Enterprise Ireland says more needs to be done to reward the risks taken by the real heroes of the Irish economy.
State agency Enterprise Ireland has joined the chorus of voices calling for entrepreneurial tax reliefs to be made more internationally competitive.
Addressing the Enterprise Ireland Start-up Showcase 2019 yesterday (14 February), the divisional manager of the high-potential start-up (HPSU) unit, Joe Healy, said entrepreneurs were “the real heroes of the Irish economy and deserve recognition and attention”.
‘The taxation environment is critically important for starting and scaling companies. It is a key factor in the overall competitiveness in Ireland’
– JOE HEALY
He revealed that Enterprise Ireland invested €23m in 132 start-ups in 2018, including: 82 HPSUs with the potential to create jobs and €1m in sales each, 28 women-led HPSUs, 15 fintech HPSUs, 50 Competitive Start Funds, 15 university spin-outs and 26 additional HPSUs that received follow-on investment as their businesses scaled.
He told the hundreds of entrepreneurs and investors present at Croke Park yesterday that “starting a business requires hard work, resilience, innovation and ambition”.
Healy said the class of 2018 was characterised by a strong cohort of HPSUs led by women founders and that Enterprise Ireland wants to encourage more women founders with global ambition but also more diverse management teams.
In terms of technology, 18pc of the class of 2018 were engaged in fintech, 17pc in life sciences, 18pc in industrial/manufacturing and 5pc in food tech.
“More female founders and companies of scale is a key focus in 2019, and a focus on scaling of the regions is a key element of our strategy.”
But despite the growing interest in entrepreneurship, Healy said the environment is getting challenging and increasingly competitive, with Series A rounds getting bigger, resulting in “large cheques for fewer companies”.
For many years entrepreneurs in Ireland have called on the Government to overhaul the current rules around Capital Gains Tax as well as the Employment Incentive and Investment Scheme (EIIS), which is deemed less effective than its UK counterpart SEIS (Seed Enterprise Investment Scheme), which is rewarding risk and enabling entrepreneurs to back more companies.
However, every year their hopes are dashed. But now Enterprise Ireland has publicly added its voice to the chorus calling for change.
“There are still challenges around retaining and attracting talent, and we need to ensure that the tax system supports and encourages risk-takers. We have 132 of our brightest and best in this room, and an important role is to be an advocate for a tax regime that is needed.
“Not only changes to reward the real heroes of the economy but the tax system must be internationally competitive. It is about the future economic engine of this country and enhancing Ireland’s reputation as a start-up hub, but also inoculating against Brexit, trade wars and other unforeseen events.
“The taxation environment is critically important for starting and scaling companies. It is a key factor in the overall competitiveness in Ireland.”
Healy continued: “There is a need for an entrepreneurs’ relief scheme to reflect the risks of setting up a business, and a share options scheme to reward shares.”
Internationally competitive in the war for talent
Speaking with Siliconrepublic.com, Healy said that he and his colleagues regularly talk with founders, investors and business owners about their concerns.
“It’s not to say we should do exactly what’s happening in other countries, whether it is an island close by or internationally, but certainly the view from the founders and entrepreneurs who are taking the risks is that more needs to be done.
“Why is that? Well, they are taking a huge sacrifice – so, the Capital Gains piece, we can probably do more there, according to the founders.
“A huge issue is talent. This isn’t a solo sport – everybody on our panels talked about the team. You can’t do it on your own, but how can you afford to attract real talent when you have no money or can’t pay very much? So, that share options piece is critically important.
“And then there is the investors’ side. We’d like to feed back that more could be done there to make high-risk investments more attractive, not to eliminate the risk. And certainly, when we look internationally, there is more we could do to make Ireland move towards that.”