State in­vestor warns of fund­ing short­ages hit­ting tech star­tups

NDRC claims that govern­ment sup­ports for startup firms are ‘in­suf­fi­cient’

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Saman­tha Mc­caugh­ren

DIG­I­TAL startup in­vestor NDRC, which is funded by the State, has warned that Irish com­pa­nies are strug­gling to get early-stage in­vest­ment and that the re­sponse from Govern­ment is “in­ad­e­quate”.

In a sub­mis­sion to the De­part­ment of Fi­nance, NDRC also said there had been a num­ber of wor­ry­ing de­vel­op­ments as fund­ing avail­able for early-seed in­vest­ment shrinks.

It said the de­ci­sion by life sciences ac­cel­er­a­tor Re­bel­bio to move from Cork to Lon­don was a con­cern.

“In light of the ob­vi­ous dif­fi­cul­ties posed by Brexit for the UK econ­omy, to see an ac­cel­er­a­tor like that grav­i­tate to­wards Lon­don for tax/in­vest­ment rea­sons is a par­tic­u­larly wor­ry­ing in­vest­ment.”

NDRC said fig­ures from the Irish Ven­ture Cap­i­tal As­so­ci­a­tion sug­gested a re­duc­tion in early-stage fund­ing.

“While the macro num­bers are healthy, they are dom­i­nated by a small num­ber of high-pro­file deals.

“Early-stage in­vest­ment would ap­pear to be strug­gling.”

NDRC, which has in­vested in over 250 com­pa­nies since it was founded in 2007, made the sub­mis­sion to a con­sul­ta­tion into the Em­ploy­ment & In­vest­ment In­cen­tive (EII) and Start up Re­funds for En­trepreneurs (Sure) schemes.

It said that sim­i­lar British schemes gen­er­ated sig­nif­i­cantly more in­vest­ment for new ven­tures, even when the size of both mar­kets was taken into ac­count.

“The sheer scale of these in­vest­ments be­ing gen­er­ated by the Irish schemes is sim­ply in­suf­fi­cient and is nowhere near the kind of pol­icy re­sponse to the prob­lem that pol­icy mak­ers would wish.”

It added that ven­tures sup­ported by NDRC were un­able to ac­cess bank fi­nance.

Al­though some changes were made to the EII scheme in Oc­to­ber’s Bud­get, a spokesman for NDRC said its po­si­tion re­mained the same.

“A more favourable tax regime for en­trepreneurs would go some way to in­creas­ing the avail­abil­ity of fund­ing to star­tups and scal­ing com­pa­nies.”

The Halo Busi­ness An­gel Net­work (HBAN), whose mem­ber have in­vested €90m of di­rect seed cap­i­tal in 400 com­pa­nies, said there were two broad is­sues with the EII scheme — op­er­a­tional in­ef­fi­cien­cies and a lack of com­pet­i­tive­ness when com­pared to the UK schemes.

In its sub­mis­sion, it said there is a “vac­uum of funds” avail­able at the mo­ment.

In its cur­rent form the EII scheme was “se­verely in­hibit­ing Ire­land’s in­ter­na­tional in­no­va­tion ca­pac­ity de­vel­op­ment and com­pet­i­tive­ness”.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.