Without revealing details of the budget, Donohoe said high inflation and interest rates have caused a ‘regime change’ in the Irish and EU economies.
Ireland’s high tax rates, a need for more Government funding and a paucity of suitable talent for early-stage companies are just a few of the problems facing founders of Irish start-ups today.
Speaking at a Scale Ireland event in Dublin today (12 September), the founders of three Irish start-ups shared with Minister for Finance Paschal Donohoe, TD, their needs to scale their businesses in the country. This comes ahead of Budget 2023, which is due to be published in two weeks’ time.
Jack Pierse, CFO and co-founder of unicorn Wayflyer, said that the way option schemes for employees are taxed in Ireland “could probably be worked on” comparing it with the “much more favourable” tax regime in the UK.
“At the end of the day, most of these people work for us to probably go on to start their own businesses. Having a 52pc tax rate on all the money they make, which they will probably invest back into the economy over the next few years, just doesn’t feel like it makes a whole lot of sense.”
Wayflyer, which is a Dublin-headquartered revenue-based financing business, has more than 500 employees globally, many of whom are based in Ireland. Less than two weeks ago, it secured $253m in debt financing – its second significant round since it was valued at $1.6bn earlier this year.
For Orlaith Ryan, co-founder of cancer treatment start-up Shorla Oncology, funding has been the biggest challenge in scaling, particularly in the “expensive” pharmaceutical sector which is heavy on research and development.
“The R&D tax credits is very important to us. And it would be great if we could realise that sooner. The complexity of the process can also be reduced. I can see how it would be cumbersome for a company trying to work on all the angles to grow a business.”
Earlier this year, the Government launched a €90m investment fund aimed at Irish start-ups to boost areas such as regional development, climate action and women in entrepreneurship.
Matthew Coffey, co-founder of digital loyalty card platform Squid, added that finding talent as an early-stage business can also be quite hard, particularly when it comes to hiring software developers.
“It always feels like there is a deficit of developers. So when you’re competing with bigger companies that have more liquidity, you get a bit creative, I suppose and look at things like the KEEP scheme, etc, to incentivise people.”
Coffey also highlighted the complexity of the admin process. “When you’re looking at angel investors and the likes, it’s quite hard to do the admin – particularly the simple agreement for future equity which doesn’t qualify for the Employment Investment Incentive Scheme.”
Donohoe did not reveal details of the upcoming Budget but said the Government will consider recent issues around the energy crisis and the economic downturn in its package.
“We’re in the early days of very considerable regime change within national and European economies, from very low inflation and low interest rates to – at least for a time – higher inflation than were used to and interest rates that are clearly changing,” he said.
Speaking at the event in Avolon’s offices in Ballsbridge, Donohoe said that he will take into consideration all the points raised ahead of the Budget on 27 September.
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