The substantial funding gap for seeding start-ups and college spin-out companies may soon be addressed by the universities of Ireland banding together and creating their own venture capital (VC) fund, siliconrepublic.com has learned.
Speaking with siliconrepublic.com, the president of NUI Maynooth John Hughes said that it is in times of recession when some of the best companies and industry clusters are created.
“Silicon Valley was created during a recession. The US military pulled a load of contracts and suddenly there were lots of out of work scientists. They banded together, created companies and local universities played a role too,” Hughes said.
In the same spirit, Hughes believes the current economic crisis is an opportunity for SMEs, entrepreneurs, investors and universities to bring about a wave of innovation that will put Ireland in the right position to capitalise when the upturn comes.
Hughes, who is an entrepreneur in his own right having started two technology firms (e-learning firm Synergy is still operating from Northern Ireland), believes it is vital that universities and local businesses collaborate.
Since taking up his role at NUI Maynooth five years ago, Hughes has brought about a culture change at the university, transforming it from a sleepy campus to a vibrant research- and enterprise-focused college with relationships with firms like Intel and Chevron that leading UK universities would give their eye teeth for.
Hughes, who was instrumental in transforming the spin-out culture in Northern Ireland, said the UK Government invested heavily in the ‘third strand’, where academics collaborate with companies in applied research projects.
According to an article in the most recent Times Higher Education supplement, the UK’s initial investment of £600m sterling to encourage universities to enter into money-making partnerships with business has generated up to £4.2bn sterling.
“Basically, for every million pounds invested in the UK in college/business research, there’s a seven-fold return. The Government in Ireland has to do more in terms of incentivising businesses and academics.”
Hughes also believes universities should try to take matters into their own hands and create their own VC fund to address the seed venture funding gap largely ignored by local venture capitalists.
“This is one of the key strands of building an innovation economy and this is missing in Ireland. VC here is very weak. In Northern Ireland, the universities developed their own VC fund and invited business angels to join to focus specifically on spin-outs from universities.
“The Industrial Development Board (now InvestNI) very quickly came in and offered to manage the fund. The Republic of Ireland doesn’t have anything similar, except for a few small operators.
“The universities here are beginning to look at doing this, particularly to support things such as patenting, which is very expensive.
“I found when I spun out my own companies, the biggest problem was VC,” Hughes said. His e-learning firm Synergy eventually attracted £1.2m sterling investment from ACT Venture Capital.
Hughes said he was relieved the Irish Government didn’t interfere with the current level of investment in science and technology.
“I think the Government is committed to maintaining the level of investment. Frankly, they realise its all we have left, science and technology innovation is the only game in town. Other countries realise this too, and we’re in a global race to win.
“The universities too are being hit quite hard by this recession and we are prepared to take our own share of the pain like everybody else. We feel it is also vitally important that primary or secondary education in this country isn’t hit either.
“We have to remember that education is a huge part of the whole science and technology agenda.”
By John Kennedy