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When SoftBank took a 51 per cent stake in Cubic Telecom in December, valuing the vehicle-technology supplier at greater than €1bn, Eire’s largest homegrown tech deal was validation for certainly one of Cubic’s early buyers, Enterprise Eire.
The state company that channels seed capital and different funding to firms looking for to emulate profitable world champions — like constructing supplies giants CRH and Kingspan, meals group Kerry Group, packaging agency Smurfit Kappa and Ryanair — took an early punt on Cubic. The company reckons it has noticed extra “hidden” Irish unicorns.
“I’d say we have now fairly just a few and we have now numerous quietly bold family-owned companies which might be rising very strongly,” Leo Clancy, chief government of Enterprise Eire advised the Monetary Occasions.
Eire has made attracting inward funding certainly one of its most profitable financial insurance policies in current many years: annual capital spending by overseas firms in Eire elevated 49 per cent in 2023 to €15.5bn, in line with IDA Eire, the state company answerable for attracting overseas direct funding. The world’s prime world tech and pharmaceutical firms have arrange within the nation and are major contributors to state coffers through their taxes.
However home companies nonetheless account for two-thirds of Irish jobs. Enterprise Eire’s mission is to assist these firms develop, export and develop internationally.
Enterprise Eire is by far Europe’s most active venture capital fund by deal depend, in line with PitchBook, a VC and personal fairness platform. It tallied 988 investments by Enterprise Eire between 2018 and the primary half of 2022.
That put the company 42 per cent forward of its closest rival when it comes to quantity of offers, French public sector funding financial institution Bpifrance.
“We made 161 investments in 2022 versus 125 in 2021,” Clancy stated. “We set a goal that we might develop that to 150 — and we’ve exceeded that.”
Firms backed by Enterprise Eire achieved report exports in 2022 of greater than €32bn, and in 2023, firms it supported employed a record 225,495 individuals. However a lot of the company’s enterprise is on the seed or pre-seed stage.
“There are different state VCs [like Bpifrance and Scottish Enterprise] on the market however we’re investing extra at earlier levels. We’re seeing firms invested in by establishments as soon as we get the funding circulate transferring,” Clancy stated.
“Funding has slowed prior to now 18 months — you’ve seen that all over the world — it’s more durable to clear rounds. However the very best firms are nonetheless attracting funding,” he stated.
“We’re writing a lot of small cheques to a lot of firms however that’s superb as a result of these firms wouldn’t be funded in another manner if we weren’t there.”
Solely round 1 / 4 of the 90 excessive potential start-up firms during which Enterprise Eire made pre-seed funding final yr managed to get matching funding from different VC firms, with the remainder counting on households, associates and different non-public buyers, he stated.
Enterprise Eire’s price range was some €450mn in 2022 and is predicted to have been about €480mn in 2023. Seed rounds are usually within the area of €200,000 to €300,000, matched 100 per cent by non-public funding raised by the corporate. It invested €850,000 in Cubic in 2011 and 2013.
Pre-seed funding is far smaller — some €100,000 from Enterprise Eire plus €10,000 from founders’ funds. “Virtually nobody [else] would fund this,” Clancy stated. The company made 70 such investments final yr.
Because the early Nineteen Nineties, Enterprise Eire and its precursors have invested €700mn of funds, a sum which has leveraged €2.6bn of fundraising from firms during which it has invested, Clancy stated. Funding relies on returns, not on explicit sectors, and the company has a portfolio of investments starting from medtech to manufacturing.
“We need to suppose there’s no purpose why we are able to’t have tech leaders out of Eire,” he stated.
He dislikes the time period “unicorn” as a proxy of company worth as a result of some privately held $1bn companies have little financial impression. “I believe we’ve over-focused on that. And it’s a metric that solely turns into obvious by a funding occasion — so that you received’t hear about firms that keep non-public.”
What Enterprise Eire prefers to concentrate on, he says, is the power to scale.
“You’ll be able to see extra firms which might be attaining unicorn standing — though that’s not my favorite metaphor for firms,” Clancy stated. “However if you happen to can see extra firms obtain success globally and really funding into the businesses’ development of their workforces, development of their gross sales, I believe it’ll encourage increasingly more entrepreneurs and that’s the way you get a flywheel transferring.”
In 2011, when Eire was being rescued in an IMF and EU bailout, and battling to emerge from financial meltdown following the worldwide monetary disaster, a home property market bust and a banking disaster, Enda Kelly, the taoiseach on the time, declared his ambition to make Eire “the best small country in the world during which to do enterprise”.
“It was extremely highly effective. I believe it’s nonetheless not a foul imaginative and prescient for Eire,” stated Clancy.
However he added one other layer of ambition: “I believe we are able to definitely be essentially the most revolutionary small island on the earth . . . I believe we simply haven’t blown our trumpet.”