Startup Investment Opportunity in Ireland 2023

I. Introduction

Ireland in 2023 has a thriving startup ecosystem with a strong focus on technology, fintech, and life sciences. According to Scale Ireland , a not-for-profit organization that represents Irish start-up and scale-up companies, the sector comprises more than 2,200 companies and employs almost 55,000 people.

Ireland offers a supportive environment for startups, including favorable tax policies, access to funding, and a highly educated workforce.

Dublin is the hub of the Irish startup scene, attracting both local and international entrepreneurs, and is the home of almost 60% of the sector’s companies. Major multinational companies including 谷歌 , Meta , and Airbnb have also established operations in Ireland, further fueling the growth of the startup ecosystem.

The Irish government has made smart investments to support the startup community, such as launching initiatives to encourage innovation and entrepreneurship. Organizations like Enterprise Ireland and the NDRC provide wide-ranging support for start-ups including grants, equity investments, mentorship, and accelerator programs.

While overall, the startup scene in Ireland is dynamic and growing, offering a range of opportunities for entrepreneurs, there are also substantial challenges.

The investment community in Ireland is still small and a 2022 Scale Ireland survey identified securing funding as the number one challenge facing Irish start-ups. Almost 80% of survey respondents identified raising private capital as difficult or extremely difficult. While this is a challenge for founders, it represents an excellent opportunity for new investors to tap into the rich supply of talented entrepreneurs driving innovative new business opportunities.

In this article, we outline the opportunity, investment thesis, and strategy for a new, foreign investment approach to Ireland.

II. The Startup Opportunity in Ireland

In order to understand the start-up sector in Ireland, I spent two months there in early 2023, meeting with stakeholders across the sector. During my time there, I met with:

·????????15+ startup founder teams

·????????Angel investors

·????????VCS

·????????Accelerators

·????????Universities (UCD, Trinity, NUI Galway)

·????????Government agencies.

The following is a summary of my findings from these meetings and the opportunity for a new ‘fund’ in Ireland.

1. High Growth Potential:

Ireland has a thriving startup ecosystem, with a strong track record of successful high-growth companies in sectors such as technology, fintech, climate, and MedTech.

Ireland has produced 7 ‘unicorns’ (including Stripe) so the market there is still embryonic but has great growth potential.

There is a robust pipeline of start-ups in Ireland with multiple sources of deal flow including:

·????????Enterprise Ireland’s High Potential Startups

·????????Universities:

• BioInnovate Fellowship program at NUI Galway
• NovaUCD, the hub of innovation at University College Dublin
• Trinity College Dublin

·?????VCs -There a 4-6 leading local VCs in Ireland and preliminary discussions indicate they are open to partnering on deals.

·????????Halo Business Angel Network (HBAN) -??HBAN is an Enterprise Ireland-funded initiative to promote angel investment syndicates

·????????Informal Angel Network -??There are several informal angel networks in Ireland comprised of Irish executives who have completed successful foreign careers and business exits.

·????????NDRC - The NDRC is a national startup accelerator program comprised of shared work facilities and mentorship programs in Dublin, Galway, Cork, and Kerry.

·????????Other Start-up networking programs including Scale Ireland and Startup Ireland

In addition to these channels, all of the early-stage companies I met with are seeking pre-seed and seed funding and many could be candidates for a new fund later this year.

Other start-ups I met with covered sectors including MedTech, Fintech, Supply Chain, Renewables, and Sustainability.

By investing in early-stage startups in these sectors, a new fund could potentially tap into significant growth opportunities with global reach potential.

2. Access to European & US markets:

Ireland's location and membership in the European Union provide easy access to the large and lucrative European market, which can offer significant growth opportunities for startups.

Ireland also has strong connections with and easy access to the US market.

3. Skilled workforce:

Ireland has a highly educated and skilled workforce, with a strong tradition of innovation and entrepreneurship. Foreign direct investment is estimated to be responsible for 20% of all private-sector employment in Ireland.

This workforce comprises graduates from Ireland’s excellent University education system as well as a rapidly growing pool of international workers drawn to the excellent employment opportunities and quality of life in Ireland.

This provides a strong talent pool for startups to draw from, which can help increase their chances of success.

4. Government support:

The Irish government has been actively encouraging foreign investment in the country and it has established several policies and initiatives to support the growth of the startup ecosystem.

Enterprise Ireland , the government agency responsible for the development and growth of Irish businesses, has a strong focus on supporting startups. The agency provides a range of services and funding to help entrepreneurs bring their ideas to market and grow their companies.

Enterprise Ireland plays a vital role in the Irish startup ecosystem by providing funding, mentoring, networking opportunities, market research, and other services to help startups bring their ideas to market, grow, and scale their businesses, and access new markets.

There is a tremendous opportunity for a new fund to invest alongside EI and to benefit from their due diligence and screening of high-potential startups.

The National Digital Research Centre ( NDRC ) in Ireland is a government-funded organization that helps startups and entrepreneurs in the technology sector. Their mission is to accelerate the growth and success of innovative digital companies by providing them with the resources and support they need to bring their ideas to market.

One of the ways the NDRC helps startups is through its accelerator programs. These programs provide startups with access to mentorship, training, and funding opportunities to help them get their businesses off the ground. The NDRC also provides office space and other resources to help startups grow and succeed.

Another way the NDRC helps startups is through its network of industry partners and investors. The NDRC has relationships with many of the top companies and investors in the technology sector, which allows startups to connect with potential partners and investors to help them grow their businesses.

The NDRC also conducts research and development to help startups develop new technologies and products. They work with startups to identify areas of technology that have the potential to be commercialized and provide funding and resources to help them develop these technologies.

The NDRC can also be a great source of well-qualified investment opportunities.

5. Connected world-leading research

Ireland is one of the leading Research, Development, and Innovation (RDI) locations in the world. Ireland’s national innovation system enables collaboration between industry, academia, state agencies, and regulatory authorities. Irish research and training centers act as beacons that attract prospective investors and provide a capacity for applied research, supporting firms to develop innovative products and services. Additionally, R&D tax credits support companies to undertake new or additional RDI activity in Ireland. The major Universities have excellent programs to promote technology transfer and spinouts and can be an excellent source of investment opportunities.

IV. Potential Investment Strategy for a new Fund

Geography and Sectors:

Focus on startups originating in Ireland. Since the Irish market is still young and relatively small, the fund should be cross Sector with a focus on areas of strength in Ireland with international growth potential including Enterprise Technology, SaaS, MedTech, FinTech, and Sustainability.

Investment Stage

The stage of greatest need and potential in Ireland is pre-seed and seed Investments. A new fund could focus on seed/pre-seed stage investments and set aside a portion of the fund to enable participation in high-potential pre-seed rounds.

Target Company Profile:

·????????Talented, ambitious, driven, and experienced founders.

·????????Innovative technologies with large growth potential.

·????????Initial market fit and paying customers established.

·????????Global reach ambitions and potential.

Philosophy & Values

·????????Promote American-Irish collaboration, business, and cultural connections.

·????????Transparency and Integrity in all business activities.

. Founder-friendly smart money – bring value to the start-up beyond the financial investment.

·????????Promote diversity and inclusion with a focus on female founders.

·????????Collaboration – partner with the existing start-up ecosystem.

VI. Conclusion

Ireland is a thriving market for innovative startups with global growth potential. Many of these startups are struggling to raise capital from the relatively small and close-knit Irish investment community.

There is a tremendous opportunity for a new fund to tap into this flow of excellent, underserved startups with a founder-friendly fund that can provide capital and international growth assistance, in collaboration with the existing Irish startup ecosystem.

For investors, Ireland offers a stable economic and political environment, a business-friendly legal system, a rich pool of talent and startup opportunities with global growth potential, and well-proven pathways into the European Union and US markets.

The timing is also perfect now with cautious investors meaning less competition and better investor valuations for the very best companies.

Sources:

https://uploads-ssl.webflow.com/60143b5f4bfa6c7e7f2266fb/626a8e7896ae0b0a95991ada_ScaleIreland_SurveyResponse2022.pdf