If just one in three pension funds invested 2pc of their capital in the Irish economy that would represent an injection of €500m in Irish SMEs, the Irish Venrture Capital Association said, urging the funds to put this investment into technology companies via venture capital companies.
The chairman of the Irish Venture Capital Association (IVCA) Mark Horgan said the €500m investment would enable Irish entrepreneurs to build their companies over a longer period and so increase valuation for investors.
He said the opportunities for exit were greater than ever.
Horgan pointed to the fact that US tier-one multinationals have billions of dollars offshore which they are unable to repatriate without incurring tax liabilities.
Backing Irish winners
“Rather than growing organically they are using these funds to purchase niche technology companies especially across mobile, cloud, digital and life sciences to fill the gaps in their product and service offering,” Horgan explained.
“The process is called ‘Search & Development’ rather than ‘Research & Development’ – pushing up exit prices and thereby generating greater returns for investors.”
Horgan, who is a partner in Atlantic Bridge, added that pension fund investment would help to counter the trend of Irish firms selling out before their full potential is reached.
“By building Irish winners we will produce serial entrepreneurs. These entrepreneurs will create and fund further start-up opportunities with the potential to make Ireland the innovation hub of Europe.”
He said Irish venture capital firms are collaborating with Enterprise Ireland and the National Pensions Reserve Fund to build local VC funds.
“This investment will also attract tier one international VCs to syndicate with local VC partners, thereby providing further investment for Irish companies so that they can scale globally,” Horgan added.