Despite the fact that one out of every 14 people in Ireland is an entrepreneur, Ireland now falls behind Europe in terms of annual venture capital (VC) investment as a percentage of gross domestic product.
The revelation was expressed by Javier Echarri, secretary general of the European Venture Capital Association (EVCA), who was addressing the InterTradeIreland’s Equity Network conference at Dublin Castle this morning.
Echarri said that Ireland had the potential to become a leader in VC technology investment given its young educated workforce, the technology base of the economy and Ireland’s cultural affinity with the US, the main market for technology.
He challenged Ireland to invest as much in building its indigenous tech industry as it had invested in building its foreign multinational investment base.
Shay Garvey, chairman of the Irish Venture Capital Association (IVCA) stated that the €1bn invested by Irish venture capitalists in Irish tech companies had resulted in a transformation in the economy where 20pc of all indigenous exports (more than €1bn per year) is generated by Irish high-tech companies.
He agreed with Echarri that more needed to be done to make Ireland comparable to Scandinavian countries that are the tech leaders in Europe. Garvey said the Irish VC industry would be fundraising in 2005/06 and would need to raise a minimum of €1bn to maintain its present position in Europe and €2.5bn to become a technology leader in Europe.
He called on the pension funds industry, the banks and the Irish Government to work with the IVCA to ensure Ireland becomes a leading and profitable centre for VC-backed technology companies in Europe.
Also at the conference was Minister for Enterprise, Trade and Employment, Micheál Martin TD, who acknowledged access to VC and private equity funding was vital in the drive for knowledge-based businesses to be created in Ireland.
Martin said that there’s no shortage of Irish entrepreneurs. “This is clearly illustrated by the findings of a study Entrepreneurship on the Island of Ireland, which was published last year by InterTradeIreland in conjunction with Enterprise Ireland and Invest Northern Ireland, based on the research findings of the Global Entrepreneurship Monitor (GEM) 2003.
“The study revealed that the total number of entrepreneurs on the island of Ireland in 2003 was approximately 253,000. This means that for the island as a whole, about one person in every 14 is active as an entrepreneur. To put this into perspective, in a league table of European countries and the US, which participated in the GEM research in 2003, the island of Ireland was ranked sixth, while Ireland was ranked third. Only the US and Iceland performed better than Ireland. So the entrepreneurs are out there — the challenge is to ensure that we find ways of assisting and developing them into sustainable businesses,” Martin said.
The minister acknowledged that key to a thriving VC industry in Ireland was not only the quality of entrepreneurs but having the ideal tax and legal environment. Quoting the EVCA’s May 2004 publication, Ireland is listed as one of the strongest performers listed in third position behind the UK and Luxembourg respectively and ahead of 17 other countries benchmarked.
By John Kennedy
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