Work is under way to discover just what it is that is driving Irish companies in the direction of trade sales rather than focusing on a successful IPO strategy, Enterprise Ireland CEO Frank Ryan told the ITLG Global Technology Leaders Summit in Cork today.
Ryan said that today some 300,000 people are employed directly and indirectly in the Irish economy and by the end of 2011, Enterprise Ireland-supported companies achieved exports of €15.2bn – the highest level yet.
He also revealed that with its portfolio of 800 companies, Enterprise Ireland is technically the largest early stage venture capitalist investor in Europe.
Addressing more than 1,000 attendees at the summit at Cork City Hall, Ryan conceded that Ireland’s performance for IPOs has generally been poor.
He said 13 Irish companies have gone for IPO since 2000, out of which seven have been acquired, four remain public companies and two returned to being private companies and the subject of management buyouts (MBOs).
However, this contrasts with Israel, which has seen 33 tech companies IPO since 2000.
He said there are obvious differences in terms of the make-up of the Irish and Israel tech scenes, the latter benefitting from large investment in military R&D.
He said there are many reasons why Irish tech companies fail to make it to IPO level and ultimately veer in the direction of the inevitable trade sale.
“There is often a reluctance to change the founding team, the absence of C-level people States-side. And also Irish IPOs are raising smaller amounts than their Israeli counterparts.”
But Ryan also pointed out that the route to trade sale rather than IPO is a global problem and the former chief science office for Israel also recently noted an increased trend towards trade sales.
“More companies need to IPO successfully,” Ryan emphasised.
He said that in the UK, the Department of Skills is investing in resources to increase the route to IPO for high-growth companies and in the US President Barack Obama is implementing measures to ease the route to IPO for high-growth companies.
“The recent US Jobs Act highlighted the cost of IPOs in the US and there has been the creation of a new SEC category for high-growth companies and new rules for crowd finance.”
Ireland’s plan to boost the IPO pipeline
Ryan said it’s part of the Irish Government’s Action Plan for Jobs to deliver a report by the end of the second quarter to identify the barriers that push companies towards a trade sale when it could be an IPO.
He said that as well as Irish companies telling their stories better, Irish people need to also celebrate their entrepreneurs.
He cited the example of Dublin-based software company Daon, whose bioinformatics technology is used in US airports by the Department of Homeland Security – no mean feat since only the best technology is chosen by Homeland Security.
“We in Ireland have to value our own going forward, more than we normally do.”
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