Will new €175m Seed and Venture Capital Scheme breathe life back into Ireland’s ailing venture scene?
Enterprise Ireland has made its first call for expressions of interest from fund managers under its Seed and Venture Capital Scheme for 2019 to 2024.
If successfully leveraged, the scheme could grow the amount of seed and venture capital available for Irish start-ups to between €800m and €1bn.
‘The new programme will be oriented towards seed and early-stage investments, where there is a very clear market failure’
– HEATHER HUMPHREYS
Under the call, Enterprise Ireland proposes to allocate up to €100m to funds focused in three specific areas.
Up to €50m will be available to funds focused on pre-seed and seed investments, supporting Enterprise Ireland’s high-potential start-up strategy, and a further €30m to funds making investments at Series A level and beyond in companies seeking to scale.
In an important new initiative, up to €20m will also be made available to funds focused on the food and foodtech sectors.
The previous Seed and Venture Capital Scheme (2013 to 2019) provided €175m in capital for the Irish early-stage ecosystem.
Potential for scheme to be leveraged to beyond €900m for early-stage start-ups
Since the Seed and Venture Capital programmes commenced in 1994, the investment provided through Enterprise Ireland commitments has leveraged substantial additional external funding. As a result, more than 500 Enterprise Ireland clients have received in excess of €900m in investment.
“The new programme will be oriented towards seed and early-stage investments, where there is a very clear market failure,” said the Minister for Business, Enterprise and Innovation Heather Humphreys, TD.
“It will actively direct investment to key sectors that have been identified for development as part of overall enterprise strategy and will be closely aligned with other key enterprise support programmes.
“The benefits to businesses of the scheme are twofold,” said Humphreys.
“It will provide them with much-needed finance during the stages in their business cycle when finance can be extremely difficult to come by. Crucially, it will also introduce young businesses to networks and connections that will provide an invaluable source of mentoring and guidance.”
Kevin Sherry, executive director of global business development at Enterprise Ireland, said: “It is now 25 years since the first Seed and Venture Capital Scheme was launched, and in that time we have seen how the successive schemes have transformed and strengthened the funding ecosystem in Ireland, from business angels to venture funds, with a resulting substantial increase in the number of new, high-growth start-up companies in Ireland.
“Enterprise Ireland’s support has enabled the venture sector to achieve greater leverage from private investors who recognise the exciting investment opportunities these companies represent, most notably in the ICT and life science sectors. The new scheme is focused on increasing the availability of that essential early-stage and growth capital, and addresses equity funding availability within the food sector, further driving Ireland’s reputation for quality and innovation in this important sector,” Sherry said.
The Seed and Venture Capital Scheme (2019 to 2024) may have arrived in the nick of time but it remains to be seen if it can arrest the steep decline in venture capital funding in Ireland, which has fallen by 25pc in the past year. A few large investment rounds in companies such as AMCS and Intercom prevented investment levels declining 40pc in that period.
As well as plummeting venture capital funding, Irish entrepreneurs still have to content with an enduring litany of policy failures by the Irish Government in areas such as Capital Gains Tax, share options, and inadequate investment schemes and tax incentives compared to superior schemes in the UK.