Some 20,000 high-quality jobs have been created by Irish venture capital-backed companies over the past 10 years, which in turn supported another 50,000 indirectly, according to the Irish Venture Capital Association.
Chairman Brian Caulfield, addressing the annual IVCA dinner, said that the funds under management by Irish venture capital firms now exceeds €2bn.
Caulfield said that, since the beginning of 2013, 10 Irish companies have raised venture capital rounds of US$20m or more, primarily from non-Irish investors.
“Not one of them achieved that important milestone without first raising funds from an Irish venture capital investor. This emphasises the importance of a strong domestic VC industry if Ireland is to play in the big leagues,” Caulfield said.
‘We need to create a vibrant angel capital environment and to look at other innovative funding approaches for these seed-stage companies’
– BRIAN CAULFIELD
As well as being a partner with Draper Esprit, a subsidiary of the US$9bn Draper Fisher Jurvetson venture capital syndicate, Caulfield was a tech entrepreneur himself.
Caulfield worked in a number of indigenous financial technology companies, including Peregrine Systems and Trintech. He sold Exceptis Technologies, an electronic payments company, to Baltimore Technologies in November 2000 for US$26m. Six years later, he sold Similarity Systems, a data quality company, to IT giant Informatica Corporation for US$55m in cash.
Ireland’s start-up scene in danger of being stifled
Caulfield told the 350 attendees at last night’s dinner that Ireland’s start-up scene was in danger of being stifled due to lack of tax incentives for angels and early-stage backers combined with discriminatory personal and capital gains taxes for entrepreneurs.
“Conventional venture capital was never intended to efficiently make investments of €20,000 to €100,000. We need to create a vibrant angel capital environment and to look at other innovative funding approaches for these seed-stage companies. We need look no further than the UK to see the transformative and job-creating impact that such approaches can have.”
“We also need to reform our personal taxation system to remove barriers and disincentives to entrepreneurship and create real incentives both for entrepreneurs and those who fund them at this incredibly risky stage of their development.
“Tellingly, Ireland ranked just 16th in Europe for early-stage entrepreneurship in the recent GEM (Global Entrepreneurship Monitor) report and has less than half the entrepreneurship rate of the US.”
He said that while the Government has been very supportive of the industry through Enterprise Ireland and the Ireland Strategic Investment Fund, it remains difficult to attract matching private institutional capital to what is a high-risk and illiquid asset class.
“Working with Government, we need to find innovative ways to encourage pension funds and other large asset managers to invest a small proportion of their total assets in Irish venture capital and to remove regulatory barriers.”