With Covid-19 affecting the broader economy, CRIF Vision-Net said the number of new start-ups in Ireland has dropped to a five-year low.
Covid-19 has impacted nearly all areas of business in Ireland, including start-ups that are just getting off the ground. According to figures from credit risk analyst CRIF Vision-Net, the number of new start-ups launched in Ireland in the first half of 2020 marked a five-year low.
The first half of the year saw 9,853 new start-up companies recorded in Ireland, which is the lowest number on record since 8,981 companies were set up in the first half of 2015.
Between the months of February and May, there was a decline of almost 30pc on last year’s figures, while April was the worst month for new start-ups in Ireland since December 2012.
The CRIF Vision-Net report said that despite the decrease in activity in the sector so far this year, there are signs of recovery with 1,701 new start-ups registered in June 2020, which is up 7pc on the same month last year.
The areas that suffered
Of the 26 counties in the Republic of Ireland, only one saw a year-on-year increase in the number of start-ups recorded in the first half of the year – Tipperary.
Westmeath, meanwhile, showed the largest year-on-year decline. In the first half of 2020, 99 start-ups were registered in Westmeath, which marks a 38pc decrease on the same period last year.
There was a 60pc drop in the fishing sector, which showed the largest decline in new start-ups being recorded. This was followed by the community, social and personal sector, which saw a 36pc decline, and the real estate sector, which was down 32pc.
During the first half of 2020, there were a total of 240 insolvencies recorded in Ireland, with the largest number in February. The overall insolvency rate for the first half of 2020 was 27pc lower than the same period last year, as courts closed and the Government introduced measures to keep businesses going.
CRIF Vision-Net predicts that there will be a significant rise in insolvency figures in the second half of the year as courts resume.
The need for Government support
Christine Cullen, managing director of CRIF Vision-Net, said that the figures illustrate the toll that the pandemic has taken on company formation and the broader Irish economy.
At the beginning of the year, she said that Ireland was in extremely good economic health, with more than 2,200 company registrations in a single month for the first time ever.
“Covid-19 led to an early dip in this figure, with levels starting to drop off as early as February,” Cullen said. “The full brunt of the pandemic was particularly evident in the month of April when numbers dropped to the lowest in eight years.”
“Thankfully, new company start-up figures for June may suggest the beginnings of a recovery. We must now build on this. The Government’s July stimulus package is a vital step in the right direction, demonstrating strong commitment to rebuilding the economy at all levels.”
Cullen spoke in favour of extensions to the Restart Grant for enterprises and the Future Growth Loan Scheme. “It is vital that industry and Government continue to work together to ensure that the necessary supports remain available to businesses in this challenging period,” she added.
A report from TechIreland last week revealed that although €545m was invested into Irish tech in the first half of 2020, investment into early-stage start-ups dropped due to the pandemic.
In the report, Draper Esprit venture partner Brian Caulfield warned that it is a difficult time for “new companies, companies without existing deep-pocket investors or companies that have yet to prove their business model”.