Smart funding, where specialist investors with contacts, expertise and insight into niche areas like software, cloud computing, clean tech and life sciences can bring more to the table than just capital, is the future of venture funding, Enterprise Ireland said today as it gathers 100 investors from around the world in London.
Precisely 114 venture capital, corporate and other investors from North America, the UK, mainland Europe and Asia have gathered in London today to attend the Enterprise Ireland International Investor Forum.
Also attending the event is the Irish Venture Capital Association and the Irish banking sector, represented by AIB and Bank of Ireland.
The purpose of the event is to match international investment with 25 Irish companies who will be presenting today. In addition, 150 formal meetings have been set up between the Irish and international investors.
In the last 10 years, Irish venture capital firms have invested €1.5bn into Irish SMEs and attracted an additional €1.5bn from international VCs through syndication.
‘Follow on’ funding gap
The elephant in the room, however, is the massive funding gap that exists not only in Ireland but across the world. In particular, this funding cap is impacting second and third round or ‘follow on’ investments.
Last year, the Irish Venture Capital Association warned there could be a shortfall of €1.5bn from 2012 over the next five years, which will affect follow-on investments.
Speaking with Siliconrepublic.com today, Eamon May, a manager within the Enterprise Ireland Managed Growth Capital team, explained: “We would say that the seed capital stage of investment is well covered. The tighter area is the rounds in the region of €2m to €3m and beyond, which are usually the second or third round of funding, which are the most challenging.”
May said the best way to break this impasse is to focus on specialist investors who bring not only capital but expertise, insight and contacts to the table to help Irish companies grow internationally.
“This is an international issue, not just an Irish issue. The investors gathered here today are global players. Many are focused on specific fields.
“We believe that smart funding is essential for innovative companies. They need to partner with parties with insight and contacts.”
May said Ireland’s two-speed economy – the traditional and the innovative – is not a distraction for either the start-ups or their would-be international investors.
“Ireland has put time and effort into building its innovation economy and this is a product of that. We are as good as anybody in the would.
“Many of the investors here today from Asia, Europe, North America and elsewhere are here because they know Ireland is a good place to source good innovation investment opportunities,” May said.