and propose practical reforms with the ambition of making the UK a global open innovation hub as part of the urgent task of rebalancing and growing the UK economy,
and with the vision of building a world-class innovation and investment ecosystem by 2025.
Here the term‘open innovation'refers to both the sourcing and involvement of external organisations and stakeholders in the innovation process,
Most global corporations are not under pressure either from shareholders or other stakeholders to be open for the sake of it,
but rather are expected to manage an innovation strategy that deploys openness in a sophisticated and nuanced manner.
Industrial and enterprise policy which considers the strengths and weaknesses of open innovation approaches for key UK industries which are operating at different points in the innovation value chain;
An IP regime which genuinely incentivises investment in innovation, including through open routes, and discourages purely defensive use of IP to block new solutions to market demands;
3 Missing an open goal? UK Public policy and open innovation Executive summary A financial and investment ecosystem which looks to support business as it grows,
and to reward innovation over time and particularly not to make blanket demands for fully closed,
or open, innovation strategies as a prerequisite for new business funding in specific sectors; Improve our understanding of markets for open innovation, through analysis and encouragement of the required intermediaries
Defining innovation and innovation investment value chains 11 Box 2: Open definitions of open innovation 13 Box 3:
whether this meant the government's recently-announced‘patent box'fiscal policy designed to increase the number of operations like Sandwich in the UK was busted a flush
or simply where the new customers were. Or then again perhaps was this instead about broader changes to international business models
including the shift away from large-scale single-firm R&d‘farms'and towards more‘open'innovation models?
others, faced with stark challenges to established business models, have turned deliberately to more‘open'structures and processes for innovation.
acquire, exploit'business model. But what challenges do these changes present for the national investment landscape?
Is there, for example, a risk that increased corporate open innovation activities in the UK and abroad result in a drop in overall investment in fundamental research and development by organisations in the UK?
At the moment it is unclear whether incentives will align for others including the public sector to fill this gap,
and complicate the innovation investment and revenue-raising value chain. Following an innovation‘ecosystem'model,
which support investment in new knowledge generation, its development, and commercialisation. The open innovation paradigm creates at least the potential for a greater disconnect between knowledge creation and application or commercialisation.
and new employment opportunities) then the nature of these cash flows is increasingly important for government growth and economic policy.
Given that for the foreseeable future the fastest growing markets are likely to be in emerging economies such as India and China,
There is little doubt that returns to commercialisation will be centred increasingly on these economies. Does this mean that greater levels of open innovation within corporate innovation activities will see innovation investment increasingly sourced
deployed, and accrued away from the UK? Because this change touches on so many areas relevant to the success of the UK innovation system, an understanding of how innovation value chains are becoming increasingly open will be a major focus of activities
UK Public policy and open innovation Perhaps the most fundamental strategic decisions facing any company concern its core business model:
the way it will derive value in its relations to other organisations and to customers.
and customers they consider how vertically or horizontally integrated to be. Firms consider what parts of the production process they can create value in
Some organisations operate across the whole innovation value chain from basic research to the final delivery of new products and services (in effect vertically-integrated innovation.
Other enterprises choose to focus on drawing value from specific areas of the innovation value chain:
or perhaps the development of innovative new business models. 2 This section explores the notion of open innovation.
It considers evidence suggesting that open innovation processes are increasingly shaping the operation of innovation investment value chains,
A. and Piqneur, Y. 2010) Business model Generation, London: Wiley 3 Chesbrough, H.,Vanhaverbeke, W. and West, J. eds)( 2006) Open Innovation:
Defining innovation and innovation investment value chains Innovation represents much more than invention or discovery. Innovation represents the creation and application of new knowledge.
or service to meet a market demand, or the creation and implementation of processes which improve the productivity of existing activities.
Adapted from NESTA (2009) An innovation investment value chain can be thought best of as a practical mapping of how this innovation system operates for an individual innovative product
Here new products and services are conceived of and developed entirely internally by the firm through the pursuit of technical breakthroughs.
whose business model is fundamentally open and based on the transmission of knowledge across the firm's boundaries.
or spun-out to create new ventures. Knowledge Creation Entrepreneurship Selection Mobilising Resources 11 Missing an open goal?
UK Public policy and open innovation Figure 1: The Closed Paradigm The market Boundary of the firm Projects Research Development Figure 2:
Chesbrough (2003) These models can be interpreted as two fundamentally different innovation investment value chains. Under the closed innovation model, all benefits from the innovation accrue to the single organisation,
nuclear reactors, mainframe computers Largely internal ideas Low labour mobility Little venture capital activity Few, weak start-ups Universities unimportant Examples of industries:
PCS, movies Many external ideas High labour mobility Active venture capital Numerous start-ups Universities important Source: Chesbrough (2003) With open innovation such a widely deployed term for describing organisational activities,
It immediately can be applied to almost anything without offering any meaningful interpretive power in the case above listening to your customers could be described equally as good business practice rather than an open innovation strategy.
and open innovation business models. To avoid confusion, this paper focuses on this second interpretation of open innovation as a planned process of innovation which:
and‘platforms'on which others provide products or services (itunes, for example). This is not to say that the development of these technologies could not be through open innovation, in our understanding,
open source can be a manifestation of open innovation IBM has used open source approaches to drive standardisation across its customer base which makes it less costly for the firm to interact with its customers
and allows it to sell more advanced bolt-on services which improve the experience of using the open source software. 4 However,
and future profit streams are not necessarily bound together. The following statements illustrate the power of creating greater flexibility between these elements:
and services by carefully releasing related knowledge, allowing others to engage and develop complementary offers.
and business services where there are fewer‘tangible'barriers to new-entrant competition. As organisations consider their place within innovation value chains they reflect on the subtle and complex balance between the advantages and disadvantages of openness for each area of corporate knowledge.
Opportunities which are too distant are hard to align with existing expertise and practice. This means that the effectiveness of openness is contingent on the resource endowments of the partnering organisations.
Non-Pecuniary Sourcing/scanning the external environment before initiating R&d (Chesbrough 2006. Advantages: External sources of ideas a positive (Rosenthal 1974/94;
Revealing internal resources released to external environment. Advantages progress as a group of firms through sharing knowledge and gains of cumulative achievement:
Smaller companies lack resources to manage the process for profit. Source: Adapted from Dahlander and Gann (2010) The complex ways that these different strategies play out in practice is illustrated in the cases of Amazon,
which constrains their ability to develop their products and services, KLM has adopted a partnership model in
KLM's innovation fund acts as a venture capital mechanism to fund product and IP development among start-up businesses.
are the key element of Amazon's business model. It enables the company to process a vast number of orders at a negligible marginal cost,
while matching products to customer preferences, and receiving bills in advance. Amazon spent an estimated $800m on developing its IT infrastructure during the company's expansion,
but this large fixed cost is offset by a small marginal cost of using the infrastructure.
its business model would depend on maintaining a high level of turnover to offset its fixed costs. However
To follow this, Amazon has begun offering cloud computing services to smaller businesses, enabling them to buy Amazon's capability rather than developing their own at great cost.
This allows Amazon to offer excellent services to customers at a lower cost while also making a profit itself.
As is clear from the examples cited above, the debate about whether firms should engage in blanket open
congruent with their overall business model and innovation value chain. Are innovation value chains becoming increasingly open?
particularly in the developed world, have looked increasingly to open innovation as a potential solution to the erosion of profitability for more established business models.
UK Public policy and open innovation occurrence of open innovation is given by a number of broader drivers of long-term change within western economies,
particularly those classed under the‘knowledge economy'.'9 Elements from the broader knowledge economy affording a greater level of open innovation would include:
The rise of a well educated workforces knowledge not confined to an elite core within major corporations,
The rise of educated and sophisticated consumer demand is changing and creating potential for the co-creation of a diverse range of new products
and services this depends on the operation of key open processes; Convergent technology the rise of general purpose technologies, particularly in digital, computing and internet areas has been identified by many as leading to a convergence of platform technologies,
Increasing flows of knowledge services while these flows are incredibly difficult to quantify at a national level,
OECD trade data does confirm that the past decade saw a dramatic increase in the scale of international trades in knowledge services;
which support the knowledge economy are supportive of open innovation practices. The evolving focuses of our universities (exemplified by the changing impact assessment guidelines)
it is also likely that open innovation within a knowledge economy will have a particular impact on certain industrial sectors some
A. and Holloway, C. 2011) A plan for growth in the knowledge economy, London: The Work Foundation, http://www. theworkfoundation. com/research/publications/publicationdetail. aspx?
healthcare, computers, software, communications, banking, insurance and consumer packaged goods. Although it is circumstantial evidence, the‘buzz'surrounding open innovation also provides an indication of its increasing importance.
While for some the changes are likely to represent a flowering of opportunities for inserting themselves into new innovation value chains,
for others it may force unwanted change to value chains as new competitors disrupt existing business models.
These challenges of increasingly open value chains for a range of stakeholders are the focus of Chapter 3. 23 Missing an open goal?
Small and medium enterprises (SMES) the fixed costs of managing open innovation processes fall disproportionately heavily on SMES;
but research also shows that open innovation can be a costly and difficult strategy for small enterprises to pursue effectively.
From its origins in large multinational product-focused companies, the concept of open innovation has also spread to small and medium enterprises (SMES.
they may have access to opportunities denied them as mere‘suppliers'or‘customers'of a large firm.
For SMES practicing open innovation without large firm involvement, an open and collaborative approach to new solutions encourages networking and partnership between small enterprises,
There is also some evidence that open innovation combined with strong intellectual property protection has sparked a new business model of so-called‘born-global'entrepreneurial businesses. 13 The general pursuit of increasingly open innovation strategies
potentially boosts the exit opportunities for owners of SMES. If large corporations are increasingly looking,
To manage intellectual property opportunities and deals requires skills in IP valuation, access to opportunities,
and capabilities in deal structuring areas where most SMES are inexperienced. Access to financial support for such deals through investment banking is geared often towards large firms, with advice costs unsupportable by small firms.
A major resource investment of senior managers in an SME to deal negotiation could bring down a small enterprise
if it were to collapse at a late stage. Activities which help to build networks between large firms and related SMES (such as supply chain programmes,
or initiatives such as Microsoft's Bizspark community of start-up customers) may help to build trust between organisations
Becoming part of the open innovation value chain of a large corporation offers opportunities otherwise out of reach, but potentially also opens them up to exploitation,
and through the dispersal of knowledge into the broader economy by educating students who go on to work outside academia.
I. 2011)‘ Open Innovation Choices-What is British Enterprise doing?''Cambridge: UK IRC 15 Gassmann, O.,Enkel, E. and Chesbrough, H. 2010),‘The future of open innovation',R&d Management, Vol. 40, No. 3: 213
the better to allow maximum outflow of knowledge and innovation into the national economy. In reality, the blanket mandating of openness
The challenge for universities is to be able to make decisions regarding the balance of openness in their role between the value to business and the value to the national economy. 16 Cohen, Wesley, M.,Nelson, Richard, R.,Walsh
For the foreseeable future the fastest-growing markets are likely to be located in emerging economies such as India and China.
as expected, these locations will present the most dynamic markets and the greatest opportunities for commercialisation,
Equally, if returns to commercialisation activities are centred increasingly on emerging economies, then rapidly-growing domestic market organisations
which focus on commercialisation of innovation may not choose to focus investment in the UK. The UK's advertising sector offers a powerful illustration of this point.
and an important creator of value within the economy. Within innovation value chains its activity can be viewed as commercialisation-related the sector creates value by applying its knowledge of
since advertising organisations centred in London may struggle to demonstrate an awareness of consumer demands and cultural sensitivities in many emerging markets.
such a shift of resources to emerging markets is a sensible commercial decision to bring innovation investment closer to growing markets.
which are at the research and early investment end of innovation value chains. Such changes may also impact negatively rganisations in the UK and therefore potentially the UK economy as a whole
which currently derive value from commercialisation, development and the application of new knowledge and innovation. 29 Missing an open goal?
This demands translating the concept from the level of the organisation to something which is of relevance to a national innovation system.
if more firms within an economy do so it should, for example, result in more high performance firms. 18 Unfortunately the model of open innovation presented here potentially represents a greater win for a single large firm than for the whole economy.
Take for example, the acquisition of a UK-based SME by a large non-UK multinational. Interpreted in the context of Figures 1 (closed) and 2 (open) in Chapter 2 represents a positive opportunity for a multinational company to exploit ideas
which are external to the firm. However, this is not necessarily a gain for the SME's native national economy the innovation could perhaps have been developed further by the SME
who might even have been more likely to retain related jobs and profits in the UK.
In this way many of the firmlevel wins from an open innovation strategy represent a zero-sum game at the level of the economy
or innovation system i e. the economy will not be strengthened by more organisations pursuing more open innovation strategies.
But both the utopian and doom-laden scenarios for open innovation at the national level oversimplify the situation,
and a better chance of successfully commercialising the new knowledge than an SME they may for example have stronger routes to markets or complementary products and services
Equally, some products and services may be driven best forwards through independence and greater flexibility. 18 E g.
UK Public policy and open innovation Chapter 4 A national approach what do increasingly open innovation investment value chains mean for the National Innovation System?
19 20 The announced sale of Autonomy to Hewlett-packard for $10bn in August 2011 has reignited the debate over the robustness of British enterprise.
In many cases these large enterprises may be able to yield greater returns from the knowledge embodied within the SME than the SME would by growing organically.
‘The lesson of so many technology companies is that they always go through quite a few rocky patches nearly always along that track a company will have faced near-fatal crisis. Patient capital
there are fundamental and systemic issues with how such markets for knowledge and knowledge enterprises work.
It is far from clear that trades of such enterprises reliably capture their true value especially to national economies
and that some enterprises will sell out too cheaply when their real value could be realised through organic growth,
which knowledge moves around our economy. In this sense open innovation is a great 21 opportunity
since it will support greater knowledge flows. But, its rise clearly tests the quality of our innovation system
We know that such knowledge markets are much more complex than standard markets for goods and services.
o VI Stimulate interaction+++VII Enhance technology markets-o--VIII Use go-betweens++o+IX Back up clusters+++o/++Entrepreneurship policy X Support corporate entrepreneurship
++o+XVI Organised diffusion+++o/++Education policy XVII General stimulation+++XVIII Entrepreneurship education+o o o Labour market policy XIX Aim for flexibility+o
++XX Enable knowledge migration+-o/+o Competition policy XXI Stimulate competition++++++25 De Jong, J. P. J.,Vanhaverbeke, W.,Kalvet, T. and Chesbrough, H. 2008), Policies for Open Innovation:
Correcting for a changing innovation investment landscape The UK's position as a predominantly knowledge-based economy in the UK makes its degree of investment in innovation probably its only source of enduring competitive advantage.
But do greater levels of open innovation across the economy threaten that overall level of investment?
'26 While it is limited a proxy for investment in innovation, we know that large firms disproportionately invest in research and development.
If industry‘can no longer be expected'to make their traditional investment, who can, or should, step up to fill the gap?
support for intramural R&d is vital to reduce the risk of downward spirals in knowledge investments
This increases the importance of schemes that incentivise private investment in innovation, not just blanket openness.
but if mishandled for example allowing the Patent Box to become used as a tax holiday for major organisations repatriating existing profits could do as much harm as good to the innovation system.
the policy agenda must generate infrastructures that support open innovation practices at the points in global industrial innovation value chains where that approach is likely to play to the strengths of the UK economy.
The intellectual property regime Confidence in the currency of intellectual property becomes even more fundamental to economic activity in the context of open innovation securing market clarity is important here,
and the increasingly open innovation investment value chain model offers a perspective or a framework through
‘the intellectual property system must incentivise and reward inventiveness and creativity throughout the economic system rather than the current winner-takesall approach,
I. 2011) Digital Opportunity: A review of Intellectual Property and Growth, London, the Intellectual Property Office, http://www. ipo. gov. uk/ipreview. htm 29 Andersen, B. 2011)‘ Think Big!'
UK Public policy and open innovation The proposed Copyright and Business models Centre, supported jointly by the three UK Research Councils,
Financing investment in open innovation Formal intellectual property rights apply weakly for many areas of knowledge.
(i e. non IP based services and business models in particular) strong venture capital markets are likely to be relevant here for building into a business
and traded on the strength of its business model. As The Work Foundation outlined in a recent report to the Independent Commission on Banking,
there is a clear case for reappraising the UK financial sectors'position in supporting the knowledge economy
and nurturing successful markets for knowledge through open innovation is a particular issue for small and medium enterprises.
when the incentive structures for developing innovations in the private sector have been unclear. 31 30 Hutton, W. and Nightingale, P. 2011) The Discouraged Economy:
the industry incubator programme in Norway',Technology Analysis and Strategic Management, Vol. 23, No. 1: 75-85 37 Missing an open goal?
UK Public policy and open innovation A mission making the UK the best place to commercialise an idea The dislocation of innovation investment value chains also heightens the importance of another longstanding policy challenge:
But to achieve that mission demands much more than having a competitive tax rate, or even the often-measured variables of the ease with which a business can be set up
and leadership skills should be an urgent enterprise policy priority. 32 From this perspective it must also be an open innovation policy priority.
Finally, the attractiveness of the UK enterprise environment depends on infrastructures and the strength of networked institutions.
But, for the knowledge economy the presence of strong business services networks are an equally important consideration.
Fortunately for the UK, this appears to be an area of real strength, but as we argued in a recent Work Foundation's report, this sector needs continued support and investment,
along with a steady increase in the supply of highly skilled labour. 33 32 Levy, C.,Lee, N. and Peate, A. 2011) Ready, Steady, Grow?
Business Services in the Knowledge Economy',London: the Work Foundation, http://www. theworkfoundation. com/research/publications/publicationdetail. aspx?
and b) sustained progress towards more open innovation investment value chains, will both have significant impacts on the operation of the national innovation ecosystem.
Policy thinking must look beyond this even if open innovation is on balance a negative for our economy
increasingly open innovation investment value chains appear to be an international feature. There is probably very little that the UK can do to stem this tide overall.
Our research has highlighted how responding to shifting innovation investment value chains will demand action on three fronts:
and the UK will be able to thrive in the changing innovation environment. Fail here and we risk the erosion of our innovation ecosystem
and growing limitations on our ability to create vale from our investments in innovation. The Big Innovation Centre, a major new initiative from The Work Foundation and Lancaster University, will be driving forward this analysis and commentary.
and rebalance and grow the UK economy.''The Big Innovation Centre brings together some of the world's leading companies with key institutions from across the policy landscape,
building an environment in which innovation can flourish. The commitment and drive of these organisations is focused on delivering five far reaching research programmes.
ecosystems operate in different parts of our economy. It will look to map the role of open innovation activities
focusing on the technical skills for invention as well as the softer communication and business skills needed to succeed in open environments;
and 5. The Enterprising State will explore the practical role of our state in supporting innovation,
'in Nelson, R. R. ed.)The Rate and Direction of Economic activity, Princeton university Press, N y. Birkinshaw, J.,Bouquet, C. and Barsoux, J.-L. 2010)‘ 5 Myths
of Innovation',MIT Sloan Management Review, Vol. 52, No. 2, 43-50 Chesbrough, H. and Rosenbloom, R. 2002)‘ The role of the business model in capturing value from innovation:
the industry incubator programme in Norway, Technology Analysis and Strategic Management, Vol. 23, No. 1: 75-85 Cohen, Wesley M. and Levinthal, D. A. 1990
I. 2011)‘ Open Innovation Choices-What is British Enterprise doing?''Cambridge: UK IRC Dahlander, Linus,
I. 2011) Digital Opportunity: A review of Intellectual Property and Growth, London, the Intellectual Property Office, http://www. ipo. gov. uk/ipreview. htm Herstad, Sverre J.,Bloch, Carter
UK Public policy and open innovation Levy, C.,Sissons, A. and Holloway, C. 2011) A plan for growth in the knowledge economy, London:
oitemid=290 Lichtenthaler, U. 2011)‘ Is open innovation a field of study or a communication barrier to theory development?
Measuring the UK's investment in innovation and its effects',London: NESTA http://www. nesta. org. uk/library/documents/innovation-index. pdf Nuvolari, A. 2004)‘ Collective Invention during The british Industrial revolution:
the Case of the Cornish Pumping Engine',Cambridge Journal of Economics, Vol 28, pp347-363.
Osterwalder, A. and Piqneur, Y. 2010) Business model Generation, London: Wiley Reznik, G. and Morrelli, A. 2009)‘ Open innovation:
Business Services in the Knowledge Economy',London: The Work Foundation, http://www. theworkfoundation. com/research/publications/publicationdetail. aspx?
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 1 EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS AND ENTREPRENEURSHIP 2table of Contents Executive Summary 3 1 Background and Context
20 2 Enterprise Ireland High Potential Start up Supports 25 3 CORD Programme 47 4 Enterprisestart 1 Programme 54 5 Enterprisestart2
Programme 60 6 Enterprise Ireland Propel Programme 66 7 Enterprise Ireland Ideagen Programme 81 8 Enterprise Ireland Seed & Venture capital Fund Programme
91 9 City & County Enterprise Boards Start Your Own Business Supports 2004-2010 117 Appendix I:
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 3 Executive Summary Background Programme of Evaluations for Enterprise Supports The Department of Jobs, Enterprise and Innovation (DJEI) has requested that Forfás
undertake an evaluation of the comprehensive suite of enterprise support programmes provided by the enterprise development agencies1.
A framework was developed by Forfás in 20112 to ensure consistency of approach that facilitates comparison (where appropriate) and that is cognisant of the common challenges facing enterprise evaluation.
and iii. alignment with national enterprise policy. An Evaluations Steering Group has been chaired set up by Forfás.
It includes representation from the Department of Jobs, Enterprise and Innovation, the Department of Public Expenditure and Reform, IDA Ireland, Enterprise Ireland, Science Foundation Ireland,
Entrepreneurship and start-up supports; Research, Development and Innovation supports; and Business development supports that encompasses supports for capacity building (capital
and employment) and capability building in the areas of productivity, management and skills, internationalisation and transformational change.
This report sets out the findings and recommendations relating to the evaluation of the supports for Entrepreneurship and Start-ups.
it is important to place these in the context of enterprise policy. The following sections set out the rationale for government intervention for start ups informed by international review.
We then set out an overview of Ireland's enterprise policy and start up activity during the period under evaluation (2004-2010). 1 Including those provided by IDA, Enterprise Ireland,
the County Enterprise Boards and those programmes delivered by SFI that have a'touch point'with enterprise 2 Informed by research conducted by Indecon Consultants 4evaluation of Supports for Entrepreneurship
and Start ups Rationale for Government Intervention Entrepreneurship is recognised internationally as a key element of enterprise policy and contributor to economic performance.
There is a positive and robust correlation between entrepreneurship and economic performance in terms of growth, firm survival, innovation, employment creation, technological change, productivity increases and exports3.
The rationale for Government intervention directed at start-up entrepreneurs is twofold. In the first instance it relates to market failure specific to entrepreneurship,
and in the second to a desire to proactively develop the enterprise base and to stimulate sustainable economic growth and job creation.
Market failure involves a number of different factors. Examples include the fact that individuals may fail to recognise the benefits of starting a new business
or may be unwilling to take risks in establishing that business; or that financial institutions may be unable to accurately assess the risk of lending to small firms
or that there are imperfections in the market that restrict competition. The different market failures and enterprise objectives demand different policy responses.
For example, information deficits may be addressed by interventions that provide information to entrepreneurs. Financial market imperfections may be addressed by grant aid.
Ireland's Enterprise Policy Context and Challenges Relevant strategies over the period of review reflect the importance of supporting start-up companies as a means to stimulate economic growth and employment.
These include Building the Smart Economy, 2008, and the National Recovery Plan as well as Ahead of the Curve, 2004 (Enterprise Strategy Group) and the Report of the Innovation Task force, 2010.
Over the period of the evaluation (2004-2010) Ireland's economic circumstance changed significantly from one of high growth
In this changed economic context Forfás undertook a review of Ireland's prevailing enterprise policies and published Making it Happen4 in 2010.
and set out the critical factors that underpin a competitive and sustainable enterprise base. These include Innovation, Productivity, Cost Competitiveness and a Strong Enterprise Mix.
These factors are relevant for all firms and particularly so for start-up activity given that entrepreneurship is a key driver of innovation
and that start up companies tend to increase the level of productivity in the enterprise base
and can increase competition with existing firms. Start-ups are one of the means by which new sectors or sub sectors of existing industries take root in Ireland helping to deliver a strong enterprise mix. 3 Action Plan the European Agenda for Entrepreneurship,
European commission, COM (2004; Understanding Economic growth, OECD,(2005) 4 Making it Happen Growing Enterprise for Ireland, Forfás,
2010 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 5 The Action Plan for Jobs published in 2012 places an increased emphasis on supporting indigenous start-ups.
Entrepreneurship Activity in Ireland during the Period under Evaluation Since the onset of the recession that occurred midway through the evaluation period,
there has also been a decline in entrepreneurial activity. This trend is consistent with research findings that indicate that
while interest in start-ups rises with economic recession, the capacity to implement them declines due to market conditions.
Figures compiled from Entrepreneurship in Ireland 2010 Global Entrepreneurship Monitor (GEM) Report and GEM Report 2011;*
Scope of Evaluations This suite of evaluations covers programmes offered by Enterprise Ireland and by the City and County Enterprise Boards (CEBS) 7 to entrepreneurs and start-up companies.
Enterprise Ireland supports companies that employ greater than 10 people and that target export markets and/or demonstrate export potential.
The County Enterprise Boards cater primarily to micro-firms (those employing less than 10 people. Enterprise Ireland Programmes:
High Potential Start-ups Package Feeder Programmes: CORD Enterprise START 1 Enterprise START 2 Ideagen Propel Seed
& Venture capital Programme-in terms of its contribution toward improving the eco system for start ups County and Enterprise Board Programmes:
Encompassing financial and soft supports, including Start Your Own Business courses. 7 This evaluation was completed substantially prior to the publication of the Action Plan for Jobs 2012
which envisages the dissolution of the existing CEB offices and the creation of a new network of Local Enterprise Offices.
SE SUPPORT epreneurship n8 for entrep programme (y the Seed a iatives for th hat reflect thets FOR STA p and Startpreneurship p 42 per cent) nd Venture
and the CE Capital Fund gramme deli vices and guid ENTREPRENE, the majori Bs'Start You ds (17 per ce ivered by En dance provideeurship7 ty is ur
The net cost of the Seed & VC programme is calculated from Enterprise Ireland Cash Flow Statement year ended 31 december 2010-investing activities were €15. 61m
HPSU, €21. 02,42%Seed & VC, €8. 34,17%SYOB, €17. 04,34%CORD, €2. 40,5%Propel, €0. 34,1%Enterprise Start, €0. 20,0%Enterprise
1%Ideagen, €0. 14,0%FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 9 Individual Programmes-Key Findings & Recommendations High Potential Start ups Programme
Findings This programme is targeted at providing a wide range of services to a relatively small cohort of companies identified as high potential start ups (HPSUS.
or innovative product or service to international markets, involved in manufacturing or internationally traded services,
Financial and nonfinancial supports provided by Enterprise Ireland encompass those areas critical to business success,
Enterprise Ireland's funding contribution is primarily in the form of equity toward the implementation of a business plan9.
A Cost Benefit Analysis (CBA) was conducted over a 7 year period for each of the 2005 and 2006 cohorts to establish the impact to the wider economy.
The CBA 9 In each of the years evaluated (2004-2006) at least 70 per cent of supports had been in the form of equity investment,
primarily preference shares 10 All Irish owned firms surveyed annually through the ABSEI 11 Enterprise Ireland firms started between 2000 and 2006 with 10 employees
The stitutes of Te1 for 2005 a butable to a sing to trade economy. rated per an f 95-100 amb of HPSUS gen status. Highe outs from re e Action Plan nclude
Enterprise merly funded has been manor 200612. Th haser of dom d year as a H terprise Irela gh?
The Nation dstart 2, CORD by the Depar naged throughhe differenc mestically-so HPSU with a and's target due regard e likely to co mediate term Enterprise Ir overseas as spin outs e
whi ise Ireland. he associated rcialisation of nal Technolog D, Propel, Ide rtment of Edu h Enterprise Ire ce urced knockfor 2012 to
and/or know mme is to w investment, acity as HPSU onth long pro n panel befo to the survey.
Enterprisestart (ES1) and Enterprisestart2 (ES2) facilitate the sourcing Of high Potential ideas and business plans at a relatively low cost of provision.
or to identify at an early stage that a proposed venture is unlikely to be viable.
seven are HPSU/pre-HSPU clients of Enterprise Ireland. Overall however, there is evidence of some duplication of activities across these HPSU feeder programmes in terms of programme content
Recommendation Introduce a modular system for the delivery of start-up/entrepreneurship supports, with clear marketing and communications material for participants aimed at providing a more streamlined delivery mechanism,
removing duplication and increasing efficiencies. Enterprise Ireland replaced the Enterprise Platform Programme (EPP) and Propel with a new programme New Frontiers in February 2012,
which will partly address this issue. An ex-ante evaluation should be undertaken for the programme that clearly sets out the rationale for the (amended) programme in the current economic climate, the objectives and desired outputs/outcomes.
and 141 in Enterprisestart2 for the period 2009 to 2011 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 13 Seed and Venture capital Programme Findings The evaluation focused on the period 2000-2010
which covers two schemes of the Enterprise Ireland Seed & Venture capital Programme17. This evaluation is not an analysis of the performance of the VC funds themselves.
The Enterprise Ireland Seed & Venture capital Programme was conceived initially in the mid 1990s at a time when Ireland's VC industry was in the embryonic stages of development.
State intervention was provided on the basis that the private sector on its own would not provide equity capital for high risk/high growth companies,
and the State could address this market failure by committing capital to VC funds, thereby encouraging the private sector to participate in sharing the risk18.
the VC market in Ireland was still relatively young and underdeveloped vis-à-vis international benchmarks
which the Enterprise Ireland Seed & Venture capital Programme is delivering on its stated objective which is to:
Leveraging private sector investment; and Developing commercially viable funds that can meet the capital requirements of high technology start-ups and scaling companies.
and particularly appropriate given the prevailing national and international economic environment. By the end of 2010, the total investment funding available under Schemes 2 and 3 amounted to €1. 023 billion,
of which €114 million is dedicated Seed funding; 805 actual investments from Enterprise Ireland partner funds were made by the end of 2010.
These were made in 186 companies and had combined a value of €425 million; The pool of VC funds available and investments made for innovative start-ups has expanded.
According to EVCA data, all Irish VC firms have invested circa €963 million in Irish firms since 200019.
Private funds invest in the Enterprise Ireland Partner Funds: Each €1 committed by the State to the Enterprise Ireland partner funds attracted €3 of private investment20.
This compares 17 Scheme 2 from 2000 to 2006 and Scheme 3 from 2007 to 2012 18 The same rationale was set out for Finland's involvement in VC funds:
. 3 million (44 per cent) has been invested by the Enterprise Ireland Partner Funds 20 Leveraging effect Scheme 2 was €1:
€2. 60 14 favourably with similar government interventions in the UK where investments between 2000 and 2009 had a leveraging effect of £1:
There has been €3 billion of VC investment in Irish SMES from 2000 to 2010 according to the IVCA22.
make sufficient investments across a range of projects to diversify risk; to make follow-on investments;
and to generate sufficient management fees to support a strong management team23. All nine of the funds established to date under Scheme 3 meet
It is important that Enterprise Ireland continually assesses the availability of different and appropriate sources of funding for its clients
In terms of alignment with enterprise needs, there may be scope for greater investment in the areas of clean technologies and technology based food products
Although there have been improvements in terms of VC firms'investments in Irish firms since 2000, there remains a need for The irish VC industry to continue to develop to bring it into line with international comparator countries
This is particularly relevant given the prevailing national and international economic environment which remains extremely challenging.
Recommendations Ensure that any future EI partner funds are aimed at addressing the prevailing market failures in the venture capital market
and in sectors aligned with the investment strategies of commercial venture capital fund managers. 21 Investments made by the Department for Business,
IVCA data included investments by angel and investors and corporation that are considered not to be VC firms 23 PWC review 24 For example,
not all companies in all sectors are appropriate candidates for VC investment. The Development Capital Fund (www. developmentcapitalfund. com) announced by the Minister in March may go some way to increasing the availability of capital for larger SMES in the food sector 25 A Cleantech fund
Novas Modus, is supported by the ESB 26 Including Denmark, Finland and Sweden, see Chart 8. 4 27 Reference Action 3. 42.
Establish a working group to ascertain the need for the State to continue its support, on the same terms as the private sector, for the development of the domestic venture capital sector (DJIE, EI,
NPRF) FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 15 Work with the private sector to ensure the availability of funding from other sources for key sectors that are not appropriate for venture capital investment.
A full evaluation should be undertaken to assess the economic return through the State's investment in VC Funds
The Department of Jobs, Enterprise and Innovation should be cognisant of the financial return to the State through EI-Partner funds28.
Start Your Own Business Supports (SYOB) Findings The County Enterprise Board network consists of 35 companies limited by guarantee.
The CEBS provide direct financial and soft supports to new and existing enterprises. They are also responsible for increasing awareness
and for promoting entrepreneurship and supporting local developments that contribute to enterprise. Total exchequer funding to the CEBS is circa €33. 5 million (2009) to support their wide ranging remit.
Each year the typical CEB: Handles some 800 to 1, 000 queries; Offers 7 Start Your Own Business (SYOB) courses and 30 management development training courses;
and 58 per cent of mentoring services are directed to start-up businesses. The evaluation found that over the 2004-2010 period the financial supports are likely to have paid at least their way in terms of wages,
profits and taxes generated. Financial supports are targeted at manufacturing and internationally trading companies and proposals are subject to a robust review by the Evaluation Committee30.
either providing personal and local market services or are in constructionrelated activities. In terms of SYOB training, there were almost 18,900 participants over the period 28 The Department of Jobs,
Enterprise and Innovation should be cognisant of the financial return to the State through EI-Partner funds 29 This includes circa €6 million of indirect costs.
The economic value of the CEB soft supports depends somewhat on the prevailing economic environment and unemployment levels.
creating additional wages, profits and tax revenues. Nonetheless, if resources for SYOB training supports were to become more limited
it would be advisable to target these soft supports to start ups in the fields of manufacturing and exportable services,
by excluding supports to start-ups in local and personal services. This will require‘real-time'assessment and a more anticipatory and agile support system across the CEB network.
and in particular facilitate the delineation of activities/supports directed toward the stimulation of entrepreneurship and start-ups.
which envisages the dissolution of the existing CEB offices and the creation of a new network of Local Enterprise Offices.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 17 Overarching Recommendations Alignment with Government Policy Findings Generally,
the entrepreneurship and start-up supports examined are in alignment with Government policy and mirror practices in many innovation driven economies.
Nonetheless, it is notable that Government policy in Ireland is general enterprise policy. There is no policy set out that is specific to entrepreneurship31.
Enterprise Ireland has developed its own strategies, as have the CEBS, but the lack of clear direction from Government makes it difficult to assess
whether or not supports provided to entrepreneurs are effective in realising Ireland's entrepreneurship potential.
Examination of entrepreneurship policy in the Nordic countries reveals similar trends but there has been progress
or by benchmarking themselves against high performing countries. 32 Recommendation It is recommended that a national Entrepreneurship policy be developed for Ireland that sets out clearly identified objectives,
This is likely to be even more pertinent in the context of proposed changes to the agencies/structures to support micro enterprises as set out in the Action Plan for Jobs, 201233.
Since 2008, that situation has reversed with significant difficulties for enterprises relating to access to finance following the onset of the banking crisis
and competition has remained constant throughout the 2004-2010 period. The desire to proactively develop the enterprise base to stimulate sustainable economic growth
and job creation has remained also constant, and has been reflected in government policy and enterprise supports over the entire period.
In overall terms, the analysis of the enterprise agency supports for start-ups and entrepreneurship34 shows that these programmes are addressing the market failures common to entrepreneurship.
The 31 While policies such as the Smart Economy document National Recovery Plan and successive strategies of the Department of Jobs Enterprise and Innovation recognise the importance of supporting start-up activity,
these do not set out a clear vision or objectives for what Ireland wants to achieve in this area 32 Entrepreneurship policy in the Nordic Countries perspectives of development since 2003, Nordic Innovation Centre 2008 33 Action Plan for Jobs, 2012.
Action Number 2. 2 refers 34 Including start up supports provided by Enterprise Ireland and the City and County Enterprise Boards 18 fact is that the emphasis on specific market failures change in differing economic circumstances
which also affects the nature of policy response and/or intervention required. Recommendation The rationale for State intervention should be reviewed continually to ensure that the most appropriate supports are being provided to address the market failures that pertain at any particular point in time.
An ex-ante evaluation should be undertaken and documented as a matter of course when introducing new and/or modified interventions (See below).
At a‘system'level, consideration should also be given to what is already in existence to avoid duplication,
Recommendation Introduce a system of ex-ante evaluation across the enterprise agencies, informed by the programme logic model set out in the Forfás Evaluation Framework.
One Stop Shop for Entrepreneurs Findings The analysis found that there are multiple supports available from a number of State agencies in the area of entrepreneurship
The proposed new network of Local Enterprise Offices (LEOS) in each local authority aims to provide a‘one-stop-shop'micro enterprise support structure
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 19 Recommendation Develop a national information portal to provide easily accessible and relevant information for individuals wishing to start a new business, building upon existing websites.
Conclusion Overall the individual supports aimed at stimulating entrepreneurships and start-ups are appropriate, in that they are aligned with national policy,
and Enterprise Platform Programme are welcomed. The suite of supports offered span a broad range of potential entrepreneurs
In line with enterprise policy, financial supports are targeted toward manufacturing and internationally trading services companies thereby minimising the potential for displacement.
35 The Voice of Small Business, 2011 report of the Advisory Group for Small Business, Forfás 20 1 Background and Context 1. 1 International Review Entrepreneurship
and Economic Performance Entrepreneurship is recognised internationally as a key element of enterprise policy and contributor to economic performance.
There is a positive and robust correlation between entrepreneurship and economic performance in terms of growth, firm survival, innovation, employment creation, technological change, productivity increases and exports36.
This echoes the creative destruction theories of Schumpeter38 who argues that entrepreneurship is associated typically with innovative new firms competing with,
In the first instance it relates to market failure specific to entrepreneurship, which involves a number of different factors,
or other improvements that spill over to the rest of the economy but these may not be a factor in private investment decisions;
Financial institutions may be unable to accurately assess the risk of lending to small firms or may simply be risk averse;
There may be imperfections in the market that restrict competition, so that new entrants to the market facilitate increased competition and improved productivity;
Start-up entrepreneurs may fail to understand the benefits of training or the fact that new knowledge and skills may spill over to other firms;
and driving regional development may also have social as well as economic benefits that may not be a factor in private sector investment decisions.
In the second instance the rationale for government intervention relates to a desire to proactively develop the enterprise base
and to stimulate sustainable economic growth and job creation. In general, companies that emanate from entrepreneurial activity are the feedstock for future employment and growth.
The different market failures and enterprise objectives demand different policy responses. For example, information deficits may be addressed by interventions that provide information to entrepreneurs.
Financial market imperfections may be addressed by grant aid. 36 Action Plan the European Agenda for Entrepreneurship European commission, COM (2004) 37 Understanding Economic growth, OECD,(2005) 38
London FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 21 It is also true to say that the nature
In this context start-up enterprises can deliver economic benefits by harnessing underutilised labour resources to generate additional wages, profits and tax revenues.
Thus, the turnover and employment levels of new firms, export and productivity performance together with their longevity are indicators of a successful entrepreneurial performance. 1. 2 Ireland's Enterprise Policy Context
and Challenges Relevant Government strategies over the period of review reflect the importance of supporting start-up companies as a means to stimulate economic growth and employment.
2004, Building the Smart Economy, 2008, the Report of the Innovation Task force, 2010 and the National Recovery Plan.
In this changed economic context Forfás undertook a review of Ireland's prevailing enterprise policies and published Making it Happen39 in 2010.
and set out the critical factors that underpin a competitive and sustainable enterprise base. These are relevant to all firms in the economy,
and particularly so for start-up activity: Innovation: Entrepreneurship is a key driver of innovation. Increased start-up activity enhances innovation in the market place
but potential entrepreneurs face considerable challenges, particularly in the current economic climate. Access to finance is likely to remain a challenge in the short to medium term.
Programmes provided by the enterprise agencies should seek to address these challenges40. Productivity: Start-up companies tend to increase the level of productivity in the enterprise base.
As stated above, there is a positive correlation between the entry rate in a given 39 Making it Happen Growing Enterprise for Ireland, Forfás,
2010 40 The RD&I suite of programmes include a number of initiatives that focus on commercialisation
This should be borne in mind in terms of resource allocation to entrepreneurship programmes. Cost Competitiveness: As an open economy that is reliant on export performance for economic growth, relative cost competitiveness comes into sharp focus for Ireland.
Start-up activity can increase competition with existing firms and contribute to addressing this economic challenge.
Strong Enterprise Mix: Government intervention in entrepreneurship can play a key role in creating a strong enterprise mix.
Start-ups are one of the means by which new sectors or sub sectors of existing industries take root in Ireland.
A new Government was formed in 2011. Its recent publication, The Action Plan for Jobs published in 2012 places an increased emphasis on supporting indigenous start-ups. 1. 3 Entrepreneurship Activity during the Period under Evaluation
Since the onset of the recession that occurred midway through the evaluation period, there has also been a decline in entrepreneurial activity.
Entrepreneurship in Ireland Global Entrepreneurship Monitor 2010. FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 23 Table 1. 1:
New Firm & Early Stage Entrepreneurs in Ireland 2004-2011 New Firm Entrepreneurs Early Stage Entrepreneurs 2011 3. 1%7. 3%2010
2. 6%6. 8%2008 4. 3%7. 6%2007 4. 2%8. 2%2006 2. 9%7. 4%2005
Figures compiled from Entrepreneurship in Ireland 2010 GEM report and GEM Report 2011; Ireland is not alone in experiencing this decline in entrepreneurial activity.
Entrepreneurship Monitor, 2004&2010. Key Indicators Database at:<<http://www. gemconsortium. org/key-indicators>Accessed 04 may 2012.24 Chart 1. Source:
of Adadult Popula dult Populatation 2004 & tion 2004 &2010 2010 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 25 2 Enterprise Ireland High
and services in world markets Foster job creation across the regions of Ireland Promote the growth of new sectors with sustainable competitive advantage Inputs Enterprise Ireland contribution predominantly in the form of equity funding
(standard Enterprise Ireland supports may also run concurrently) Private sector funds Outputs High potential start-up/infant companies in
receipt of HPSU equity investment per year Facilitation of company expansion, investment in specific areas (e g.
Activities Based on a robust approval process, Enterprise Ireland provides financial (equity) and nonfinancial support to HPSU with a business strategy that encompasses all elements required for business success Enterprise Ireland also assesses future HPSUS who are participating on other programmes,
or in receipt of other Enterprise Ireland supports (e g. Enterprisestart, CORD) Outcomes & Impacts Increased number of high potential, innovation-led companies with the capacity to sell innovative products and services in world markets Increased exports
Increased turnover Increased employment High survival rates 26 2. 1 Evaluation Aim The aim of the evaluation is to assess the appropriateness
efficiency and effectiveness of the Enterprise Ireland High Potential Start up supports. This is an interim evaluation focusing in the period 2004-2006.2.2 Programme Background,
Objectives & Target Population A HPSU is defined as a company that is capable of introducing a new
or innovative product or service to international markets, involved in manufacturing or internationally traded services,
provided by the HPSU and Scaling Division in Enterprise Ireland. The core role of the team involves assessing enquiries,
The speed of progress from enquiry to Enterprise Ireland HPSU depends on the experience of the founders and the quality of the idea.
Enterprise Ireland runs and supports a range of programmes that help the entrepreneur build the project,
create the business plan, make the first sale and get to the point of being investor ready.
Precursor agencies to Enterprise Ireland typically invested in Start-up companies in the form of grant aid
however over time this evolved into a risk-reward strategy involving state investment in the equity of high risk companies.
and the provision of upfront equity payments is particularly important to start-up companies who may encounter difficulty securing funding from the private sector in the absence of that investment.
Enterprise Ireland's funding contribution is in the form of equity towards the implementation of a business plan.
The size of Enterprise Ireland's contribution is based on the company's growth potential the achievement of milestones and value for money criteria.
which can be approved in a series of milestone related investments. The maximum amount that can be approved as an Innovative HPSU is €1m for HPSUS located outside the BMW and €1. 25m for those located in the BMW.
The Innovative HPSU offer provides funding of a business plan and is similar to a Venture capital approach.
Clients receive funding towards the achievement of an overall business plan, rather than funding towards discrete elements of a business plan, such as R&d or Management Development.
Target Population Enterprise Ireland identifies three general types of HPSU clients though individual targets may not be definitively set with this in mind:
Game-changing companies; high risk/high return (in strategic sectors/new technologies; 43 Technically, EU State aid regulations determine that a HPSU can be treated
so for up to 6 years after hiring its first employee FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 27 Potential Scaling companies;
medium-high risk/medium-high return; Small Exporters; low-medium risk/low-medium return (often rural-based, serving niche markets.
Enterprise Ireland has begun also supporting entrepreneurs relocating from overseas that now average 10 per year. 2. 3 Programme Rationale Funding HPSUS is a fundamental part of enterprise policy
(and forms the core part of the Enterprise Ireland Policy framework set out by DETE in 1998).
and services in world markets in order to foster job creation across the regions of Ireland, promoting the growth of new sectors with sustainable competitive advantage, providing for growth in exports and employment in Ireland.
The provision of upfront equity payments is particularly important to start-up companies who may encounter difficulty securing funding from the private sector in the absence of that investment.
This echoes enterprise policy in most innovation-driven economies, particularly the US, Australia, Denmark, Finland, The netherlands and Sweden, where there is a focus on supporting high potential start-up companies. 2. 4 Evaluation
The timeframe chosen reflects time lags associated with entrepreneurship and start-up programmes a 5 year timeframe is considered necessary for a programme of this type to deliver on its stated objectives.
commentary is made on activity in the 2006-10 period, particularly regarding issues such as continuing take-up and a changing enterprise policy context.
Nonetheless, it is possible to compare the performance of HPSU supported firms with the wider population of The irish owned firm population supported by Enterprise Ireland
comparator groups from the wider population of Enterprise Ireland supported firms have been constructed, controlling for age of firm, numbers employed, turnover and sector44:
For employment we use the population of Enterprise Ireland start-ups from 2000-2006 with a minimum of ten employees for comparison45;
A previous review of HPSU supports was carried out by Enterprise Ireland in 2010. This review covered the period 1989-2008
and improve the reach of the supports by targeting specific opportunities such as greater emphasis on scalability,
and encouraging a higher proportion of overseas entrepreneurs/investment in future HPSUS. 2. 5 Alignment with National Policy This evaluation centres on impacts of the programme over the period of 2004 2010,
The important contribution of entrepreneurship and innovative start-ups is reflected in relevant reports throughout the evaluation period.
The increased potential for international trade in services is also pertinent. The Enterprise Strategy Report Group
which reported in 2004 cited Internationally-traded services sector as forming an increasingly important component of trade in the economies of the more developed countries,
and will be a growing source of high-skilled, knowledge-intensive jobs and competitive advantage. The report of the innovation task force refers to Success in achieving our vision of Ireland as an Innovation Hub requires a dramatic increase in the number of start-ups 44 To control for the difference in the average age of firms between HPSUS and the wider population,
OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 29 with the potential and ambition to grow innovative, export-focused companies.
Increasing export potential of entrepreneurs is at the core of both of these reports. The HPSU programme assists entrepreneurs in gaining competitive advantage in international markets to generate value and jobs in the domestic market.
Enterprise Ireland's corporate strategies build on this by highlighting export growth and service growth as drivers for enterprise development.
Enterprise Ireland's corporate strategy (2008-2010) points to the flow of innovative start-ups into The irish economy which is critical for future growth.
Towards Developing an Entrepreneurship Policy for Ireland (2007) stresses that enterprise supports should optimise the number of start-up businesses
This sum covered supports to clients in the form of equity investments, feasibility studies, training, R&d, management development, consultancy and others.
Costs to Enterprise Ireland in providing support services such as advice for clients on aspects of their business
2006 Direct Costs (€) Indirect Cost (€) FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 31 Table 2. 2:
Itemised Breakdown of Expenditure by Year 2004(%)2005(%)2006(%)Capital 15.0 1. 2 0. 9 Consultancy/Ex-Directors 0. 6 1. 5
Feasibility Capital 3. 7 2. 8 0. 8 IP Assistance 0. 0 0. 0 0. 0 Leasing 0. 4 0. 4
had been in the form of equity investment, predominantly preference shares. Research/R&d has emerged as the second largest component of HPSU expenditure;
In the case of equity support, supported companies are required to raise matched funding of 50 per cent from the private sector to provide 3rd party validation for the investment.
over half of recipient companies (54.1 per cent) and over half of all funding (57.8 per cent) fell within Internationally Traded Services,
and Business Services (Table 2. 3). Metals and Engineering accounted for 20.7 per cent of recipients and 21.5 per cent of funding.
Proportion Equity Investment 2005-2011 Proportion Chemicals 7 5. 2%€ 1 749,362 6. 2%Clothing Footwear and Leather 2 1. 5%€ 175,000 0. 6%Drink and Tobacco 2 1. 5%€ 265,000
0. 9%Financial services 1 0. 7%€-0. 0%Food 8 5. 9%€ 939,380 3. 4%ITS (ICT and Business Services
) 73 54.1%€ 16,192, 797 57.8%Metals and Engineering 28 20.7%€ 6, 033,163 21.5%Mining, Quarrying and Indigenous Services (Health and Education Services;
28,001, 699 The HPSU team works closely with the Investment Services Division of Enterprise Ireland to identify suitable third party funding for start-up companies.
Enterprise Ireland also funds the activities of the Halo Business Angel Network, administered through the four regional BICS.
outputs and activities involve the provision/facilitation of HPSU activities itemised in Table 2. 3. Enterprise Ireland offers a wide range of services to HPSUS eligible to be considered for supports
Financial and nonfinancial supports are provided to companies with a business strategy that encompasses all elements required for business success. FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS
& ENTREPRENEURSHIP 33 HPSUS are tracked through the ABSEI46 and the Annual Employment Survey that are published annually by Forfás.
Relevant metrics are supplied to the Enterprise Ireland Board each month (spinouts from research are captured also. Getting funded is a key milestone a start-up faces
and Enterprise Ireland plays an important role in helping companies to reach this goal. Once this has been achieved, HPSU
and the Enterprise Ireland overseas team works closely with companies to achieve another major milestone, getting to €1m in sales. 2. 8 Impacts & Outcomes Turnover Total turnover for all HPSU
EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 35 Table 2. 5: Total Turnover (2004 HPSUS)( 000's) 2004 2005 2006 2007 2008 2009 2010 2004-2010 Total Sales 2004 Arrivals 30,030 58,965
00's) FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 39 Chart 2. 9:
terms during the period of the recession than the comparator group (Enterprise Ireland firms started between 2000 and 2006 with 10 employees or over) 47.
-20 pulation 2000 s Enterprise returns (or trix by year 4 2005 101 04-2010) 006 HPSUS w 0-2006, a lar Ireland
of co ermined by it 0. 2010 Tota 14 17 7 38 wider Enterp ourse, HPSU ts Annual lrise s. The FORFÁS EVALUATION OF ENTERPRISE SUPPORTS
FOR START-UPS & ENTREPRENEURSHIP 43 Chart 2. 14: Survival Rates (HPSU V's Comparator Group, 2004-2006) Start-ups dating as far back as 2000 were selected as a more robust comparator group to reflect the fact that companies can be trading for some years before receiving HPSU supports.
Internationally Traded Services broadly categorised includes Internationally Traded Services and Software and Public Procurement; Manufacturing refers to all other sectors for the HPSU 2004-2006 cohort only. 50 Note that ages of individual companies were calculated in years on a deductive basis,
Surviva disposals also investment nefit Analys lement the a Us was also a 6 HPSU grou e51.
estimates of nvolved in a of costs and by inflating this is based as were calc f the two HP efit-to-Cost rence betwe d raw mater U group was to should norma or services co ere public
which ov f HPSU inves t Analysis (C from the 10 propriate ove rt. der economy rced service ormally categ t costs were g
cies, FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 45 HPSU, leading to a sharp decline in subsequent years,
with a knock-on effect on the benefit to the wider economy. Table 2. 12: Seven Year Benefit-to-Cost Ratios for 2005 and 2006 HPSUS Year of Entry to HPSU CBR 2005 2. 67 2006 3. 98 2. 10
and its approach also reflects international practice in innovation driven economies. The support is tailored to individual client needs
HPSU supports take the form of equity injection, normally on the basis of leveraging investment through matching private sector funding.
investment risk is pooled between multiple parties, mitigating or overcoming the often sub-optimal allocation of funding by capital markets to start-up firms of this type.
Synergies/Overlap The HPSU support is an holistic approach, drawing on appropriate Enterprise Ireland programmes to address client requirements.
but there is likely the potential to grow those numbers more, particularly in light of sustained investment by the State in innovation and the third level sector generally.
Enterprise Ireland has now set targets of 100 HPSUS per year and has been active in securing HPSUS from overseas,
Enterprise Ireland It is recognised that it will be important that any increase in numbers generated is not at the expense of quality of HPSU.
Scalability of companies in subsequent years will also be an important consideration in maximising the return on investment in HPSU clients.
The recommendation (ref 2. 6) set out in the Action Plan for Jobs requires that Enterprise Ireland to deliver 95 new HPSUS for 2012.
Enterprise Ireland is charged also with increasing the number of investments in Inward Entrepreneurial Start up Projects by 50 per cent. 54 The RD&I suite of programmes include a number of initiatives that focus on commercialisation of HEI research
The National Technology Transfer system, the Business Advocates Programme and the Patent Fund FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 47 3 CORD Programme (2005
to entrepreneurs on the Enterprise Platform Programme (EPP) Outputs Continued Participation on the Enterprise Platform Programme (EPP) Activities The CORD programme is grant-based only Outcomes
efficiency and effectiveness of the Enterprise Ireland CORD grant supports. 3. 2 Programme Background, Objectives & Target Population Launched in 2005,
the CORD Grant programme provided by Enterprise Ireland is a constituent part of the Enterprise Platform Programme (EPP),
a one year entrepreneurship training and start-up incubation programme run by the Institutes of Technology and funded by Department of education and Science.
Participants are eligible to apply to Enterprise Ireland for a salary grant of 50 per cent of their previous year's salary
while they are on the Enterprise Platform Programme. The broad objective of CORD is to discover
i e. a manufacturing or internationally traded services proposition with the potential to create a minimum of 10 jobs and €1 million in sales.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 49 3. 3 Programme Rationale EPP/CORD participants are a source of potential High Potential Start-ups to Enterprise Ireland,
which target high growth entrepreneurs first emanated from the then Department of Trade Enterprise and Employment's Strategy of 2003 to 2005.
and services that can add value in the domestic economy and have potential to export.
Towards Developing an Entrepreneurship Policy, 2007, recommends that an entrepreneurship policy and other policies dealing with entrepreneurship should focus on the entrepreneur
and not the firm in order to maximise the number of potential entrepreneurs in start-ups policies should focus particularly on innovative entrepreneurs
The CORD enterprise support has a particular focus on finding and assisting early stage high potential entrepreneurs with their business ideas.
Enterprise Ireland's Strategy 2008-2010 Transforming Irish Industry highlights the importance of developing the pipeline of new ideas, leaders and innovative products and services.
This strategy also emphasises the importance of supports such as CORD to encourage and produce entrepreneurs in all locations
Enterprise Ireland only funds the salary stipend of the entrepreneurs with A high Potential Start-up (HPSU) proposition, that have left employment (have been made redundant
and are participating full time on the Enterprise Platform Programme. 50 Between the COR approva Since its 2008,
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 51 Table 3. 1: Number of CORD Recipients, 2005-2010 2005 71 2006 88 2007 114 2008 108 2009 75 2010 71 3. 6 Outputs
so the only immediate output of CORD Grant is continued participation on the Enterprise Platform Programme. 3. 7 Impacts
92 20.6 A survey was undertaken on behalf of Enterprise Ireland, gauging the opinion of EPP participants in late 2009 (EPP is CORD's parent programme) across all years of the programme's existence.
A total of 94 participants responded to the Enterprise Ireland survey. Of these, 33 (35.1 per cent) indicated that they were a HPSU client.
and business plans that would not otherwise have been captured and fully exploited. In the case of the CORD, a high proportion of surveyed HPSU/CORD participants ascribe the CORD support as being instrumental in their becoming an Enterprise Ireland HPSU client. 12 16 6 02468 10 12
14 16 18 Yes No Don't Know FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 53 Efficiency Based on client surveys
35.1 per cent of CORD recipients that responded to an Enterprise Ireland survey in 2009 had become HPSUS.
This compared with a progression rate to HPSU of approximately 60 per cent on the Propel programme. 57 The level of per company CORD expenditure,
In part, this represents a more risk-averse approach by Enterprise Ireland by concentrating more on those companies with clearer HPSU potential.
During the process of this evaluation, full responsibility for the EPP was assigned to Enterprise Ireland.
In February 2012 Enterprise Ireland launched a new programme (New Frontiers Entrepreneurship Development Programme -which includes the replacement of Propel)
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 55 4. 1 Evaluation Aim The aim of the evaluation is to assess the appropriateness
efficiency and effectiveness of the Enterprise Ireland Enterprisestart 1 programme. 4. 2 Programme Background, Objectives & Target Population Introduced in January 2009,
and business advice to potential entrepreneurs to assist them in developing their business idea into a tangible business plan.
The programme is usually run 3 times a year, over 6 weekends (Friday evening and Saturday morning) by third party consultants, taking place either in Enterprise Ireland regional centres or nearby hotels.
for Enterprise Ireland it is to drive the number of HPSUS in the context of the increase in the Enterprise Ireland target from 80 to 100 per year;
and to ensure potential entrepreneurs are able to formulate a business plan and understand their value proposition.
in that any potential foregone time/expenditure by Enterprise Ireland on all or some of those ideas would have resulted in inefficiency and deadweight loss.
Added to this was Enterprise Ireland's revised strategy between 2008 and 2010, under which innovation-led regional
and delivering entrepreneurship from/in all regions. As a means of achieving these wider strategic objectives,
particularly at a regional level. 4. 5 Programme Rationale A range of market failure factors relating to entrepreneurship were highlighted in Section 1. These included information deficits
The Enterprisestart programme aims to increase awareness of and participation in Enterprise Ireland programmes in all regions, by making information and training more easily accessible.
The Enterprise Ireland regional offices are expected to hold two sessions each per year. 4. 6 Inputs Total costs for the programme for the two years 2009-2010 were €344,
Total Costs €185, 400 €159, 400 58 Towards Developing an Entrepreneurship Policy for Ireland, 2007 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 57 Direct
and not to investment in the entrepreneurs/companies themselves. Indirect cost estimates comprise of salaries only;
Salary costs include the provision of soft support services such as evaluating who is eligible for the project,
Average salary of all enterprise Ireland employees involved was calculated and then weighted depending on the estimated time spent delivering the support.
Enterprisestart Direct and Indirect Costs 2009 & 2010 4. 7 Outputs & Activities Eighteen events are held per year in Enterprise Ireland's regional offices.
The events are staged by Excel Partners, in conjunction with Enterprise Ireland. The programme executives pre-vet the participants for each session the aim is to restrict the number per session to 15.
1 participant transferred to the County Enterprise Boards (CEBS; and 14 are still in progress. In 2010, out of 241 participants;
16 are HPSUS/Pre HPSU clients of Enterprise-Ireland; 12 transferred to the CEBS; 140,000 114,000 45,500 45,500 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2009 2010 Estimated Indirect cost
106 are still developing their business plans; and 106 have decided not to pursue their business plan to date
but may do so in the future. So far in 2011, out of 156 participants: 25 are HPSUS/Pre HPSU clients of Enterprise-Ireland 4 transferred to the CEBS 55 are still developing their business plans 46 have decided not to pursue their business plan to date
but may do so in the future 26 have not yet been tracked. 4. 9 Findings & Conclusions Appropriateness It is clear that the function of the Enterprise START programme is aligned well with the prevailing policy objectives of stimulating regional entrepreneurship, in pursuit of future HPSU development and export performance.
Efficiency and Effectiveness Although the programme has been in existence for a short period its efficiency is already apparent,
as opposed to individual programmes FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 59 each focusing on different-but not necessarily highly differentiated-cohorts of entrepreneurs.
The Ideagen programme, operating in a similar space and geared towards development of HPSU ideas as its principal aim, also requires consideration in this context.
export intensive and innovation-led enterprises, from all regions through: Refining and integrating new business ideas into HPSU-worthy enterprises;
Enabling entrepreneurs to best judge the viability of their ideas; and To filter out non-HPSU worthy value propositions.
Inputs Financial commitment of €2m in annual funding from Enterprise Ireland to the Business Innovation Centres (BICS), Projects are referred to the BICS by Regional Development Executives and Development Advisers following
Outputs Modular-based programmes run by the four BICS, Participants'assessment of own value propositions and where appropriate, business plans.
Activities (Enterprise Ireland) Project referral, Ongoing Participant assessment with respect to HPSU. Outcomes & Impacts HPSU Transfer, CEB Transfer, Discontinuation of incomplete/non-HPSU ideas.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 61 5. 1 Evaluation Aim The aim of the evaluation is to assess the appropriateness
efficiency and effectiveness of the Enterprise Ireland Enterprisestart 2 programme. 5. 2 Programme Background, Objectives & Target Population Commencing in December 2008,
or one-to-one basis. The programme covers specific idea/opportunity evaluation and encourages participants to assess their idea in terms of value proposition,
in that any potential foregone time/expenditure by Enterprise Ireland on all or some of those ideas would have resulted in inefficiency and deadweight loss.
The withdrawal of entrepreneurs on such a basis is in fact an indirect objective of the programme itself. 62 5. 4 Programme Rationale A range of market failure factors relating to entrepreneurship were highlighted in Section 1. These included information deficits
The Enterprisestart programme aims to increase awareness of and participation in Enterprise Ireland programmes in all regions, by making information and training more easily accessible.
Addressing market failure to support the establishment of start-ups with potential for growth based on a sustainable and viable business model is a key policy.
or (b) projects that realise through structured consideration of the idea that the venture is not viable.
By learning this early on, it saves both the promoter and Enterprise Ireland time and money,
developing a sustainable enterprise base59. Added to this was Enterprise Ireland's revised strategy between 2008 and 2010, under
which innovation-led regional and rural based start-ups would be supported through encouraging and delivering entrepreneurship from/in all regions.
By delivering targeted training modules in fixed locations, the programme facilitated a filtering of potential entrepreneurs
and not investment in the entrepreneurs/companies themselves. Apportioned costs to Enterprisestart 2 are €180, 000 annually.
These salary costs allow for soft support services such as answering queries, organisation of resources for the programme and advice on business issues.
this figure was adjusted then by the estimated amount of time the 59 Towards Developing an Entrepreneurship Policy for Ireland,
2007 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 63 team spent conducting the support.
Efficiency and Effectiveness The potential strength of the feeder programmes to the HPSU supports is the availability of a source Of high Potential ideas and business plans at relatively low cost
South East BIC Percentage FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 65 contribution of Enterprisestart2 to the HPSU cohort,
such as in Enterprise Ireland resources which, in the absence of the programme, would have been devoted to companies with incomplete
Enterprise Ireland had made clear the advantage of delivering ES2 through three other BICS is that it would relieve the Dublin BIC of a bottleneck of participants;
it is however something that merits further monitoring as the programmes continues. 66 6 Enterprise Ireland Propel Programme Programme Logic Model Objectives The strategic objective of the Enterprise Ireland Propel programme is to improve the overall economy of Ireland by:
Inputs Enterprise Ireland contribution: Organisation and hosting costs; Promotional activities; and Consultant fees (PA. Outputs Number of participants, Number of investor ready business plans,(Phase II as proxy) Number of HPSUS.
Activities The specific elements of the Propel Programme are: Workshops including residential; One to One Mentoring;
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 67 6. 1 Evaluation Aim The aim of the evaluation is to assess the appropriateness,
efficiency and effectiveness of the Enterprise Ireland Propel programme. This is an interim evaluation, focusing on Propel One
the programme providers and stakeholders to assess their views on the programme and its impacts.
They also reviewed the programme vis-à-vis international benchmarks and other enterprise supports such as the Enterprise Platform Programme (EPP) run by the Institutes of Technology.
The Grant evaluation focused on the progression of participants to develop business plans and/or become High Potential Start-ups
which are the key success metrics for the programme in the short term. They also provided an overview of the costs of the programme
and provides detail on the national enterprise policy context. It also considers Propel in terms of complementarity and/or overlap with other enterprise interventions.
The Propel programme runs until the end of 2011. Enterprise Ireland is launching a new programme in 2012
which combines the Enterprise Platform and CORD Programmes. This programme will also address the objectives of the Propel programme. 6. 2 Background,
Objectives and Target Beneficiaries Propel provides training and business development supports to start ups and entrepreneurs with ideas for export based businesses
which have the potential to become Enterprise Ireland High Potential Start up clients. The strategic objective of Propel is to improve the overall economy of Ireland by:
Increasing the number and accelerating the development of technology led start-up companies with scaling potential;
a cross border collaborative programme run by Enterprise Ireland and Invest Northern ireland in 2007 and 2008.
and the recommendations provided by Grant Communications 68 6. 3 Programme Rationale Over the past fifteen years there has been significant investment in increasing the levels and intensity of research,
development and innovation activities in Ireland and in developing the business environment to support the emergence
These investments have enhanced greatly the capacity of, entrepreneurs and businesses to engage in the development and commercialisation of innovative products, technologies and services.
However, in many instances, early stage businesses and entrepreneurs do not have the resources and/or expertise to translate these initial ideas phases into investor ready business plans and from there to full scale development and commercialisation.
The specific aim of Propel is to work with these companies and entrepreneurs so that they can develop their business plans such that they can attract investment,
develop their product/service for the export market and demonstrate their capacity as high potential start ups.
A particular benefit of the programme is that participants have the opportunity to network and share ideas and issues with the other early stage entrepreneurs on the programme. 6. 4 Alignment with National Policy This evaluation focuses on impact achieved over the 2009-2010,
and it is important to take note of how the policy environment evolved during this time.
This programme is in line with national enterprise policy61 as it has evolved over the past decade.
as Ireland faces very challenging economic conditions, the Government's Building the Smart Economy, 2008 discusses the importance of providing strong supports for startup companies
Building on the Smart Economy strategy, the Report of the Innovation Taskforce, 2010 states that policy and investment decisions must be centred on supporting
and encouraging the entrepreneur and innovative enterprises, the Propel programme is directly relevant in this regard.
Enterprise Ireland's corporate strategy62 states that the development of innovative products and services by start-up companies with a high potential to grow,
underpinned by the effective and imaginative use of technology, will be the lifeblood of The irish economy
and that supporting these companies is a key objective. This fits with the core objective of Propel
and accelerating the development of technology led start-up companies with scaling potential. 61 Key enterprise related policy documents over this time include the Enterprise Strategy Group Report,
Ahead of the Curve, 2004, Building Ireland's Knowledge Economy The irish Action Plan for Promoting Investment in R&d to 2010, Forfás, 2004, the National Development Plans, 1999 and 2006,
and the Strategy for Science, Technology and Innovation 2006-2013,2006 62 Enterprise Ireland, 2007, Transforming Irish Industry,
Enterprise Ireland Strategy 2008-1010 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 69 Making it Happen Growing Enterprise for Ireland, Forfás,
and start-ups are significant drivers of economic growth and that supporting entrepreneurs and start-ups has a key role to play in Ireland's return to sustainable growth and job creation.
The figure for indirect costs includes support services such as mentoring, answering queries and offering advice on clients business.
The selection process is done jointly by PA Consulting (the contracted providers) and Enterprise Ireland. Propel Recruitment and Selection Criteria Senior manager with 5 years plus experience
&/or graduate Participant proposals should have a significant market opportunity, particularly in international markets Knowledge base business with some potential for intellectual property ownership (even if this ownership is not yet formalised) A realistic potential for substantial growth to a minimum turnover of €1 million within 3 years
The selection panel is made up of strategic business development experts from Enterprise Ireland and PA Consulting.
and this is demonstrated to some extent by the high proportion of participants that access these supports (Chart 6. 1). The programme is managed by a team of people from Enterprise Ireland and PA Consulting,
The same supports were offered with some additional services available such as one to one meetings with sector experts.
For Propel Two it was decided to focus on the Lifesciences and the ICT sector, based on the existing enterprise base, the profile of programme candidates and the experiences from the pilot programme.
84%11 110%Total Participants 45 25 Number of investor ready business plans The Grant Connections review did not specifically assess the numbers of participants that went on to develop investor ready business plans.
However, developing a business plan is a central activity of Phase II and the numbers of participants that complete this phase can be taken as a proxy for the development of an investor ready business plan.
As such 14 participants from Propel One and 11 participants from Propel Two developed investor ready business plans exceeding the operational target by 40 per cent and 10 per cent respectively.
Furthermore, of the ten Phase I participants surveyed by Grant Connections, nine went on to develop their business plans.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 73 Chart 6. 2: Extent to which Propel benefitted the development of your business-Survey Respondents Propel One & Two:
Phase II Source: Grant Connections, Evaluation of the Propel Programme, February 201165 Participant progression to become High Potential Start ups The first cohort of participants from Propel One Phase II finished in June 2010 with 7 of the 14 (50 per cent
Increase As with program services product Any proj New pro develop develop. 5: Projecte mme Surve Grant Conne ed numbers impacts on e mme in terms.
a start-up enterprise could move from the thematic area of start-up to business development after a number of years
Overlap/Duplication There is some overlap between Propel and other enterprise support programmes. In particular, Enterprise Start 2 and the EPP in terms of aspects of the training delivered
and access to supports such as incubation space. However, the Propel programme is more intensive than Enterprise Start
and involves significantly more one to one and tailored training specifically to high technology start up needs.
Enterprise Ireland is launching a new programme in 2012 which combines the EPP and CORD and
Evaluation of the Propel Programme, February 2011 direct costs only FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 79 Table 6. 2:
Enterprise Ireland data and Forfás analysis Effectiveness Effectiveness covers the extent to which the outputs have led to the desired outcomes.
Propel is relatively new and the full impacts in terms of the development of commercially successful products or services,
and a number of other enterprise development supports and it is likely that there is some substitution effect across these programmes.
and does not support me too businesses or services. Propel has clear criteria in place to ensure participants are appropriate to deliver on these aims.
there is likely to be associated some deadweight with Propel as companies/entrepreneurs can develop business plans without participation on the programme.
As a result, Propel reduces the time taken to develop the business plan in the first instance
In addition, they gain a greater knowledge and understanding of supports for enterprise development and commercialisation of research.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 81 7 Enterprise Ireland Ideagen Programme Programme Logic Model Objectives Bring entrepreneurs,
and Provide information to entrepreneurs and academics on sectoral trends, research activities, enterprise and research supports, commercialisation strategies and market developments.
and services based on research outputs and market led business innovations. Inputs Enterprise Ireland contribution: Organisation and hosting costs;
Promotional activities; Consultant fees. Partner HEI contribution. Outputs Number of participants industry and academic, Sectors and technology areas covered aligned to enterprise and research base,
Number of events held in different regional locations. Activities Sectorally based networking events, Presentations by industry experts on commercialisation strategies,
growth opportunities etc, Structured networking, Brainstorming sessions, Information sessions enterprise and research supports etc. Outcomes & Impacts Increased awareness among participants of:
Potential businesses and researchers to collaborate with; Market opportunities; and Available supports. Increased numbers of innovative collaborations between companies, entrepreneurs and academics.
Increased numbers of business/technology ideas successfully developed and commercialised based on the Ideagen events ultimately leading to increased employment and exports.
Increased take-up of supports to promote enterprise development. 82 7. 1 Evaluation Aim The aim of the evaluation is to assess the appropriateness, efficiency and effectiveness of the Enterprise Ireland Ideagen Programme.
and Provide information to entrepreneurs and academics on sectoral trends, research activities, enterprise and research supports, commercialisation strategies and market developments.
services or technologies and who would benefit from collaboration with other local businesses and higher education institutes (on a regional scale)
in order to develop innovative products and services. The pilot for Ideagen was launched in the South East region in 2009
and Enterprise Ireland worked with a number of stakeholders and partners in delivering this programme including the South East Business Innovation Centre,
local Chambers of Commerce, the City and County Enterprise Boards in the region, South East Spirit of Enterprise, Waterford IT, Carlow IT and Tipperary IT.
and enterprise base in the region as well as emerging business opportunity areas, such as converging technologies and consumer foods.
As a result, significant numbers of people were engaging with Enterprise Ireland and other enterprise development bodies to seek support and guidance on developing their business propositions.
In a number of cases, the business propositions being put forward by entrepreneurs were not sufficiently innovative to meet the qualifying criteria for High Potential Start up supports.
At the FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 83 same time significant investments were being made to commercialise research outputs from the higher education sector
and there was an increasing amount of research being generated that had commercial potential. However, the researchers involved did not always have the business acumen and/or desire to commercialise these outputs.
This is supported by research literature on entrepreneurship, idea generation, and successful commercialisation of innovations which highlights the importance of:
and combine this knowledge to develop products or services that service a customer need68. In many instances, this knowledge and expertise does not sit with any one individual or cohort.
As such collaboration with academic and/or enterprise partners is often essential to realise the full potential of innovative business ideas in terms of economic growth and job creation.
and it is important to take note of how the policy environment evolved during this time.
In December 2008, the Government published Building Ireland's Smart Economy A Framework for Sustainable Economic Renewal in response to the economic challenges facing Ireland.
It emphasised the importance of building the innovations or‘ideas'component of the economy through the utilisation of human capital-the knowledge,
skills and creativity of people-and its ability and effectiveness in translating ideas into valuable processes, products and services.
Building on the Smart Economy strategy, the Report of the Innovation Taskforce (2010) places innovation and entrepreneurship at the heart of driving increased productivity and economic growth.
A model of the entrepreneurial opportunity recognition process. Journal of Enterprising Culture, 8, 103-119.84 The programme fits with Enterprise Ireland's stated corporate strategy that the development of innovative products
and services by start-up companies with a high potential to grow, underpinned by the effective and imaginative use of technology,
will be the lifeblood of The irish economy. Supporting these companies is a key objective for Enterprise Ireland.
Making it Happen Growing Enterprise for Ireland, Forfás, 2010 sets outs four interlinked and complementary critical success factors to ensure a sustainable and competitive enterprise base in Ireland.
These success factors are Productivity Innovation, Cost Competiveness, and a Strong Enterprise Mix. Innovation is viewed as an essential element for driving economic growth and the report emphasises the strong role of entrepreneurship and the commercialisation of academic R&d in increasing innovation.
More recently, the National Recovery Plan, 2011-2014, which was developed in the context of Ireland's challenging economic environment the plan emphasised the absolute need to support economic growth and stresses the importance of protecting investment in supports for enterprise and innovation for the development of the smart economy and on the key
role of growing high potential indigenous enterprises to support economic recovery. The Programme for Government similarly stresses the importance of supporting the commercialisation of research
and innovations from the higher education sector to promote economic growth, it states that we will promote
and support investment in technology research, development and commercialisation. 7. 5 Inputs The average cost per Ideagen event was €8, 000 in 2009 and 2010.
This has been reduced to €5, 000 per event in 2011 reflecting changing market conditions and greater efficiencies achieved in running the programme;
for instance utilising space in the HEIS to host the events. These figures cover all direct input costs such as advertising, venue hire, catering,
and facilitation fees. Four Ideagen events were held in 2009 with a total cost of €32, 000,
Six events were held in 2010 with a total input cost of €48, 000, Four events were held in the first half of 2011 with a total cost of €20, 000.
which is weighted then by the amount of time the project leader estimates was spent administering soft support services such as organisation of events,
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 85 Chart 7. 1: Direct and Indirect Costs 7. 6 Activities & Outputs Enterprise Ireland arranges
and promotes a series of sectoral based networking events that involve: Presentations by industry experts on commercialisation strategies, growth opportunities etc;
Structured networking; Brainstorming sessions; and Information sessions enterprise and research supports etc. Each Ideagen event is a three hour session focusing on a specific sector
and is facilitated by an external innovation expert. Each event begins with a presentation from the industry expert from Enterprise Ireland who highlights the trends
and high-growth opportunities within the sector and gives detail of relevant research and enterprise supports.
Next, the structured brainstorming session called‘Brain Frame'allows participants to generate entrepreneurial ideas and also network within the larger group situation.
Enterprise Ireland designs the format and content for each of the Ideagen events. They arrange the speakers and facilitators for each of the events and work with the Higher education Institutes
business organisations and enterprise support agencies in the regions to develop and promote the specific events.
In this context, Enterprise Ireland manages a Linkedin and Facebook page for Ideagen to facilitate ongoing networking
and to promote the initiative to all stakeholders. The Pilot phase was attended by 144 individuals.
fourt st three qua variation acro of the back academia and ps such as ch gen Particip egional Cove ld during the, Enterprise the events a sses with int ial;
and network and enterprise d d networking most about de: ed all three of hirteen researse SUPPORT hich allowed standing of h t this worke n particular trepreneurs.
However, Enterprise Ireland actively tracks the progress of the participants on the programme particularly in terms of business plan development
and progression to become HPSU/Pre HPSU clients of Enterprise Ireland as a result of Ideagen. Data on the progression of participants from the pilot phase to become HPSU/Pre-HPSU is not available.
7 are HPSU/Pre HPSU clients of Enterprise Ireland; and A high proportion of other attendees are in the process of developing business plans
and are still in contact with their Regional Executives in Enterprise Ireland. 7. 8 Findings
& Conclusions Appropriateness Ideagen is appropriate in meeting its objectives. It was developed in response to a specific identified need that became apparent over 2008.
and looking to secure support and advice from the enterprise agencies. Although the economic circumstances were
and a number of Irish entrepreneurs are looking for next generation business opportunities. In many instances
generate ideas and identify opportunities for collaboration informed by opportunities and trends in the particular sector.
and its objectives do align with national enterprise policy and there remains an ongoing rationale for the Ideagen programme.
and it can act as a feeder for programmes and supports such as Enterprise Start or the HPSU supports.
A key element of Ideagen is the provision of information on relevant enterprise and research supports such as Propel
This increases the likelihood that the business idea is successful and ultimately leads to increased economic growth in terms of jobs and exports.
For example, a start-up enterprise could FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 89 move from the thematic area of start-up to business development after a number of years and avail of supports such as
Business Accelerator or Going Global. Duplication There is limited duplication between Ideagen and other programmes. The City & County Enterprise Boards run periodic Idea Generation sessions;
but these sessions target a more general audience than Ideagen and typically address more general business start up issues.
However, they do cover issues such as intellectual property management and business plan development which may be of benefit to the Ideagen target audience as well.
The breakdown of participants is circa 50 per cent industry, 40 researchers with the remaining 10 per cent from the public sector or enterprise development groups.
and the full impacts in terms of leading to the development of commercially successful products or services are difficult to measure at this point.
However, there is evidence that a number of participants on the programme have gone on to fully develop their business plans
and avail of enterprise and/or research supports to develop their business idea. Though these are in the early stages of development they are an indication that the Ideagen programme is delivering on its objectives.
and regions and to provide advice on available enterprise supports. The premise of the programme is that it leads to the development of new and not me too businesses and services.
It is interested open to all businesses researchers and entrepreneurs and involves a limited resource commitment by participants;
In addition, participants gain a greater knowledge and understanding of available supports for enterprise development and commercialisation of research.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 91 8 Enterprise Ireland Seed & Venture capital Fund Programme Programme Logic Model Objectives Further develop The irish seed
and venture capital sector by: Increasing the availability of risk capital to high tech/knowledge intensive SMES in the seed,
start-up and development stages Leveraging private sector investment Developing commercially viable funds that can meet the capital requirements of high technology start-ups
and scaling companies Inputs Enterprise Ireland contribution as limited partners Private sector funds Outputs Commercially viable partner funds based on Enterprise Ireland contribution leveraging
and VC funding Availability of management expertise/advice through the Enterprise Ireland partner funds Activities Coordination
and Governance Enterprise Ireland invites and assesses proposals from potential funds to operate under this Scheme Enterprise Ireland coordinates the drawdown of funding by the partner funds As a limited partner in the partner funds Enterprise Ireland is represented on the Advisory boards of each of the funds Outcomes
& Impacts Companies and entrepreneurs benefit from an expanded pool of funds available for export oriented high technology start-ups
and investment and aligned to the needs of the enterprise base Increased number of early stage
efficiency and effectiveness of the Enterprise Ireland Seed & Venture capital Programme. This is an interim evaluation,
as a result of receiving venture capital (VC) funding nor is it an analysis of the merits of VC financing versus other forms of finance.
which the Enterprise Ireland Seed & Venture capital Programme is delivering on its stated objective which is to further develop The irish VC sector
This approach has been supplemented by primary research involving consultations with representatives of the VC sector, of Enterprise Ireland as the programme provider and other relevant individuals in the area of enterprise development.
The data on the Enterprise Ireland partner funds is provided in terms of the two separate Schemes as it is not generally possible
Venture capital Venture capital refers to equity investments made by professional investors. VC companies seek to generate high levels of returns by investing in early stage
Venture capital Funds VC Funds are established generally for a ten year term. Investors in the funds commit to provide their capital as requested by the VC fund manager for investment during that period.
The fund invests in new opportunities during its first five years the investment period and,
if required, makes follow-on investments during the later years of the fund's 10-year term.
The development of a venture-backed company has three basic financing stages: Seed capital is provided to research,
assess and develop an initial concept (Pre/High Potential Start-ups). ) Start-up financing is provided for product development
and initial marketing (High Potential Start-ups) Expansion financing is provided for the growth and expansion of a company that is breaking even
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 93 The primary objective of a VC Fund is to make attractive capital profits for its investors by divesting its holding in investee companies after they have developed from being early stage companies into successful
According to the US National Venture capital Association for every 100 business plans that come to a VC firm for funding,
The Enterprise Ireland Seed & Venture capital Programme started in 1994 and there have been three Schemes to date;
This programme of activity was put in place to develop the enterprise environment as part of broader efforts that included, for example,
the Seed Capital and Business Expansion Schemes (recently replaced by the Employment Investment Incentive scheme) and R&d tax credits as well as direct firm level interventions-aimed at supporting the emergence and development of high potential companies.
The overall aim of the Seed and Venture capital Programme is to: Further develop The irish VC sector
Leveraging private sector investment; and by Developing commercially viable funds that can meet the capital requirements of high technology start-ups and scaling companies.
which are too small to raise capital in the public markets. As such, their financing needs tend to fall outside the scope of financing through retail banks
Under this programme of activity Enterprise Ireland partners with private sector seed & VC funds.
and who take investment decisions on a fully commercial basis. This model whereby the State does not have an operational role in running the funds and making 73 National Venture capital Association, 2011,
NVCA Yearbook 94 investment decisions is reflective of international experience and best practise74. The State invests on a pari passu basis
whereby the State shares equally in any risk and returns associated with investments. The current Scheme, 2007-2012, places a strong emphasis on stimulating
and supporting the development of the seed capital market in light of the particular difficulties early stage entrepreneurs are experiencing in raising capital due to the national and global financial downturn.
EU level data shows that seed capital funds typically experience greater challenges than VC funds in raising private capital
and as such tend to require greater state intervention75. Though it is not an explicit target of this programme of activity many of the companies that avail of VC
and seed funding in Ireland are companies that emerge to commercialise outputs of state investment in R&d e g.
Approximately 75 per cent of Irish university spin outs go on to raise venture capital and 66 per cent of the SMES collaborating within the Science Foundation Ireland Funded Centres for Science,
While most enterprises are not venture-backed, venture capital has a particularly important role to play in high-growth/high-risk enterprises.
Innovative firms, particularly in high technology sectors, find it difficult to raise more traditional forms of finance (e g. bank debt.
The empirical evidence77 shows that venture-backed start-ups redefine the US economy through direct and spillover effects.
According to the 2011 Venture Impact study, produced by IHS Global Insight, originally venture-backed companies accounted for 11.9 million jobs
R. J.,2003, Engineering a Venture capital Market: Lessons from the American Experience, Stanford Law Review, 55 (4) 75 Pricewaterhousecoopers, 2006, Final Report:
Enterprise Ireland Seed and Venture capital Funds Programme 76 Irish Venture capital Association, National Venture capital Association, British Venture capital Association cited in IVCA Report to Government, July
United nations FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 95 The Enterprise Ireland Seed & Venture capital Programme was conceived initially in the mid 1990s with a view to developing a viable and sustainable VC market in Ireland
State intervention was provided on the basis that the private sector on its own would not provide equity capital for high risk/high growth companies,
and the State could address this market failure by committing capital to VC funds, thereby encouraging the private sector to participate in sharing the risk80.
the VC market in Ireland was still relatively young and underdeveloped vis-à-vis international benchmarks
who tend to look to the local market for evidence of support for venture capital. This was given particularly relevant the need to attract private limited partners to invest in Irish venture funds;
a key requirement for developing a sustainable VC market over the long term. Some of the other key findings of the review were:
The evidence available on the outlook for new, early stage, high growth companies suggested that there would continue to be a demand for VC investment from these enterprises at a rate similar or greater than that experienced over the preceding five years;
The study recommended that Enterprise Ireland should consider introducing a minimum size as an eligibility requirement for its support in the next Scheme of funds to assist the funds in achieving scale,
in being able to follow their investments and in becoming more commercially viable and attractive to investors.
The PWC study preceded the global financial crisis and the downturn in the national economy. In assessing the impacts of the Enterprise Ireland Seed
& Venture capital Programme it is essential that the national and international economic environment is considered. Changed Economic Context The global financial crisis in particular continues to have ramifications across the private equity market internationally.
VC firms are experiencing greater difficulty in raising new funds as investors have become more risk-averse post the global financial crisis.
The international environment for the industry remained challenging in 2010 with opportunities for company exits through trade sales
patents, and VC investment, has experienced major 80 The same rationale was set out for Finland's involvement in VC funds:
Venture capital Association, 2011, Venture capital Industry Raises $2. 7 Billion in Q2 2011, Press release 96 challenges in raising VC in recent years.
In 2010, no capital was raised and in 2009, only $234 million was raised by Israeli VC funds82.
The irish VC industry currently has funds available for investment at a time when lower valuations are presenting attractive investment opportunities.
However, these funds will be committed fully by 2012 and Irish VC firms will need then to raise fresh capital
if they are to continue investing in Irish SMES83. The National Competitiveness Council also maintains that continued Government support through the BES
and further funding for Enterprise Ireland to continue to act as a catalyst for the establishment of new funds
and attract venture capital and private equity investment from abroad is vital to ensure competitive and diverse venture capital funding is available to support new businesses84. 8. 4 Alignment with National Policy This evaluation focuses on the period 2000-2010,
and it is important to take note of how the policy environment evolved during this time.
In particular, the National Development Plan, 1999 stated that a dynamic VC industry is a key element in business development
and build on the success achieved over the (1994-99 programme) by continuing to provide support through the seed and venture funds mechanism.
the Government launched the Enterprise Strategy Group Report, Ahead of the Curve. This report called for the adoption of a new enterprise strategy which would position Ireland to retain the competitive advantage it had achieved in an increasingly competitive global market.
Despite the advances made in developing a VC market in Ireland, the report identified continued market failures in the provision of risk capital to start-ups and stated that there was a continued need for some state intervention.
In parallel to this enterprise strategy report, Building Ireland's Knowledge Economy The irish Action Plan for Promoting Investment in R&d to 2010 was launched in July 2004.
This report stated that there is a clear role for the State in funding ventures at the seed stage.
or very early stage investments. The report recommended that the focus of State intervention should be to support funding mechanisms and initiatives at the seed stage,
and to forge new partnerships between these institutions and enterprise. The existence of a vibrant,
and more importantly, sustainable VC industry in Ireland 82 Ibid. 83 Irish Venture capital Association, 2010, The Economic Impact of Venture capital in Ireland-2009 84 National Competitiveness Council, 2010
Ireland's Competitiveness Challenge FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 97 into the future is vital for the commercialisation of the research investments and commitments into tradable products and services or intellectual property.
as Ireland faces very challenging economic conditions, the Government's Building the Smart Economy, 2008 aspires to make Ireland an innovation
Building on the Smart Economy strategy the Report of the Innovation Taskforce, 2010 states that venture capital has a particularly important role to play in high-growth enterprises.
It refers to the role of Enterprise Ireland and the Enterprise Ireland Seed & Venture capital Scheme in developing the domestic Irish VC industry
and states that one critical challenge facing Ireland is to continue to support the development of The irish VC industry,
which will remain an important part of the overall VC ecosystem, particularly in the current economic environment,
as VCS commence a new fundraising cycle in the coming years The Taskforce therefore supports continued investment to sustain
and build further the domestic VC sector. However the report is clear that this is in tandem to developing a broader and sustainable VC sector in Ireland stating that a key goal must be a transformation in the scale
and nature of The irish Venture capital environment by attracting top tier venture financing to Ireland so as to successfully scale innovative companies.
The programme fits with Enterprise Ireland's stated corporate strategy85 that it will support the development of seed
and venture capital funding in Ireland and that it will engage with investors (financial institutions, private investors,
Making it Happen Growing Enterprise for Ireland Forfás, 2010 also considers that the continuing efforts of the State in the area of Seed
and Venture funds are especially important in ensuring a flow of venture equity into companies.
The challenge is to build a sustainable VC industry in Ireland despite the current economic environment.
which was developed in the context of Ireland's challenging economic environment and the absolute need to support economic growth committed to introducing the Innovation Fund Ireland86 to attract international venture capital fund managers to Ireland,
making their expertise, experience and network available to enterprises and supporting the development of the national VC sector.
The Programme for Government similarly stresses the importance of a sustainable and viable VC sector as a key element of supporting economic development
and the emergence of high potential technology and knowledge based companies to support enterprise development stating we will support the development of a more dynamic,
venture capital industry in Ireland by seeking to attract top tier venture financing and investment companies to Ireland.
Although a very valuable instrument for supporting innovation, state support for VC is only one part of a much wider support system for innovation and enterprise development.
The role of the state 85 Enterprise Ireland, Transforming Irish Industry, Enterprise Ireland Strategy 2008-1010 86 Innovation Fund Ireland was launched in September 2010
and is a component of the National Recovery Plan 2011-2014. Through this initiative the Government made available €125 million for Enterprise Ireland to invest in international venture capital funds that establish a presence in Ireland
and that invest, at a minimum, an equivalent amount in Irish companies or companies with a significant presence in Ireland.
The National Pension Reserve fund has announced already two investments which they have made. In addition in cooperation with Enterprise Ireland, a number of commitments have been made that are due to be announced in the near term. 98 involves using different instruments to ensure that the business environment is conducive to the emergence
and development of high potential start up companies including: Ensuring the availability of seed funding options for high potential start-ups (e g. seed capital scheme;
the development of robust business plans. 8. 5 Inputs & Implementation €250 million has been committed by Enterprise Ireland to date across the two Schemes as follows. 2007 2012:
000 per annum related to the cost of providing soft support services to clients through activities such as answering queries and evaluating seed & venture capital opportunities.
Implementation of the Seed & Venture capital Scheme Enterprise Ireland's Role Enterprise Ireland's primary role in relation to the Seed & Venture capital Programme relates to coordination and governance of the programme.
Enterprise Ireland invites and assesses proposals from potential funds to operate under this Scheme on an open and competitive basis. The proposals are assessed against a range of criteria including:
The availability of management expertise to enable hands-on input into investee businesses; The likely impact of fund investment on SME access to the capital market;
Potential for growing and developing business operations in terms of added value/turnover and sustainable job creation; Capacity to use funds for additional investment;
The level of administrative expenses relative to the level of total investment. 87 A number of the funds established under the Seed
and Venture capital Scheme 2000-2006 are still open for making investments FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS
& ENTREPRENEURSHIP 99 These assessments are made by the Board of Enterprise Ireland with the assistance of a Seed and Venture capital Approvals Committee,
which includes both Enterprise Ireland members and other external public and private sector members. Enterprise Ireland manages the drawdown of its commitments by the partner funds.
Enterprise Ireland's funding support is provided up to a maximum of 50 per cent of total fund size
which is the maximum amount of funding allowable under the EU approval for the scheme.
As a limited partner in the partner funds Enterprise Ireland is represented on the Advisory boards of each of the funds.
Enterprise Ireland also produces annual reports on the Seed & Venture capital Scheme providing detailed updates of the three VC initiatives undertaken in partnership with the private sector.
They provide data on the partner funds themselves and on the investments they make in terms of the size of individual investments in companies, the company's stage of development and
what sectors they operate in. The Partner Funds The partner funds are staffed by professional seed
& VC fund managers and sectoral experts who are responsible for raising financing from the private sector, making all investment decisions (based on eligibility criteria) and the ongoing management of investments.
The partner funds have committed a amount of capital in the fund for a period of ten years
which allows for initial investments and follow on capital to support company needs and realise the potential for growth.
The fund managers also provide key strategic and development advice to companies particularly in the early stages and for companies considering initial moves to the international marketplace.
Enterprise Ireland engages with the fund managers on an ongoing basis as part of its coordination and governance functions.
Investment Model The irish Seed and Venture capital Scheme is run on a pari passu basis whereby the Government is a direct investor in the funds
and the investment is made on the same grounds as all other private sector investors. The State shares equally in any risk
and returns associated with investments. The advantage of pari passu is that it is driven commercially and therefore encourages market discipline,
which avoids the type of market distortions that other forms of State intervention might involve
and sharing risk. 8. 6 Outputs The primary outputs of the Seed & Venture capital Scheme are:
Establishment of partner funds 24 funds have been established under Scheme 2 and 3 as set out in Table 7. 1. These funds successfully leveraged sufficient private sector investments based on the Enterprise Ireland contribution,
As of the end of 2010: 100 The fifteen funds established under Scheme 2 had made a total of 691 investments with a combined value of €345 million.
The nine funds established under Scheme 3 had made a total of 114 investments with a combined value of €80 million.
Enterprise Ireland Partner Funds established under the Seed & Venture capital Schemes 2 & 3 Scheme 2, 2000 200688 Size Scheme 3, 2007 2012 Size Total
AIB Equity Fund 2002*€0m AIB Seed Capital Fund €53m Atlantic Bridge Limited Partnership**€98. 5m Atlantic Bridge II €75m
BOI Kernel Capital Partners Private Equity Fund I €27. 3m BOI Kernel Capital Partners Private Equity Fund II €51m BOI Venture capital
Sectors Equity Fund 2010 €17m Enterprise Equity Investment Fund Ltd. €15m Delta Equity Fund III €105m Enterprise Equity Seed Capital
Investment Fund €7m Fountain Healthcare Partners Fund I €73m European Bioscience Fund I €12 7m Seroba
Kernel Lifesciences Fund II €75m Guinness Ireland Ulster Bank Equity Fund Limited Partnership €19m Ulster Bank Diageo Venture Fund €75m
Hotorigin Fund I*€2. 1m EVP Early Stage Technology Fund €10m ICC Regional Venture capital Fund*€7. 6m Seroba Bioventures €20m 88
*Closed for new and follow on investment**c. €67. 5m of the Atlantic Bridge Venture Fund relates to the Seed
& Venture capital Scheme 2007-2012***Trinity Venture Fund 2 converted to TVC Holdings plc. in July 2007 FO Trinity V 4th Leve Seed
ORFÁS EVAL Venture Fund el Ventures U nd nds ents made to r of Compan he end of 201 ise Ireland p erstate the e o
Scheme Enterprise Ir LUATION OF II***€ niversity €€ 2010 € ies securing 10, investme artner funds extent of inv. ed & VC fund proximately herwise,
The resou they are initi ment of fund tments made r cent of all rough invest f Investment d
& Venture C SE SUPPORT Funding en made in 1 d under Sche hrough the p er they make that initial ke in a comp urces to mak ially investin s
being com e through Sc investments tments acco ts Per year a Capital Progts FOR STA 86 separate
me 2 and 3. artner funds e their initia investment f pany will be ke follow-on ng in the very mercially via cheme 2 have s
and 45 of th ounting 65 pe and Cumula gramme 2010rt-UPS & E €550 €80 (companies t Taken in iso s to support t al investment for follow-on
investments y early stage able and sust e been follo he investmen er cent of all tive to Dece 0 Report ENTREPRENE 0. 6m €1 14.5%)€4 through the olation,
this the develop t in a compa n financing a ubsequent fu s in portfolio es of a comp tainable. ow through nts made thr l investment ember 2010eurship 101,023. 7 425
Scheme Enterprise Ir ility of Mana seed funds h alise the opti nced investo for compani eneurship an A's 2011 pub well as provi ies in the fo
blication Th iding the ess llowing area team format of realistic b echnology d e companies of internatio onitoring of p f Investment d & Venture C
tion and deve but challeng evelopment s for interna nal investors performancets Per year a Capital Prog ice orting the co vestments.
Venture Capit th, have add objectives; h experience th; rger VC syndi eation of shative to Dece 0 Report succeed com and seed fun es.
with a hat Irish vestee hnologies FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 103 8. 7 Outcomes & Impacts There are a number of outcomes from the Enterprise Ireland Seed and Venture capital Programme some
of which are linked more directly to the Enterprise Ireland Seed and Venture capital Programme and others result from a range of factors relating to the overall business environment.
A note of caution relates to the challenges faced in providing comprehensive and comparative data for seed and VC funding.
This arises because of the inconsistencies in definitions as to what constitutes VC funding versus seed funding
The analysis below is based on data from the Enterprise Ireland Seed & Venture capital Programme Annual Reports and data provided from the European Venture capital Association (EVCA).
The EVCA compiles data provided to it by national VC associations. The irish Venture capital Association (IVCA) is the relevant body in Ireland.
Companies and entrepreneurs benefit from an expanded pool of funds available for export oriented high technology start-ups
However, it is still considerably lower than that for a number of other countries that are appropriate benchmarks for Ireland in terms of their populations and enterprise base (Chart 8. 4 below.
and Sweden has had a series of initiatives in place to support VC and financing for SMES since the early 1970s.89 European Venture capital Association, Yearbook 2011.
Of this, approximately €425. 3 million (44 per cent) has been through the Enterprise Ireland Partner Funds 104 Chart 8. 4:
Total VC Investments by Country of origin of the Investing Firm, 2000-2010 Source: European Venture capital Association The State commitment to the partner funds has a leveraging effect
which is demonstrated in two key ways: 1. Private funds invest in the Enterprise Ireland partner funds Based on the Enterprise Ireland commitment of €98 million to Scheme 2 the total investment funding available to companies reached €473
million by the end of 2010; representing a leveraging effect of €1: €3. 80. Based on the Enterprise Ireland commitment of €152 million to Scheme 3 to date the total investment funding available to companies reached €550 million by the end of 2010;
representing a leveraging effect of €1: €2. 60. That is for every €1 committed by Enterprise Ireland €2. 60 was raised from the private sector.
This compares positively with similar government interventions in the UK where investments between 2000 and 2009 by the Department for Business, Innovation and Skills and its predecessors,
in a series of funds managed by private sector fund managers, had a leveraging effect of £1:
Private funds are attracted into The irish market Data from the IVCA states that there has been €3 billon of investment in Irish SMES since 200091.
Venture capital support to small businesses, Seventeenth Report of Session 2009 10 march 2010 91 IVCA, A Guide to Venture capital, Fifth Edition-Note.
and includes investments by angel investors and corporations that are considered not to be VC firms.
It also includes some of the investments in companies through the HPSU suite of supports 92 IVCA, 2011, Report to Government,
(pop. 5. 3 m) Sweden (pop. 9. 1 m) € millions FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS
& ENTREPRENEURSHIP 105 there has been an increase in the number and extent of activity by private sector VC companies in The irish market.
and includes investments by angel investors and corporations that are considered not to be VC firms.
It also includes some of the investments in companies through the HPSU suite of supports.
A viable and sustainable VC and seed capital market in Ireland with greater private sector involvement and investment and aligned to the needs of the enterprise base.
The capacity to make sufficient investments (15-20) across a range of projects which diversifies the risk of investments;
The resources to make follow-on investments in portfolio companies as they grow. This is particularly important where funds are initially investing in the very early stages of a company's development as
otherwise a VC fund's stake in a company will be diluted in subsequent funding Schemes; The capability to generate enough management fees to allow the VC fund to support a strong management team
Assessing the Enterprise Ireland partner funds against these criteria and reflecting the relative newness of a number of the funds under Scheme 3,
and there are indications that each of the funds will make sufficient numbers of investments to spread their risk across their portfolio
and spread of investment. They also have engaged in high levels of follow on funding. 93 Specific data on fund management
and has not been included in this analysis 94 Venture capital Fund size: €25 million plus; Seed Fund size:
Number of Portfolio Investments: 6 plus 106 Table 8. 2: Scheme 2, 2000-2006 Scheme 2, 2000 2006 Size No. of Companies No. of FO Viable & Sustainable AIB Equity Fund 2002 €0m 2 1 N
/A Atlantic Bridge Limited Partnership €98. 5m 13 55 Yes BOI Kernel Capital Partners Private Equity Fund I €27. 3m 9 36 Yes BOI
Venture capital Ltd. €8m 7 7-Delta Equity Fund II Limited Partnership €90m 26 167 Yes Enterprise Equity Investment Fund Ltd. €15m
10 38-Enterprise Equity Seed Capital Investment Fund €7m 11 33 Yes European Bioscience Fund I €12. 7m 6 33-Guinness Ireland
18 Yes ICC Regional Venture capital Fund*€7. 6m 6 11-Seroba Bioventures €20m 10 27 Yes Trinity Venture Fund II €138. 7m 17 40 Yes 4th Level Ventures University Seed Fund
€17. 2m 13 79 Yes Total Funds €473. 1m Table 8. 3: Scheme 3, 2007-2012 Scheme 3, 2007 2012 Size No. of Companies No. of FO Viable & Sustainable AIB Seed Capital Fund €53m 25 17 Yes Atlantic
Bridge II €75m Est. 2010 Yes BOI Kernel Capital Partners Private Equity Fund II €51m 4 1 Yes BOI Seed and Early Stage
Equity Fund 2009 €27m 5 1 Yes BOI Start-up and Emerging Sectors Equity Fund 2010 €17m Est. 2010 Yes Delta Equity Fund III
Diageo Venture Fund €75m 8 0 Yes Total Funds €550. 6m FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 107 Viability and Sustainability of the Irish
and across geographies are VC investment as a percentage of GDP, numbers of investments and numbers of companies invested in.
The chart below shows VC investments as a percentage of GDP for a number of OECD members over the past decade.
The OECD data shows that VC investment in Ireland still only accounts for a small proportion of GDP
of which the Enterprise Ireland partner funds account for roughly one third. However, against this measure, The irish VC industry does show signs of viability
and sustainability in terms of a relatively consistent performance and does not show the scale of volatility that has been experienced in some other countries as a result of the financial crisis.
This is most likely a function of the relative stage in the investment cycle of the Enterprise Ireland partner funds rather than the resilience of The irish VC industry per se.
VC Investment as a Percentage of GDP, Selected OECD Member States, 2000-2009 Source: OECD Science Technology & Industry Scorecard, 2003,2005, 2007.2009,201195 95 Note:
Danish Venture capital Association, 2008, Active ownership and transparency in private equity fund; Background report and Guidelines for responsible ownership
Germany France UK Canada USA 2009 2008 2005 2000-2003 108 Data on the numbers of investments and the numbers of companies invested in by Irish Seed
& VC firms shows that The irish VC industry has followed much the same trajectory as in benchmark countries;
However, the numbers of investments and numbers of companies invested in by Irish firms have been consistently lower in absolute terms.
European Venture capital Association 0 100 200 300 400 500 600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
No. of companies invested in Sweden Finland Denmark Ireland FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 109 Chart 8. 7:
Number of Investments by Country of origin of the VC Fund, 2000-2009 Source: European Venture capital Association Significant Private Sector Involvement As discussed above,
there is significant private sector involvement in The irish seed & VC industry. In the first instance,
if the leveraging effects of Scheme 2 and 3 are combined each €1 committed by the State to the partner funds attracted €3 of private investment into the funds.
further private VC investment has been attracted into Irish based SMES. Alignment with Enterprise Needs A stated objective of the Enterprise Ireland Programme is to further develop The irish seed
and VC sector by developing commercially viable funds that can meet the capital requirements of high technology start-ups and scaling companies.
Analysis of the sectoral breakdown of investments by number and volume of investment under the two Schemes clearly demonstrate that the Enterprise Ireland partner funds are investing in those high technology sectors where Ireland has demonstrated or emerging strengths, particularly the Lifesciences, software
and communications. 0 100 200 300 400 500 600 700 800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
No. of Investments Sweden Finland Denmark Ireland 110 Chart 8. 8: Scheme 2 Sectoral Breakdown of Investments by Enterprise Ireland Partner Funds FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 111 Chart 8. 9:
Scheme 3 Sectoral Breakdown of Investments by Enterprise Ireland Partner Funds There may be scope for greater investment in the areas of clean technologies and technology based food products;
both of which have been highlighted in successive national strategies as offering significant growth potential for Ireland. There is little debate that clean technology is a high technology and high potential area.
It is likely that a review of the sectoral breakdown of investments in future years will show greater numbers of early stage clean companies attracting financing through the partner funds.
In this context, a total of 805 separate investments have been made in 186 start up, early stage and developing companies through Scheme 2 and 3. This averages out at 17 companies per annum and represents between 25 per cent
Enterprise Ireland Partner Funds Breakdown of Investments by Stage of Development Though these figures are relatively small in absolute terms,
Even within the high technology population of early stage companies, figures from the US National Venture capital Association indicate that only one in 100 companies end up being funded96.
However, analysis of the numbers of companies receiving funding in benchmark countries indicates that there is still considerable scope to increase the numbers of early stage
European Venture capital Association 96 National Venture capital Association, 2011, NVCA Yearbook 40.5 48 11.5 20 63 17 0 20 40 60
2009 2010 Sweden Finland Denmark Ireland FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 113 8. 8 Findings & Conclusions Appropriateness This evaluation focuses on the period 2000-2010
which covers two Schemes of the Enterprise Ireland Seed & Venture capital Programme97. Analysis of the outputs and impacts of the programme over this time indicates that it is appropriate to meet its objective
By the end of 2010, the total investment funding available to companies under the two Schemes was €1. 024 billion
of which €250 million was provided by Enterprise Ireland. Of the €1. 024 billion available under the two Schemes, €114 million is dedicated seed funding.
805 investments have been made through the Enterprise Ireland partner funds in 186 separate companies with a combined value of €425 million.
A review of the investments by sector shows clear alignment with the needs of The irish enterprise base.
However, there is potentially a need for greater investment in the areas of clean technologies and technology based food companies;
Leveraging private sector investment There is significant private sector involvement in The irish seed & VC industry.
Firstly, if the leveraging effects of Schemes 2 and 3 are combined each €1 committed by the State to the partner funds attracted €3 of private investment into the Enterprise Ireland partner funds.
Secondly, data from the IVCA states that there has been €3 billon of venture, angel and related investment in Irish SMES since 200099.
and scaling companies 24 Enterprise Ireland partner funds have been established under Scheme 2 and 3; five of which have had
Venture capital Association, Yearbook 2011, Of this, approximately €425. 3 million (44 per cent) has been through the Enterprise Ireland Partner Funds, 99 IVCA,
2011, Report to Government, July 2011. Note: the IVCA data is broad in scope and includes investments by angel investors
and corporations that are considered not to be VC firms. It also includes some of the investments in companies through the HPSU suite of supports. 100 Ibid. 114 As outlined in detail above,
there is clear alignment between the programme and the national policy emphasis on supporting the creation
Synergies and Complementarity The Enterprise Ireland Seed & Venture capital Programme is quite distinct from a number of agency delivered programmes in that it operates at the broader enterprise environment level rather than at that of the company or individual.
By their nature, recipients of VC funding through the Enterprise Ireland Partner Funds are very likely to be involved in research
Overlap/Duplication There is potentially some overlap between the Enterprise Ireland Seed & Venture capital Programme and the equity supports available through the HPSU package.
Of the 186 companies that have received seed & VC financing through the Enterprise Ireland partner funds circa 15 per cent are HPSU clients of Enterprise Ireland.
However, this is not necessarily an overlap per se but rather a function of the fact that companies that seek VC and HPSU type supports are at common stages of development.
Analysis of venture capital received by all Irish based companies between 2007 and 2010 shows that a similar number of HPSU clients have secured VC funding through non-Enterprise Ireland partner funds
This is challenging in the context of the Enterprise Ireland Seed & Venture capital Programme as typical measures such as cost per participant are not appropriate.
Furthermore, the nature of VC is that the returns arise to the State on the back of successful investments
which would have the effect of reducing the direct costs of the Programme. As noted above
and returns associated with investments. Data on this is not available due to commercial and confidentiality considerations102.
But as yet, it is too early to apply these measures to the programme. 101 Irish Venture capital Association,
Venture Pulse 2007-2010 102 Enterprise Ireland cannot disclose the returns of the Funds either collectively or individually due to the commercial sensitivity of the information and the legal agreements that have been signed with the Partner Funds.
and is discussed only within the confines of the SVC Committee and the Board of Enterprise Ireland.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 115 In this context, it is most appropriate to measure the efficiency of the programme in terms of the leveraging effect of the State commitment,
we looked to similar government interventions in the UK where investments between 2000 and 2009 by the Department for Business, Innovation and Skills and its predecessors,
The impacts summarised above in terms of numbers of investments and partner funds as well as the leveraging effect of the State commitment all demonstrate that the programme has been effective in delivering on its objectives in the main.
and across jurisdictions shows that The irish VC industry has followed much the same trajectory as in benchmark countries104
for each of the indicators, VC investment as a percentage of GDP, numbers of investments and numbers of companies invested in, the scale of activity in Ireland remains lower than in each of these countries.
VC investment in Ireland still only accounts for a small proportion of GDP, of which the Enterprise Ireland partner funds account for roughly one third.
The irish VC industry has shown not the scale of volatility that has been experienced in some other countries in terms of share of GDP, particularly the US, the UK and Israel,
This is most likely a function of the relative stage in the investment cycle of the Enterprise Ireland partner funds rather than the resilience of the Irish VC industry per se.
which is only appropriate for a small proportion of the overall enterprise base. The partner funds are managed independently by the private sector,
who take investment decisions on a fully commercial basis. As such, they do not favour any particular company
Venture capital Support to Small Businesses, Seventeenth Report of Session 2009 10 march 2010 104 Denmark, Finland and Sweden 116 running the funds and making investment decisions
and to raise private capital. The Scheme has played an important role in this regard. The IVCA's 2011 report, The Economic Impact of Venture capital in Ireland found that the management teams of Irish VCS add real value to their investee companies in terms of business development and positioning the companies for international growth.
A further indication of the calibre of the fund management teams is the strong role they play in facilitating the introduction of international investors to form larger VC syndicates.
The overall effectiveness of the Enterprise Ireland Seed & Venture capital Programme notwithstanding there remains a need for The irish VC industry to continue to develop to bring it into line with international comparator countries
This is particularly relevant given the prevailing national and international economic environment which remains extremely challenging.
Recommendations Ensure that any future EI partner funds are aimed at addressing the prevailing market failures in the venture capital market and in sectors aligned with the investment strategies of commercial venture capital fund managers.
Work with the private sector to ensure the availability of funding from other sources for key sectors that are not appropriate for venture capital investment.
A full evaluation should be undertaken to assess the economic return through the State's investment in VC Funds,
The Department of Jobs, Enterprise and Innovation should be cognisant of the financial return to the State through EI-Partner funds107. 105 Gilson, R. J.,2003, Engineering a Venture capital Market:
Establish a working group to ascertain the need for the State to continue its support, on the same terms as the private sector, for the development of the domestic venture capital sector (DJEI, EI, NPRF) 107 The Department of Jobs,
Enterprise and Innovation should be cognisant of the financial return to the State through EI-Partner funds FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS
& ENTREPRENEURSHIP 117 9 City & County Enterprise Boards Start Your Own Business Supports 2004-2010 Programme Logic Model Objectives Stimulate an increase in the number of start-ups in Ireland
Department of Jobs, Enterprise and Innovation Private Sector Funding Participant fees for training programmes Outputs Number of participants in receipt of supports each year Activities CEBS provide several supports
Training Management Development Finance Mentoring Enterprise Education Enterprise Promotion Outcomes & Impacts Increased number of Start-ups Increased number of entrepreneurs Increased employment Higher
survival rates of start-ups 118 9. 1 Background to City and County Enterprise Boards The network of City and County Enterprise Boards (CEBS) was established in 1993, during a time of high
unemployment and low economic growth in Ireland. It was recognised that micro enterprises (employing 10 or less people) could be a valuable source of employment and economic growth,
and that at that time, there was a gap in the provision of state supports to those enterprises.
It was considered also that those supports could best be provided at a local level. The CEBS were designed to fill this gap.
The CEB network consists of 35 companies established under the Companies Act and limited by guarantee.
The CEBS provide direct financial and soft supports to new and existing enterprises and promote entrepreneurship through109:
Providing financial supports to firms, sole traders and cooperatives both newly formed and preexisting; Supporting local developments that contribute to enterprise creation, the development of existing businesses or other economic benefits;
and, Fostering an awareness of the need for enterprise creation and development in their local area.
Based on a range of data sources, it is estimated that each year on average a typical CEB: Handles some 800 to 1, 000 queries;
In 2007, a Central Co-ordination Unit (CCU) for the CEBS was established within Enterprise Ireland.
Galway City and Galway County are serviced by a single Enterprise Board. Cork County is served by three CEBS:
the Cork North, South Cork and West Cork County Enterprise Boards 109 This reflects the objectives set out in the Industrial Development Act 1995.
1) Support new enterprises via training, advice and support, mentoring, financial support;(2) Foster a spirit of enterprise:
schools, media events, Women in Business conference;(3) Enhance existing enterprises: advice, mentoring, training, networking, financial supports 110 Over 20,000 students a year now participate in the various CEB supported programmes implemented in the education sector FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS
& ENTREPRENEURSHIP 119 9. 2 Exchequer Funding to CEBS The SYOB programme of supports is delivered within the context of the wide range of inter-linked and complementary activities delivered by the CEBS to support,
encourage and promote an enterprise culture. Therefore, before moving on the specifics of the SYOB evaluation,
we set out the overall Exchequer funding of CEBS in order to put the SYOB programme funding into context.
The level of Exchequer funding to the CEBS increased between 2004 and 2007 and has been static
or declining since then Since 2010 the basic capital allocation under the Exchequer Estimates has been maintained at circa €15 million,
full consideration is given to making additional capital available to the CEBS. The Exchequer funding to the CEBS is broken out as follows:
and that these staff members provide a day to day information and support services to small businesses and new start ups.
DJEI and Enterprise Ireland CEB Central Co-ordination Unit 120 Table 9. 2: Using 2009 data this averages out as follows per individual CEB:
Capital grants to meet part of the cost of investments in capital equipment; Feasibility grants to cover the costs of investigating a new business idea
and preparing a business plan; Employment grants to meet part of the cost of taking on additional staff.
Breakdown of Grant Expenditure 2004-2009 2004 2005 2006 2007 2008 2009 (€)( €)( €)( €)( €)( €) Capital 8, 043,430
Enterprise Ireland CEB Central Co-ordination Unit FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 121 With effect from 2010 a new set of financial instruments was introduced
and preparing a business plan Priming grants for new start ups and firms in their first 18 months of existence;
Management Development, Training, Mentoring, Enterprise Education and Promotion. These supports are directed at both new and existing businesses
and also fund a range of activities in the wider community and in schools to promote a culture of enterprise.
Department of Jobs, Enterprise and Innovation, Enterprise Ireland CEB Central Coordination Unit 111 Some grants are refundable,
689,632 Mentoring 1, 479,388 1, 580,737 Enterprise Education 1, 155,270 978,163 Enterprise Promotion 2, 468,936 2, 512,064 Other 2, 026,008
Enterprise Ireland CEB Central Co-ordination Unit CEBS raise additional funds for Measure Two activities by making small charges for their training courses and by obtaining local sponsorship
SYOB financial assistance delivered through capital & refundable grants, employment grants, feasibility study grants and equity grants;
which is established twice yearly on foot of open competition. Trainers develop and deliver the training to a specification established by the CEB.
County and City Enterprise Boards 113 The evaluation is informed by research and analysis undertaken by AECOM consultants, December 2011 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 123 courses per annum,
indicating that there are currently over 250 such courses offered annually on a nationwide basis114. Ultimately the objectives of the SYOB supports are to:
and reported under the EU European Regional Development Fund (ERDF) 2007-2013 for the BMW and Southern & Eastern Regions under the Entrepreneurship in Micro Enterprise Theme115.
In some instances, individual CEBS may have set out their own targets. 9. 4 Rationale for Government Intervention The role of entrepreneurship in driving economic growth is accepted well.
Secondly, at times of high unemployment, where there are unused or underused resources in the economy, start-up activity may utilise surplus resources thereby creating additional wages, profits and tax revenues.
The rationale for Government to provide start your own business (SYOB) supports rests largely on the concept of market failure.
or other improvements that spill over to the rest of the economy and are reckoned not in private decisions;
These refunds are made at national level to the State 116 OECD. 2005, Understanding Economic growth 124 9. 5 Alignment with National Policy During the period under review,
Government policies recognised the role that entrepreneurship and small and medium business play in the development of the national economy.
The National Development Plan 2007-2013 for example, recognising that lack of scale is a key issue highlighted the need:
The concept of developing entrepreneurs through education and training was echoed again in Towards Developing an Entrepreneurship Policy for Ireland, 2007.
The Department of Jobs, Enterprise and Innovation: Statement of Strategy (2008 2010) highlighted the development of culture surrounding entrepreneurship through educational and society supports
which should develop Ireland into a market leader of entrepreneurs with a reputation, worldwide, as a world class place to start
focused as it is on stimulating and supporting entrepreneurship and start ups through a range of financial supports, mentoring advice and training.
The methodology follows the template for entrepreneurship and start-up programmes, developed in the Forfás Evaluation Framework118.
existing reports and data provided by the Central Co-ordination Unit in Enterprise Ireland, case studies of 7 CEBS119 including office visits and analysis of locally available data, a survey of former SYOB participants,
there were considerable data challenges associated with this evaluation. 117 Report of the Enterprise Strategy Group, Ahead of the Curve, 2004 118 Framework for Evaluation of Enterprise Supports, 2011,
Dun Laoghaire/Rathdown, Cork city, Wexford, Tipperary North, Limerick City, Roscommon, Cavan FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 125 It is also worth
)( €) Capital 6, 445,838 6, 740,836 6, 563,588 7, 663,518 7, 115,909 5, 642,430 Feasibility 325,247 315,061 282,061 331,005 416,959
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 127 Table 9. 7: Total CEB Spending on Supports for New Firms 2004-2009 Year 2004 2005 2006 2007 2008 2009 2010e (€'000)( €'000
A. Information and Advice B. Financial supports C. Training & Management Development D. Networking E. Developing an Enterprise Culture;
and advice on setting up or expanding a micro business venture. This involves signposting of services and supports for existing and would-be entrepreneurs.
The CEBS'presence on the ground locally is an important feature of this service. In meeting the demand for information,
CEBS generally provide: Access to a selection of fact sheets, business publications and periodicals; Access to sources of market and business development information;
or may not fit the Enterprise Ireland portfolio; A business employing up to 10 employees; A manufacturing or internationally traded services business;
A domestically traded service business with the potential to trade internationally; and/or A domestically traded services being established by a female returning to the workforce
or unemployed persons where the potential for deadweight and displacement is likely to be minimal. Eligible clients are awarded a Priming Grant within the first eighteen months of setting up the business.
The maximum Priming Grant payable is 50 per cent of the investment or €150, 000 whichever is the lesser.
and only apply in the case of projects that clearly demonstrate a potential to graduate to Enterprise Ireland
Feasibility Grants available to both start-ups and existing enterprises Feasibility Grants are designed to assist with researching market demand for a product
Grants include assistance with innovation including consultancy requirements, hiring of expertise from third level colleges, private specialists, design costs, patent costs and prototype development costs.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 129 Business Expansion Grants Business Expansion Grants are targeted not toward start-up businesses.
Capital Grants were for up to €75, 000 or 50%of the capital investment. Employment Grants were for up to a maximum of €7,
500 per employee and a maximum of ten employee C Training & Management Development The CEBS provide Start Your Own Business, Management Development Training and Mentoring services.
which is established twice yearly on foot of open competition. Trainers develop and deliver the training to a specification established by the CEB.
and often arise from the demand from clients of management development programmes who wish to build on previous learning
E Developing an Enterprise Culture Encouraging and promoting an enterprise culture is an important area of activity for the CEBS.
A number of initiatives are run by the CEBS at both primary and secondary level including:
Student Enterprise Awards-Second Level; Exploring Enterprise-Second Level; Enterprise Encounter-Second Level; FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 131 Celtic Enterprise-Second Level;
Bi Gnothach Enterprise Programme-Primary Level; and Third Level Over 20,000 students a year now participate in the various CEB supported programmes implemented in the education sector F Other Activities The CEBS are involved in a wide range of other activities in response
to their local development mandate. These vary considerably from place to place. For example in the Border Region, CEBS are involved in a range of initiatives that are focused on local area development.
By way of example, over €3. 064m was approved in 2011 by the European union under the INTERREG IVA Programme to support the Harnessing Natural resources (HNR) project.
It comprises 26 rural tourism and enterprise initiatives across the three counties of Cavan Fermanagh and Leitrim.
The project is managed by a consortium led by Cavan County Enterprise Board and will act as a catalyst for entrepreneurial activity and private sector investment in new businesses.
Enhancement of the environment and infrastructure, combined with economic and enterprise support initiatives, will be of long term benefit to the local economy.
A number of CEBS operate a Hi-Start programme which provides specialist support to those businesses with strong growth aspirations
and the potential to trade internationally and assists these clients to become investor-ready and prepared for consideration by Enterprise Ireland as potential HPSU clients.
In summary the typical CEB is engaged in a range of activities supporting both start-up enterprises and existing micro businesses (Table 9. 8) Table 9. 8:
Type and Level of Activity of a Typical CEB Type of Activity Level of Activity per annum Advice and Support-queries 800 100 SYOB Training courses 5 10 Management Development Programmes
30 Mentoring Assignments 110 Networks supported 1-4 Student Enterprises Initiatives 20,000 nationwide (All CEBS) CEB Activities specific to Start-up Enterprises
While it is clear that CEB activities have a focus on start-ups, the available data do not enable this to be encapsulated easily.
There are two reasons for this: Separate budget allocations are allocated not between start-up and existing enterprise supports;
and 132 For practical reasons, services, such as management training, may be delivered most effectively jointly to new and existing entrepreneurs.
Table 9. 9 sets out the key activities undertaken by CEBS and indicates that in most cases,
the services arising from these activities are delivered to both new and existing enterprises. Only Priming Grants and the SYOB courses are focused solely on start-up enterprises.
The survey of the CEBS established indicated that with regard to management training, 44 per cent of activity is directed towards start-up enterprises.
The majority of mentoring assignments (58 per cent) is in respect of start-ups rather than existing firms.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 133 Table 9. 10: Total Number of Grants Approved Year Number of Grants Annual Growth rate(%)2004 864 9. 7 2005 948 9. 7 2006 894-5
the vast bulk of the grants made were in respect of capital or employment projects.
Measure1 Projects by Type Business Expansion Priming Capital Employment Feasibility Feasibility/Innovation Preference shares Refundable Grant Aid Grand Total 2004 369 293
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 135 All 142,392 10.9 (Annual average) Source:
Derived from CCU data The analysis conducted for this evaluation indicates that 80 per cent of financial supports are directed to start-up enterprises,
and 58 per cent of mentoring services are directed to start-up businesses. 9. 9 Impacts and Outcomes Financial supports:
and/or extent of investment is impacted positively by state support. The approach adopted here is to survey estimates of deadweight from both Irish
Scenario 126 The outcome of a programme targeted at entrepreneurship may be that of securing employment for unemployed persons
who can demonstrate a solid business plan, for a period of 18 months at a rate of €590 per month (in 2009).
In Australia, the New Enterprise Incentive scheme (NEIS) offers an allowance to unemployed people to start a business with provision of an allowance for up to 1 year as well as rent allowance for up to 6 months127.
2001 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 137 Market Driven Start-up Programmes Evaluations of the deadweight impact of market driven business start up assistance
Deadweight Estimates for Irish Projects Authors (Year) Evaluation of Deadweight Estimate IEU (1999) 128 Micro Enterprise Supports 45%Forfás (2003) 129 Start up
(2000) 131 Seed and Venture capital Scheme 60%128 IEU, Evaluation of Micro Enterprise Supports Across National and Local Development Agencies, Industrial Evaluation Unit, Dublin
Evaluation of the Seed and Venture capital Scheme, Industrial Evaluation Unit, Dublin, 2000 138 Table 9. 15:
(NI) NI 8 32%Sheehan (1993) Capital Grants to Manufacturing Firms in Northern ireland NI 59%(approx) Monk (1990) Enterprise Board Investment UK
The Economic Journal, 90 (357). 1980 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 139 At times of high unemployment, where there are unused or underused resources in the economy,
start-up activity may utilise surplus resources thereby creating additional wages, profits and tax revenues. While the first category of impacts is difficult to quantify in monetary terms,
profits and tax impacts depends on the growth of the start-up and its longevity. Precise data are not available to measure these attributes
profits and tax revenues needs also to take account of the potential for labour market displacement. Our assessment has been informed by Forfás'appraisal methodology for projects seeking support from the industrial development agencies which concludes that no more than 20 per cent of the wage,
profit and tax benefits should be reckoned in the context of tight labour markets135. Based on an average earned income of €39, 000 the annual value of these benefits is estimated at between €12 million
excluding the cost of related advisory services and at €14. 1 million when we include related advisory services.
Comparing the annual benefits to the fully loaded costs indicates that the least favourable scenario would mean that each firm supported would have had to deliver the employment benefits for a period of approximately 3 years
profits and taxes created. This is apart from the productivity, cost saving and innovation benefits achieved.
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 141 Scaling of new start-ups; Associated employment generated;
me to assess feasibility of the enterprise 2 2. 8 Other (please specify) 2 2. 8 Total 71 100.0 Source:
Survey of SYOB Course Participants 2011 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 143 Existing Start-ups For the 10 per cent of participants that were already in start-up phase,
. 0 Manufacturing Green Technology 1 1. 4 Other Manufacturing 8 11.3 Software Development 3 4. 2 Web Based Services for Consumers
0 0. 0 Web Based Services for Businesses 4 5. 6 Construction and Related Activities 8 11.3 Personal & Local Services for Consumers 25
35.2 Other Consumer Services 6 8. 5 Services for Businesses 10 14.1 Other 4 5. 6 Total 71 100.0 Source:
There are significant long term benefits for the economy arising from a high level of start-ups in terms of productivity,
With the current rate of unemployment and the existence of unused resources in the economy
profits and tax revenues are substantial. Accordingly, it is recommended that the level of resources devoted to SYOB supports through the CEBS be maintained at least.
and the opportunities to network with other entrepreneurs. In that regard, while there may be further efficiencies possible in terms of delivery FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 145 of services,
there is a strong argument for maintaining the face-to-face contact between CEBS and clients. It was noted in the course of this evaluation that in some cases offices were located in areas that were not easily accessible such as out of town industrial parks.
when the proposed establishment of the Local Enterprise Offices was announced in the Action Plan for Jobs 2012.
Joint purchasing of services and other supplies by CEBS; Joint development of courses, publicity material and reference material;
Department of Jobs, Enterprise and Innovation 146 Table 9. 24: Efficiency Indicators SYOB Indicators 2004 2005 2006 2007 2008 2009 2010 No of M1 Projects per €1, 000 M1 Expenditure 0. 12 0
Synergies/Overlap The CEBS work alongside other State Enterprise Agencies (Enterprise Ireland, Shannon Development and Údarás Na Gaeltachta) in the provision of State supports to existing businesses and to people who intend to start new businesses.
and with Enterprise Ireland. A key element of the CEBS support for new start-ups is the provision of Start Your Own Business training.
In terms of any overlap with Enterprise Ireland our research found that this does not tend to occur,
with CEB clients not considering themselves to be appropriate for Enterprise Ireland supports. FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 147 Effectiveness SYOB Training Supports The research found the SYOB training supports had been very effective in the period evaluated.
At a minimum, 50 per cent of SYOB course participants go on to start-up a business,
either providing personal and local services or are related in construction activities. This indicates substantial scope for product market displacement,
Turning to impacts on wages, profits and tax revenues, these additional impacts are likely to be relatively small in the period up to 2008, because of the low levels of unemployment and consequent high levels of labour market displacement.
profits and taxes created. This is apart from the productivity, cost saving and innovation benefits achieved.
and export oriented services, this is less of a concern. However, exceptions are made where a domestically traded service is being established by a female returning to the workforce
or exportable services if resources were to become more limited or if 148 demand from this cohort could not be met.
In these circumstances the more effective use of resources would exclude supports to start-ups in local and personal services.
Analysis of the CEB activities for policy-making purposes requires data which are not currently being collected
and in particular facilitate the delineation of activities/supports directed toward the stimulation of entrepreneurship and start-ups.
which envisages the dissolution of the existing CEB offices and the creation of a new network of Local Enterprise Offices.
Start-up Grant A Key to Entrepreneurship (Stenholm, 2010) 137 Some of the key success factors of the Finnish model of business support include the strict application procedure
//Stenholm su grant. ppt FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 151 Appendix II: Grant Evaluation Methodology and Recommendations Grant employed mixed methods involving literature review, stakeholder consultations, value for money analysis,
and participant surveys. They also reviewed the programme vis-à-vis international benchmarks and other enterprise supports such as the Enterprise Platform Programme.
A considerable part of the analysis relates to process and the views of participants, Enterprise Ireland and the programme providers.
It provides an overview of participant views on the likely impact of the programme on sales, exports and employment growth.
It also provides detail of the progression of Propel participants to become HPSU clients which is a demonstration of the effectiveness of the programme.
A series of consultations were held with all stakeholders involved in rounds One and Two of the Propel programme.
research completed or other criteria defined by Enterprise Ireland Identifying key learning for the programme promoters
Some allowance for the likely future impact of the programme was sought through assessing the business plans of the participants Stakeholders and participant consultations:
PA Consulting, Programme Director, Programme Manager and other staff members involved in the Propel Team The Enterprise Ireland programme coordinator
and 3 other Enterprise Ireland staff making up the Propel Team Representative sample of Enterprise Ireland staff who work with HPSU/Cord
and Programme Supports 3 of the trainers and 3 of the mentors used by PA/Enterprise Ireland in the delivery of the programme A complete 100 per cent sample of the current and past participants of the programme Other
stakeholders in Graduate Enterprise Programmes including one to one interviews 152 In addition, a member of the evaluation team attended one day of the two day residential workshops and observed trainers,
and delivery style of the trainers/mentors Effectiveness of communication between Enterprise Ireland, PA and participants Suggestions for improvements in the programme Ideas from best practice from other Enterprise Development Programmes in Ireland and overseas Unexpected benefits from the programme Future plans of the participants Impact
of the programme on the future of the participant's Business plans Two separate questionnaires were designed
and circulated by email in order to obtain feedback from participants on Propel Phase One and Phase Two.
but based on participant and stakeholder feedback their implementation would increase programme effectiveness; for instance, using Enterprise Ireland Technical staff to complete a Technical Assessment during Phase I of the programme.
The longer term actions primarily related to where Propel sits vis-à-vis the overall continuum of support offered by Enterprise Ireland.
There were a limited number of specific recommendations on enhancing the effectiveness of the Propel programme itself such as completing a formal review of progress of all past Propel participants on an annual basis
FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 153 International comparators United kingdom There are a number of enterprise development programmes available in the UK
The focus is on ensuring that their business plan is developed well and investor ready so that they can secure external finance.
and training over an 18 month period to enable participants to develop their business plan and become investor ready.
and two of the enterprise programmes assist SMES and entrepreneurs in a similar way to the Propel programme.
Sweden The Entrepreneurship and New Business Development Programme in Sweden provides coaching and mentoring supports for entrepreneurs and SMES.
and mentoring to help companies develop their business plan. This support is provided in the Linköping region of Sweden through the Centre for Innovation and Entrepreneurship
which is based in the University of Linköping, and SMIL a local business association whose membership is composed of small technology-based firms in the region. 154 Appendix III:
Murphy Secretary general, Department of Jobs, Enterprise and Innovation Barry O'Leary Chief executive, IDA Ireland Frank Ryan Chief executive officer, Enterprise Ireland Michael O'Leary
Secretary to the Board, Forfás FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP 155 Appendix IV:
Costs and Inflation Forfás February 2014 State Investment in Research and development 2012 2013 Forfás December 2013 Survey of Research and development in the Higher education Sector 2010/2011 Forfás
December 2013 NCC Submission to the Action Plan for Jobs 2013 NCC November 2013 Addressing Future Demand for High-level ICT Skills Forfás
EGFSN November 2013 Business Expenditure on Research & development (BERD) 2011/2012 Forfás, CSO August 2013 State Investment in Research & development 2011 2012 Forfás August
2013 Social Enterprise in Ireland: Sectoral Opportunities and Policy Issues Forfás July 2013 Ireland's Construction Sector:
Outlook and Strategic Plan to 2015 Forfás July 2013 Forfás Annual Report 2012 Forfás July 2013 156 Research Prioritisation:
Framework for Monitoring Public Investment in Science, Technology and Innovation and 14 Action Plans Forfás July 2013 Monitoring Ireland's Skills Supply Trends in Education and Training
2013 Global Entrepreneurship Monitor (GEM) 2012 Global Entrepreneurship Monitor July 2013 Annual Employment Survey 2012 Forfás July 2013 Ireland's Competitiveness
for Jobs 2013 Forfás, DJEI February 2013 A Review of the Equity Investment Landscape In Ireland Forfás January 2013 FORFÁS EVALUATION OF ENTERPRISE SUPPORTS FOR START-UPS & ENTREPRENEURSHIP
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