07 Dec 2017 | 09.30 am
Interview: Hugh Scully, Dublin Vinyl
The Dublin entrepreneur is running an EIIS fundraiser for his new vinyl venture
07 Dec 2017 | 09.30 am
Hugh Scully is hoping investors will take a spin with him in his latest venture, Dublin Vinyl. He’s in the middle of an Employment & Investment Incentive Scheme (EIIS) fundraiser for the startup, with a target of €400,000. The EIIS is the only show in town for startups requiring sizeable capital, according to Scully, and the scheme provides a conditional income tax rebate of up to 40% on funds invested.
Dublin Vinyl, launched in June 2017, is tuning into the hipster-fuelled revival of vinyl records. Scully (44) has set up a record-pressing facility in a warehouse in Glasnevin and sourced two pressing machines from Toronto.
Scully runs the Coppa Café in the RHA Gallery and his business record, mostly in PR and events management, is not without some disappointments. However, he’s convinced that pressing LPs has market potential. With seed funding from an unidentified angel investor, Scully and partner, Donagh Molloy, have enlisted Padraig Daly in Mazars to round up the EIIS investors.
The entrepreneur spoke to BizPlus about his vinyl venture and fundraising efforts.
When did Dublin Vinyl officially launch?
We officially launched in June at the International B2B Music Market — MIDEM — in Cannes. It was a hugely successful launch, where we hosted 120 meetings and connected with distributors, labels and other industry folk, securing forward business in the UK, Germany, Holland, Canada and as far away as Australia and Brazil. We began pressing this month, and will have a capacity to press 25,000 records per week by mid-January.
Where did you source the vinyl pressing machines?
We sourced two WarmTone pressing machines, the flagship machine from Viryl Technologies based in Toronto. They are some of the first pressing machines to be made since the 80s, and while they follow the same traditional process for vinyl manufacture, modern technology has allowed them to become fully automated, up to twice as fast with a more consistently high quality product, significantly more efficient with 80% less waste, and with their manufacturer’s custom-built platform, they are constantly monitored remotely to maximise operational efficiency and minimise downtime.
Each machine costs €200,000, while our Glasnevin plant requires a significant amount of additional equipment for the manufacturing process. Our boiler room, complete with chiller and air compressor, take up over 400 sq. feet, and our galvanic room that produces the moulds required to press the records costs close to another €200,000. Over the next 12 months, we will invest €1.2m in equipment, but we will have the capacity to press over three million records per year.
Vinyl sales are at the highest they have been in almost 30 years, and are forecasted to grow 50% year on year.
How did you find the Glasnevin facility?
We have a long-standing relationship with The Porterhouse Group, who have just completed the build of their new brewery in Glasnevin, and their premises also had a 9,000 sq. ft warehouse next door.
It’s very difficult to find a space that size so close to the city, and given there are many similarities between the processes for brewing and vinyl manufacture. They have been a huge support, giving us access to their contractors.
As it’s a wide-open space, we’ve converted seven shipping containers to use for our offices, studios and the production area that houses the machines. We have big plans for events with local and visiting artists, and ongoing tie-ins with the brewery for limited edition brews.
Is the facility now operational?
Yes, but still in the test pressing phase. The whole vinyl manufacturing process is very specialised, and the manufacturers of the presses come over from Toronto for weeks of training.
We’ve been very lucky with the staff that are involved so far. Two of our team are highly skilled and specialised in the specific process, having worked in pressing plants before, and all have a passion for music. We’re also in the process of hiring production managers and machine operators, and the interest from very qualified candidates who are eager to get involved has been incredible.
Have you already secured customers for Dublin Vinyl?
Yes – since launching in June we have been in constant communication with local and international clients at all levels. I’m regularly in the UK for meetings and networking events, and our customers to date vary from an local independent artist with a run of 300 copies, to an international label with 10,000 copies.
We will be extremely busy over the next few months in the lead-up to Record Store Day in April, as there are currently backlogs of up to six months in some of the pressing plants. We recently had a query from a band who were about to cancel their album launch in March 2018 due to not being able to get their vinyl delivered in time, but we’ve been able to fulfil their order.
What attracted you to the EIIS Scheme?
It was recommended to us by our accountants and we’ve seen quite a few breweries and distilleries use it to raise funds. Dublin Vinyl was an ideal candidate, as we are in manufacturing and export, and will be providing increased employment over the next four years.
We were very lucky to have been approved by Revenue earlier this year for EIIS, as fewer companies are meeting the new criteria.
It’s an excellent way of raising funds and benefits both and investor and company, with up to 40% tax relief on the investment. We’re offering a further 40% return after four years.
Bank finance is increasingly difficult to secure for an early stage company, and we also spoke to most of the asset finance companies in the country. As we are such a specialist industry, most of them turned us down. We have funded the initial build and the machinery through angel investment, and the Dublin City Local Enterprise Office also approved us for a priming grant.
We have had quite a lot of interest in our EIIS fundraiser. We are too early stage for the big EIIS funds, so a majority of the interest has been coming from work contacts and people in the music industry. We expect to be fully funded in the coming weeks.
What’s your plan for Dublin Vinyl in 2018?
Our focus is on a high-quality product and we are raising eyebrows right across the industry as having just that. We’re also very focused on reducing the lead time by bringing all elements of production in-house over the coming months. We also plan on expanding our capacity and targeting markets further afield.
What are your thoughts on the fundraising options for Irish startups?
We certainly need more financial support for startups in Ireland. The banks like to promote the fact that they are supporting early stage companies, but without proven revenue and 12-month accounts, it’s also most impossible to get financial support – especially at the level we were looking for. We did manage to secure €100,000 in asset finance, but it look almost six months, and was only after we raised €500,000 privately.
A good business plan and detailed financials are essential when raising funding. I highly recommend LivePlan.com, as it allows you to create five-year monthly projections and create different scenarios. I’ve been using it all the way through the startup phase, and will continue to use it as we grow.
You are planning to open a UK office in 2018 — what is the thinking there?
So much of our business is coming from the UK, so it’s important to have a presence there. I’m already spending 5-8 days a month there meeting new and existing clients, so it makes sense to have a base there. Most of the larger international independent labels are based there, as well as a lot of the central distribution for Europe.