Invest in emerging companies or risk being left behind
Looking back 20 years, sectors such as fintech, agtech and digital health were unknown. The pace of technological innovation is exponential, and Ireland must not only be ready to participate, but also to lead or risk being left behind.
Since 1994, Irish governments, through Enterprise Ireland (EI), have committed € 565 million from five seed and venture capital programs into venture capital funds to ensure effective global finance ecosystem. To date, four new funds have been supported under the latest € 175 million program, and a call is currently open to deploy up to € 82 million to national and international fund managers with funds that will support the next generation of Irish technology companies.
The vision of the program is to foster a strong pipeline of innovative and high-growth Indigenous businesses that are supported both early and later in their further evolution.
Raising capital is often a challenge for Irish start-ups. EI can now invest up to 70% of the fund when the investment strategy is to invest at the pre-seed / seed stage. This amount has been increased by 50% in recognition of the challenges managers face in raising seed money, helping managers close their funds faster.
However, what EI is aiming for is the maximum leverage effect of our investment. Venture capital managers need to raise additional capital alongside our participation. EI would generally prefer to be 20% of an Irish 100 million euro fund rather than 70% of a 20 million euro fund, as the former will have a greater impact on the local ecosystem than a smaller fund.
However, we also consider the investment strategy and how it aligns with the needs of EI clients, as well as our development mandate for new sectors and managers.
Through these programs, EI also seeks to influence broader mandates such as women in business and regional development. When applying for EI funding, managers need to define their policies on supporting women in business and how they will help develop businesses operating regionally.
The € 565 million funding we have provided to date through the programs has leveraged substantial additional external funding of over € 1 billion, directly benefiting over 740 Irish companies.
Looking back on some of the success stories, we can see many examples of multinationals gaining a presence in Ireland through the acquisition of an Irish company, and subsequently continue to build their presence, supporting more jobs. and the development of skills and experience which will lead to the next generation of Irish entrepreneurial activity. Here are some great examples of companies supported directly by EI and by venture capital funds (VCs) supported by EI:
Semiconductor company Decawave was acquired by supplier Apple Qorvo in 2020 in a deal valued at € 363 million. Likewise, Irish games company DIGIT was acquired by Los Angeles-based interactive entertainment company Scopely.
Most recently, in March 2021, Irish data analytics firm Boxever was acquired in a multi-million dollar deal by US customer experience developer Sitecore.
No one scale-up model is right for everyone, and many companies continue to raise later and larger funding rounds. For example, AMCS, one of the leading solutions providers in the environmental waste sector, was initially backed by a venture capital fund backed by EI and more recently by international investors and the Irish Strategic Investment Fund . Likewise, Luzern, the e-commerce platform, was initially backed by an Irish venture capital fund and more recently by private equity fund Cardinal Carlyle.
As part of the current open call, we want to attract the best venture capital managers able to demonstrate that they have the skills, experience and expertise necessary to mentor and guide these companies and bring real additionality to the Irish market to strengthen Ireland’s reputation for quality and innovation. , after the pandemic, will be more important than ever.
Claire Carroll is Senior Investment Manager at Enterprise Ireland. You can find all the details and guidelines at enterprise-ireland.com/svcapitAl