The high concentration of investment in early-stage, high-potential companies by State agencies like Enterprise Ireland and Science Foundation Ireland (SFI) is vastly ahead of the European norm, a senior IBM executive has told siliconrepublic.com.
IBM yesterday announced a raft of initiatives aimed at fostering the growth of start-up firms in the fields of electronics, computing and life sciences with a particular emphasis on the venture capital community.
As part of the initiatives, the world’s biggest computer company has agreed to collaborate with IDA Ireland and Enterprise Ireland that will see State-supported companies engage in IP licensing with IBM and access the company’s technology resources in Ireland.
IBM employs a 3,200-strong workforce at an extensive campus in Mulhuddart, Dublin. In July the company announced a €46m investment that will see growth in the company’s global supply chain operations, its business incubator operations as well as an increased focus on new technologies like SOA (service-oriented architecture) at its software lab.
In this latest investment the company is planning to use Ireland as a springboard for its focus on the European venture capital community, with specific regard to forging alliances and spotting opportunities to work with early stage technology firms with promise.
The investment comes with three key elements: the establishment of an IBM European Venture Capital Centre at Mulhuddart; the establishment of the 32nd IBM Innovation Centre; and the establishment of a strategic relationship with Enterprise Ireland.
The focus of the European Venture Capital Centre (EVCC) will be to build stronger ties with the European Venture Capital community. The EVCC will give start-ups access to IBM thought leadership, hot topic technology roundtables, an IP access programme and exposure to IBM’s relationships with governments and industry.
The EVCC will also act as a hub that will give start-up companies increased visibility across the VC community, resulting in increased investment opportunities.
The Innovation Centre will help local software developers and technology firms leverage support to build and test advanced and emerging technologies.
Deborah Magib, director of strategic alliances for IBM Software Group, told siliconrepublic.com that IBM’s strategic alliance with Enterprise Ireland was driven by its progressive approach to start-up businesses. In recent months Enterprise Ireland launched its own €175m venture capital fund.
Magib said that IBM has been liaising with the US venture capital community since 2000 and sees Dublin as the ideal launch pad for forging relationships with the European venture capital community.
“While we don’t actually make the investments, we do invest in relations with portfolio companies of venture capital firms such as IP and patents and evangelism that will help drive partnerships and revenues for the companies.”
Magib continued: “People forget that a good number of the big brand name companies started out by receiving funding from venture capitalists. These include Google, Oracle and Federal Express.”
She said that Ireland, through the efforts of SFI and Enterprise Ireland, is ahead of the European norm in terms of investing in early-stage companies. “Enterprise Ireland last year announced a €175m fund to invest in start-ups by co-investing with venture capitalists. Nearly half of its funds in 2005 went into early-stage companies. This is not the same in the rest of Europe.”
While Magib would not disclose the scale of IBM’s investment in the venture capital strategy, she said that it linked back to IBM’s €46m investment announced in July.
“IBM has made some important venture capital announcements in the US and elsewhere in the world and Europe is the last piece in the jigsaw. This is very strategic to IBM and the operation in Dublin will play an important role in bringing that activity to Europe.
“We have relationships with investors across Europe, but we really felt we needed to bring some focus to our efforts and the point of presence here in Ireland will help IBM to do that,” Magib concluded.
By John Kennedy