body funded by all taxpayers but for the purpose of the efforts of “Dublin’s universities to commercialise their research”.

    2. Funded by the Department of Communications ? Seems a strange conduit.

  • Those returns for angel investing look like fantasy land, by the way. I doubt if such investors in the U.S. even approach the 7 in 7 standard on anything but an exceptional basis.

    Over here, it’s even less likely.

    If anyone can show me that I am wrong, I have a pair of wings out the back… 🙂

  • You would need to be pretty good to get that level of return for sure. I’m sure some people get it.

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