The principals and shareholders of DCU spinout Iconic Translation Machines have had a very pleasing outcome for their enterprise and risk-taking, with UK plc RWS Holdings acquiring the firm recently for $10m cash upfront, and a possible $10m in RWS shares to follow if Iconic meets earnout targets.

Iconic specialises in developing best-in-class neural machine translation solutions adapted for specific industries and blue-chip clients. RWS got to know the Dublin startup when its life sciences division called in Iconic to deliver NMT solutions for to RWS’s pharmaceutical clients.

Iconic was established in July 2013 and commenced trading in 2015. Founders John Tinsley (35) and Páraic Sheridan (52) talked Enterprise Ireland into investing €200,000, but only if the founders could round up matched funding. This they did, and those charter investors have turned out to be very fortunate.

The angel investors were sourced through Bloom Equity and the Boole Investment Syndicate through HBAN, the Halo Business Angel Network. In two allotments in 2015, €25,000 each was sourced from Anthony Bermingham, Shemas Eivers, Brian Clune, David Mee, John McWey, Patrick Garvey and Susan McCabe. Bruce Clibborn invested €10,000 and Diane Foley invested €30,000, and all those investments have multiplied by a factor of seven after the RWS cash payment.

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There was one further cash call in July 2018, when Clune, Eivers, McCabe, Mee and Bermingham again invested €25,000 each. In that funding round, Patrick Garvey doubled down with €50,000 while McWey bought shares to the value of €10,000. These investments have grown by a factor of five, with more to come from the earnout, all going well.

Enterprise Ireland’s €200,000 investment bought the agency a 13.9% stake in Iconic in the form of redeemable cumulative preference shares. The company had the option of redeeming these shares on the fifth anniversary of the investment, March 2020, which is presumably what happened before the deal went down.

Presuming EI was redeemed, Tinsley (pictured) and Sheridan, who got their shares for free, each spoke for 29.6% of the equity. So they’ve done well, though they might wonder whether sourcing debt finance in 2018 might have been a better option that issuing fresh equity.

The RWS deal values the €185,000 worth of shares issued two years ago at €960,000 in cash now, and possibly the same again in RWS shares. According to RWS, Iconic doubled turnover in 2019 to $1.2m and operating profit was $23,000.