A major gap in terms of the amount of investment that goes to Dublin- and Leinster-based SMEs instead of SMEs in other regions in Ireland was identified at the Second Equity Conference, yesterday in Dublin.
As a result, Intertrade Ireland, a North-South body aimed at fostering all-Ireland trade, has revealed that an all-Ireland ‘Seedcorn Competition’ will be announced after Easter to stimulate regional demand for seed capital or early-stage investment.
Julie Sinnamon who heads up Enterprise Ireland’s venture capital division acknowledged the imbalance that exists in demand for investment amongst Irish SMEs. “The bulk of venture capital in Ireland is invested in the Leinster region and we are anxious to push that outside to the rest of the country.”
The Second Equity Conference, organised jointly by Intertrade Ireland and the newly established Equity Network, was attended by more than 260 investment experts and companies seeking funding.
Liam Nellis, CEO of Intertrade Ireland, told the conference that a major gap in investment demand could stifle SME growth. The Seedcorn Competition, backed by both the Republic and Northern Ireland governments, will focus on identifying early-stage projects. “There will be seven regional winners who will each receive €20,000 towards starting their research and development or business endeavours, whilst one overall winner will receive €100,000 in seed funding.
“The aim is to stimulate regional demand for seed capital. We are working on identifying an independent judging panel who will provide every young company entering with informed feedback on their businessplans,” Nellis said.
Whilst it was acknowledged that Ireland is now one of the most well-funded economies in Europe in terms of the availability of venture capital, with some €400m ready to invest in technology companies, there is a big gap between investment in seeding companies and helping firms achieve their second and third funding rounds.
A major theme of the conference was the growing popularity of alternative routs to investment, in particular, business expansion schemes (BES), in which firms can raise up to €750,000 in a round for which investors can claim a return on their taxes for the amount they invest in a company.
A survey carried out by Equity Network found that while over 75pc of high-growth SMEs have made contact with private equity financiers regarding raising finance, 90pc believe they still require additional support in the form of non-executive directors and hands-on expertise.
By John Kennedy