A group of start-up leaders are launching Scale Ireland, calling on the Government to implement measures to empower Irish start-ups and scale-ups.
A group of Irish start-up leaders have banded together this week to launch a new initiative called Scale Ireland.
The independent, not-for-profit group seeks to represent Ireland’s innovation-driven enterprises (IDEs), with a call for targeted measures in Budget 2020 to empower Ireland’s start-ups and scale-ups, and support innovation on the island.
The organisation uses the term IDE to distinguish these businesses from traditional SMEs, as an IDE typically faces negative cash flows in its early stages due to heavy investment in innovation. The IDEs that Scale Ireland refers to includes business in numerous sectors, from ICT to biotech and medtech.
‘Brexit and global economic changes are exposing our over-reliance on FDI. We need the Irish economy to be firing on two cylinders’
– BRIAN CAULFIELD
The priorities that Scale Ireland has set for Budget 2020 include increased incentives for employees offered through a revamp of the Key Employee Engagement Programme (KEEP) and the improvement of the existing Capital Gains Tax (CGT) arrangement.
Scale Ireland also prioritised the stimulation of private investment in innovation by “fixing” the Employment and Investment Incentives Scheme (EIIS), which has only been implemented by 36 companies to date. The group also wants to reward Irish businesses for investing in innovation by simplifying the R&D Tax Credit.
Serial entrepreneur and investor Brian Caulfield, who serves as chairperson at Scale Ireland, said: “While Ireland’s economy is currently performing strongly, we face significant disruption to our economic model.
“Brexit and global economic changes are exposing our over-reliance on FDI. We need the Irish economy to be firing on two cylinders. Let’s emulate our success in FDI with an ambitious strategy to drive the growth of home-grown IDEs of scale throughout the country.”
Caulfield added that the objectives behind KEEP were commendable, but the scheme itself is not currently workable.
“Start-ups simply have not been able to use it. Employee share ownership is critical to attracting and retaining talent, both international and local. Budget 2020 offers an opportunity to address shortcomings in the KEEP scheme and make it fit for purpose.”
Liz McCarthy, head of Scale Ireland, said: “We’re not alone in calling for many of these measures in Budget 2020. Beyond this budget, Scale Ireland will be working to achieve a step change in how our entrepreneurs are supported from a policy perspective.
“What is needed is a coherent framework and an ambitious package of measures that takes account of the unique profile and challenges facing Ireland’s innovation-driven enterprises.”
Unlocking private capital
Another issue Scale Ireland is highlighting is the struggle to access early-stage funding. In Ireland, accessing seed funding can be an obstacle for many start-ups.
Elaine Coughlan, former CFO of Iona Technologies and member of Scale Ireland’s Steering Group, said: “Ireland currently has extremely low availability of funding for seed-stage IDEs and a high cost of capital.
“Over the last 10 years, the UK has demonstrated that it will move the dial to support the development of British start-ups. It has also signalled its willingness to introduce whatever policies it may need post-Brexit to shore up its attractiveness and competitiveness.”
Coughlan warned that this adds to the urgency to recalibrate Ireland’s policy environment and incentives. “An enhanced EIIS, for example, could enable more early-stage companies to get funded more quickly.”
Also on Scale Ireland’s Steering Group is Dogpatch Labs founder Patrick Walsh, who noted that Ireland has been a global leader in incentivising FDI investment through fiscal measures, but “now is the time for that same level of leadership and ambition to support Ireland’s entrepreneurs”.
“Adoption of the targeted measures proposed by Scale Ireland for Budget 2020, which in many cases are cost-neutral to the exchequer, would send a strong signal to entrepreneurs across the country and internationally of the Government’s intent to get behind Ireland’s innovators,” Walsh added.
Alongside Walsh and Coughlan, other members of Scale Ireland’s Steering Group include Conor Hanley, CEO and president of Fire1, and Gráinne Dwyer, former CEO of Ludgate Hub in Skibbereen and founder of Stori Creative.
Working with McCarthy, Conor Gouldsbury will be serving as policy and public affairs lead on Scale Ireland.