Star­tups los­ing out to ‘big tech’, warn in­vestors

Claims that govern­ment pol­icy de­signed to tar­get gi­ants hin­ders Irish firms, writes Fearghal O’con­nor

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

TECH in­vestors in Ire­land are con­cerned that govern­ment tar­get­ing of big tech com­pa­nies is hin­der­ing the growth of star­tups here, ac­cord­ing to an in­ter­na­tional sur­vey of the sec­tor.

The re­port found that 65pc of in­vestors in Ire­land are con­cerned that pol­icy is of­ten de­signed to fo­cus on big tech com­pa­nies and can in­ad­ver­tently hin­der star­tups.

Re­port au­thor Le­nard Koschwitz of Brus­sels-based con­sul­tancy Al­lied for Star­tups, which car­ried out the sur­vey, said the re­sults showed that “it is im­por­tant that the Irish Govern­ment demon­strates more in­no­va­tive think­ing to en­sure Ire­land does not fall be­hind other tech cen­tres”.

The re­port — en­ti­tled ‘The Im­pact of Reg­u­la­tion on the Tech Sec­tor’ — sought the views of tech­nol­ogy in­vestors across Europe, in­clud­ing Ire­land, with re­gard to reg­u­la­tion and pol­icy de­ci­sions that im­pact de­vel­op­ment of the sec­tor.

It found, in par­tic­u­lar, that tech in­vestors in Ire­land are highly con­scious and aware of the reg­u­la­tory en­vi­ron­ment and that this can have a huge im­pact on their de­ci­sion to in­vest or not.

“Ire­land is a good place to do busi­ness and the state agen­cies do ex­cel­lent work to sup­port start- ups,” said Koschwitz. “How­ever, an in­creas­ing list of reg­u­la­tion com­ing from the EU and is­sues like hous­ing and liv­ing costs are a ma­jor con­cern and have the po­ten­tial to pre­vent in­vest­ment in Irish star­tups.”

It also found that 88pc of tech in­vestors in Ire­land be­lieved that more could be done by Govern­ment to cre­ate an en­vi­ron­ment where tech star­tups could thrive, while 76pc of Irish-based in­vestors agreed that more sta­bil­ity in pol­icy and reg­u­la­tion would lead to a bet­ter en­vi­ron­ment for in­vest­ing.

“As the re­port has shown, there is a big con­cern amongst Irish and Eu­ro­pean in­vestors that pol­icy and reg­u­la­tion de­signed for spe­cific com­pa­nies could in­ad­ver­tently hurt star­tups,” said Koschwitz.

“This is a trend that is not re­stricted to Ire­land but one which all govern­ments need to step back and con­sider the im­pact reg­u­la­tion will have on the whole tech sec­tor,” he said.

Koschwitz said that 65pc of those sur­veyed had said that mak­ing tech com­pa­nies li­able for spe­cific on­line ac­tiv­ity could be dam­ag­ing for tech busi­nesses of all sizes, but par­tic­u­larly so for star­tups and smaller com­pa­nies.

“The pro­posed dig­i­tal tax is also seen as likely to be a sig­nif­i­cant bur­den on small busi­nesses, and would be harm­ful for the long-term prospects of the lo­cal mar­ket — 88pc be­lieve a dig­i­tal tax on turnover could neg­a­tively im­pact in­vest­ment in tech busi­nesses and star­tups in Ire­land and 71pc think a dig­i­tal tax could make it harder for star­tups and scale­ups to suc­ceed,” he said.

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