Ireland has ambitions of becoming a global start-up hub by 2020 and with the numerous accelerators and start-ups already calling Dublin home it’s no surprise. But is five years a realistic target to turn the Emerald Isle into a go-to hub for start-ups?
Already, Dublin is performing well for tech start-ups, which is little shock when you consider that major tech companies including Google and Facebook already call the city home. But when you look at the numbers, it’s clear that start-ups are also doing well in the city, with Dublin significantly outperforming other Irish cities when it comes to tech funding.
Last year, there were €253 million of disclosed venture-backed tech investments in the Irish capital. In comparison, Limerick had just €31 million, Galway €30 million and Cork just €7.5 million.
But it’s not just about the amounts raised, Dublin also dominates in terms of individual funding rounds, with 69 tech and tech-related start-ups in Dublin receiving backing last year, compared to just 40 throughout the rest of Ireland – with just 12 in Galway, eight in Limerick and six in Cork.
“From what we see about 75 per cent of funding is going into the Dublin area,” John Flyn, managing director of ACT Venture Capital said. “The ecosystem is simply stronger. There are way more elements in place, from an accelerator community to advisory and support services.
“That is probably leading to migration too. You’re seeing start-ups that might have stayed in other parts of the country but now go to Dublin because that’s where the services and ecosystem are.”
Flyn suggests that this mirrors the trend of other countries, in particular the USA, where “90 per cent of capital gets invested in three geographic centres”.
“You have Silicon Valley, New York and Boston. Europe is going the same way,” he says. “Already 90 per cent of the funding is going to one of nine hubs around the continent.”
We have great entrepreneurs and start-up businesses in Ireland - we just don’t have enough of them.
But it’s not just Irish entrepreneurs that are attracted to starting their businesses on the Emerald Isle and with Enterprise Ireland offering new funding of up to €50,000 for up to 10 overseas start-ups, the number of non-Irish businesses calling Dublin home is sure to rise.
The fund is part of a strategy to increase the number and quality of High Potential Start-Up Companies that have the potential to employ more than 10 people and achieve €1 million in export sales within three years.
Launching the fund earlier this month, Richard Bruton, the minister for jobs, enterprise and innovation, said: “We have great entrepreneurs and start-up businesses in Ireland - we just don’t have enough of them.
“That is why we are specifically targeting international talent as part of our Action Plan for Jobs. As well as attracting international entrepreneurs to Ireland, this fund will also help attract back those talented Irish graduates who have gained international experience and who would now like to return to Ireland to start a business. This initiative will make a real contribution to creating more new businesses and jobs in Ireland.”
Ged Nash, the minister for business and employment added: “Two-thirds of all new jobs are created by start-ups in their first five years of existence - that is why we are taking action to encourage international start-ups and indeed our own diaspora to locate in Ireland. By actively targeting international start-ups we hope to encourage more new businesses to start-up, expand and create jobs here in Ireland.”
Unfortunately, though, this isn't the whole story. The Dublin Chamber of Commerce has admitted this week that high taxes in Ireland are forcing start-ups out of the country and into the UK. In fact, the tax regime in Britain was said to be better than Ireland for entrepreneurs in nine out of 10 categories, with Ireland’s 12.5 per cent corporation tax being the only area where the country comes out on top.
“This was not a topic three or four years ago. We were hearing nothing about this then,” Chamber chief exec Gina Quinn said. “But in the last three years there has been a definite increase in the noise about this.
“There’s a lot more talk about ‘where am I going to get the best chance of making my company a success.’ And the answer to this is not always Ireland or Dublin.
“These are Irish born and bred entrepreneurs. Some of them are choosing to set up a second office in the UK and some of them are completely decamping and making their business there.”
Understandably, this is a worry for Ireland and Dublin’s first commissioner for start-ups shares the concerns. Niamh Bushnell says that the environment in Ireland doesn’t encourage people to get involved in investing or start-ups and that Ireland must allow for a culture of angel investment to develop, in a similar way to what is happening in the UK. “If you go to any very active start-up hubs globally, one of the key components will be strong angel investor activity,” she said.
“We don’t have that in Ireland because we don’t have the environment and the infrastructure from a tax perspective to encourage the ordinary man and woman to engage.”
Whether this current trend of start-ups moving from Ireland to the UK will affect the Irish ambition of being known for entrepreneurship is something that only time will tell. But one thing is for sure, the country will need to do more to attract and keep entrepreneurs if they want to be known as a global start-up hub.