April 2008, published in Dutch 5 Foreign direct investments. Trends and developments, Frederik De Witte, Isabelle De Voldere, Leo Sleuwaegen, June 2008
Len De Looze, May 2009, published in Dutch Foreign Direct Investments. Location choices across the value chain, Frederik De Witte, Leo Sleuwaegen, May 2009, published in English Prototypically Branded Innovations.
and SMES usually do not have the money to make this investment. Less expensive alternatives exist
This organization analyzes the investments required for a building to reduce energy consumption to a minimum. Combining people with strong ideas and reputation with green technology projects is an interesting recipe for successful new ventures.
That implies that some partners may have to be compensated for losses, investments, or risks they take. 3. Innovation networks need to be activated continuously.
whereas the technology transfers might still require significant investments from engineering. Furthermore, large firms that license technologies risk knowledge leaks with adverse competitive effects as a consequence.
The development cost of the microorganisms that could produce a specific flavor was the single largest investment for Isobionics;
Second, Toine Janssen had to secure the required investments for his start-up once the business plan was drafted.
the start-up was need in of considerable investments to advance the technological development and commercialization of the first flavors.
because the venture needed considerable investments which were too big a risk for VCFS 80 in an early investment stage42.
The start-up was financed combining investments from VCFS, a regional venture capital investor in which DSM participated, bank loans,
DSM, in turn, did also win from its investment in Isobionics. First, it had the opportunity to follow the evolution of Isobionics.
Finally, the indirect participation of DSM also implies that Isobionics can be acquired in case its business is becoming an interesting investment area for DSM.
because excessive investments in complementary assets are required43. Examples of complementary assets include large-scale manufacturing, brands,
corporate venturing investments, co-development agreements, and acquisitions. Licensing agreements imply that the licensor and licensee share revenues,
Partners may have to bear considerable risks or investments in dedicated complementary assets. In open business models,
because partners will ask for a return on their technology investments. Worldwide licensing deals can be challenging for SMES
and made investments. Imagining a new product is one thing, whereas starting the venturing process is another.
University college Dublin Ciaran Mcgarrity Department of Enterprise, Trade and Investment Eddie Friel University of Ulster Eoin Magennis Intertradeireland Ian Hughes Forfás John Smith
Finance the investments required to satisfy the resource needs of companies; Advice and Services the specialised support that innovators require to create
although recent analysis of BVCA data suggests that just over 2%of UK-wide VC investment between 1989 and 2010 was in Northern ireland. 13 From EU-wide metrics Ireland in 2011 lags
including marketing (e g. new or improved websites) or investments in new technology (e g. IT upgrades.
distorting investment patterns and limiting growth8. Competitive weakness also creates a stiff headwind that other components of growth (e g.,
, investment in R&d, support for technology transfer and STEM education) that can spur more innovation in all three major sectors of an economy (for profit,
based remuneration to employees 5. 2. Skills development programmes 5. 3. Immigration reform 6. Access to Finance 6. 1 Encouraging investment
which could be made to encourage investment, support lending and ease cashflow strain on the startup community.
Capital gains should be taxed at 20%rather than 33%to create incentives for investment in new enterprise.
an accelerator pays the students (through equity investments in their nascent businesses) to develop their idea into a company over a period of typically 3-6 months.
Successful entrepreneurs should consider establishing accelerator programmes in their local area, with a mind to investing or encouraging investment in the accelerated companies.
Introduce a de minimus level of HEI/startup collaboration investment (up to €25k), below which IP contracting
which could be made to encourage investment, support lending and ease cashflow strain on the startup community. 6. 1 Encouraging investment in startups A survey by the Entrepreneurship Forum with the help of Ernst & young's Entrepreneur of the Year award winners revealed that the primary source for funding a startup
is from‘bootstrapping'(that is, from customer revenue in conjunction with the entrepreneur's savings. 6. 1. 1 Angel finance
a second source is through‘angels'and family and friends'investment. Within the last 5 years over €25m of pure private money (private cheques written by private individuals) has been invested in startups via the visible business angel marketplace through the Halo Business Angel Partnership and the associated
The angel community is regarded as the most effective stimulus for internal investment. Raise awareness of the HBAN network and help its expansion. 6. 1. 2. Venture Finance For a small number of businesses,
%40%29%6%9%Initial funding Working capital Venture capital Investment from state agency Bank finance Bootstrapped
and grants Support or investment from friends/family Angel Investors Source: Survey of 2013 Ernst&young Entrepreneur Award Winner Alumni n=57 Source of majority funding for most recent entrepreneurial venture Source:
businesses. 6. 1. 2 Employment and Investment Incentive (EIIS) The Forum welcomes the announcement in the 2014 Budget to remove the high earners restriction for EIIS to increase the pool of investors.
However, some further improvements are required to encourage an increased level of external equity investment in companies in the seed,
a. Enable medium-sized enterprises (50-250 employees) in the non-assisted areas35 to avail of the EIIS. b. The EIIS should be amended to increase the period of investment from three to five years. c. Under the EIIS,
allow the full 41%relief be granted from the investment date. d. Eliminate the maximum €150k allowable qualifying investment in any one year under the EIIS.
One hundred investors will come together to create a Global Irish Investment Fund of €20m to support Ireland's high tech start-up ecosystem.
a. Under the principle of‘de minimus'investment, it is possible for the existing Seed Capital Scheme plan to be modified to be easier to understand, up to limits of perhaps €250k.
'Under Ireland's current Regional Aid Map, regions covering 50%of our population are assisted areas'recommendations recommendations recommendations 6. 1. 5 Rewarding continuous investment with deferred CGT
%with this credit only applying on the return of the second investment. It does not defer any taxes now.
when the capital was not being redeployed in startup investment. 55. Allow rollover reinvestment) relief on Capital gains into Irish companies,
or through investment into a company. Capital gains which are reinvested within a calendar year will not be recognised as gains until such time as they are reinvested not.
changes in the funding mix for SME working capital and investment since the crisis and the fact that Irish companies are exposed disproportionately to potential weaknesses in the banking sector, relative to our European competitors.
and tax policies that encourage investment and company creation. Secondly, Ireland has quite a number of great existing programmes for capacity building for startup companies, through Local Enterprise Offices (LEOS), Enterprise Ireland and other agencies.
High taxes discourage work, savings, investment, risktaking and enterprise and therefore are neither efficient nor conducive to increasing strong economic growth.
and investment and secondly to reduce individual income tax rates. High individual income tax rates result in higher costs of doing business for corporations.
all capital gains should be taxed at 20%rather than 33%to incentivise investment in new enterprise. 69.
Any proceeds from these groups paying their share should then be directed firstly at reducing capital gains income tax (to encourage long-term thinking and investment
Successful entrepreneurs should consider establishing accelerator programmes in their local area, with a mind to investing or encouraging investment in the accelerated companies.
Introduce a de minimus level of HEI/startup collaboration investment (up to €25k), below which IP contracting
Expand the tech visa to talent in other areas of unmet demand. 6. Access to Finance 6. 1 Encouraging investment in startups 51.
The angel community is regarded as the most effective stimulus for internal investment. Raise awareness of the HBAN network and help its expansion. 6. 1. 2 Employment and Investment Incentive (EIIS) 52.
Improve the EIIS: a. Enable medium-sized enterprises (50-250 employees) in the non-assisted areas43 to avail of the EIIS. b. The EIIS should be amended to increase the period of investment from three to five years.
-55-43 The EU Regional Aid Guidelines allow each Member State to provide enhanced rates of State Aid in the least economically developed areas of each country.
allow the full 41%relief be granted from the investment date. d. Eliminate the maximum €150k allowable qualifying investment in any one year under the EIIS.
a. Under the principle of‘de minimus'investment, it is possible for the existing Seed Capital Scheme plan to be modified to be easier to understand, up to limits of perhaps €250k.
where the sales proceeds from the sale of an asset are reinvested in the Seed Capital Scheme. 6. 1. 5 Rewarding continuous investment with deferred CGT 55.
or through investment into a company. Capital gains which are reinvested within a calendar year will not be recognised as gains until such time as they are reinvested not.
all capital gains should be taxed at 20%rather than 33%to incentivise investment in new enterprise. 69.
Any proceeds from these groups paying their share should then be directed firstly at reducing capital gains income tax (to encourage long-term thinking and investment),
Employment and Investment Incentive scheme EO: Entrepreneurs Organisation GNP: Gross National Profit HBAN: Halo Business Angel Network, an angel finance group.
Capital Scheme & Employment and Investment Incentive 27 2. 1. 5 Capital gains tax 27 2. 2 Business Registration 27 2. 3 Reducing Administrative
The IMD World Competitiveness Yearbook 2013 ranked Ireland third for availability of skilled labour and first for flexibility and adaptability of workforce, attitudes to globalisation and investment incentives.
female led enterprises accounted for just 7%of HPSU investments. Enterprise Ireland conducted research in 2012 which showed the following challenges specific to female entrepreneurship:
Winners at county level will be eligible for an investment in their businesses of up to €25
000, while winners at national level can receive additional investments of up to €50, 000 each.
Investments in distilling range from €5-10 million to hundreds of million euro in the case of existing players.
with both tax rates and tax incentives supporting entrepreneurship and influencing investment decisions. Taxation has an important role to play in developing Ireland's entrepreneurship ecosystem to meet the highest international standards
and affords favourable treatment of investment in research, is competitive and transparent. It has been a key attraction for international investment
and will continue to be in the future. 2. 1. 1 Startup Company Relief Startup Company Relief provides relief from corporation tax for new startup companies for the first three years of trading in respect
and hire suitably skilled staff from the global talent pool. 2. 1. 4 Seed Capital Scheme & Employment and Investment Incentive The Seed Capital Scheme (SCS), in conjunction with its associated scheme,
the Employment and Investment Incentive (EII), are tax relief incentive schemes. The EIIS provides tax relief to unrelated private investors for investment in certain corporate trades.
The SCS provides for a refund of income tax already paid to those who are or were in employment
when that individual makes a relevant investment in a qualifying company. Neither the SCS nor the EII is used extensively,
Both schemes are currently being reviewed by the Department of Finance ahead of Budget 2015.2.1.5 Capital gains tax Investment
consolidates, simplifies and modernises company law in Ireland, with the ultimate aim of improving Ireland's competitive position as a location for business investment.
and Investment Incentive (EII) scheme to fulfil its potential as a non-bank (equity) source of funding for SMES.
and academia is an important element in the entrepreneurship ecosystem. 3. 1 Innovation Supports Entrepreneurs can access a range of pre-investment supports from Enterprise Ireland or their Local Enterprise Office
Innovative HPSU Programme Allows Enterprise Ireland to offer equity investment to HPSU clients on a co-funded basis to support the implementation of a company's business plans.
First time and follow-on equity investments in HPSUS are supported under this offer. Enterprise Ireland can help companies by providing information on the main sources of private investment.
These are all important programmes which can also be used to foster more diversity of entrepreneurial activity eg. by targeting calls for females,
Technology & Innovation policy has evolved over recent years with an increase in focus on accelerating the economic and societal impact of public investment in research and greater emphasis on further increasing industry/academic collaborations
Targeting public investment in research in areas which demonstrate a clear industry need and competitive market opportunity.
and investment opportunities A stable and appropriate supply of finance promotes growth, encourages startups and enables existing firms to expand by exploiting trade and investment opportunities.
It also brings benefits to the economy by supporting business growth and market competition, thereby generating wealth
in order to increase their chances of success. In certain sectors investment funding is a particular challenge.
However, a shortage of capital worldwide for venture investment is creating uncertainty about the level of future inflows to Ireland.
Venture capital funds that receive an investment from EI have to invest a meaningful proportion of their fund in Irish companies or companies with significant Irish operations.
By June 2014, Enterprise Ireland had made four investment commitments through IFI with a combined value of approximately €80 million, out of a total EI allocation to the fund of €125 million.
By June 2014, the NPRF had made seven investment commitments through IFI with a combined value of approximately €116 million out of its €125 million allocation to IFI.
such as the Seed Capital Scheme, Employment Investment Incentive, Microfinance Ireland and the Credit Guarantee Scheme.
and international venture capital investors and continue to develop the domestic venture capital sector Double the volume of angel funding over the next five years through such actions as reforming the Employment Investment Incentive.
DJEI, Intertrade Ireland, BICS) EI and the NPRF (ISIF) will continue to manage the Innovation Fund Ireland programme to support investment by international VCS in Irish companies and companies with a significant presence in Ireland.
using funds from the German bank Kfw, the European Investment Bank and The irish Strategic Investment Fund.
Enterprise Ireland, County Enterprise Boards), mentoring to support entrepreneurs in advance of seeking angel investment (eg. Startupbootcamp Dublin) and mentoring as a core component of intensive management development programmes (e g.
of which €27 million was private investment through HBAP angels. The private sector supported Seed and Venture capital framework in Ireland, including the current AIB Seed Capital Fund,
Trade, tourism and investment are crucial to future prosperity. Although the international environment remains challenging,
The Review of the Government Trade, Tourism and Investment Strategy, 2010 2015, published in February 2014,
while increased integration of Irish companies into the MNC base may further embed foreign direct investment in Ireland.
This investment in scientific excellence continues to have many positive effects, including encouraging an innovative and enterprising economy,
The recent evolution of Science, Technology and Innovation policy has brought a focus to accelerating the economic and societal impact of public investment in research
encourages start-ups and enables established firms to grow by exploiting trade and investment opportunities. Lending rates from banks,
number of deals-Direct Angel Investment-Number of angels registered in HBAP BICS 148 25
Enterprise Ireland offers equity investment to HPSU clients, on a co-funded basis to support the implementation of company business plans.
Any Enterprise Ireland investment needs to be matched by at least a similar amount of investment by the promoters and/or other investors.
Enterprise Ireland can help companies by providing information on the main sources of private investment.
A review of the Incubator programme is currently underway to evaluate the impact of this investment to date
and Venture capital Sector in Ireland to achieve a more robust, commercially viable and sustainable sector. 2011: 116 investments;
and support them to commence investment under the first call for expressions of interest under the Seed and Venture capital Scheme 2013-2018.
*2012: 135 investments; of which 84 in Irish companies 2012: €54m invested in Irish companies. The cost to the exchequer under the SVC schemes was €14m 2013: 153 investments;
of which 94 in Irish companies 2013: €59m invested in Irish companies. The cost to the exchequer under the SVC schemes was €15m*Enterprise Ireland makes commitments to VC funds under the Seed
however also make non Irish investments. National Policy Statement on Entrepreneurship in Ireland 65 Appendix 2:
development impacts (EI evaluation feedback) n/a n/a Hi-Start Numbers run 1 2 Participant numbers 14 43 No. of investment ready business plans
Tourism and Sport EGFSN Expert Group on Future Skills Needs EI Enterprise Ireland EIB European Investment Bank EIF European Investment Fund EIIS
Employment and Investment Incentive scheme GEDI Global Entrepreneurship Development Index GEM Global Entrepreneurship Monitor HEA Higher education Authority HEI Higher education institutions HBAP Halo Business
IRC Irish Research Council ISIF Irish Strategic Investment Fund ITI Intertradeireland KTI Knowledge Transfer Ireland LA's Local authorities LCDC Local Community
in part by ensuring that budget policies support investments and tax expenditures that drive GDP growth and that boost overall work effort.
In addition to the fiscal deficit, America also faces deficits in investment and competitiveness that are equally important. 2 The best solution is to choose a mix of regulatory reforms, investment increases,
spending cuts and tax increases that promote investment and make America a more competitive place to do business.
Merely increasing federal spending to boost aggregate demand or treating all spending and taxes the same (e g.,
in part by ensuring that budget policies support investments and tax expenditures that drive GDP growth.
Yet cutting public investment (including increasing certain business tax expenditures) in the name of fiscal discipline will slow growth
but it would also increase the investment deficit, reducing the rate of innovation and productivity growth.
what would be achieved by cutting true non-investment spending. Instead of focusing solely on the budget deficit, Congress and the Administration should take a more focused approach to reducing the budget deficit by adopting policies that boost economic growth,
DISTINGUISHING BETWEEN PRODUCTIVE INVESTMENT AND CONSUMPTIVE SPENDING BUDGET POLICIES To effectively address the budget while also growing the economy,
the second two on reducing the budget deficit. 1. Increase investments, including business tax expenditures, which spur productivity,
innovation and competitiveness (PIC) by boosting spending on public investment and cutting taxes on business (including cutting statutory rates, expanding pro-growth incentives,
a. Creating a comprehensive tax credit for business investments in R&d, new equipment, and software and workforce training;
as opposed to investment. The focus should largely be on cutting entitlements to seniors, but also on areas of spending that lower productivity (e g.,
investment and trade deficits and will also spur growth which will help reduce the debt-to-GDP ratio. 4 An increase of just 0. 1 percent in the GDP growth rate would reduce the budget deficit by as much as $300 billion cumulatively over the next decade. 5 Given the economy's poor
they also need to distinguish between productive investment (expenditures that expand productive capacity, drive economic growth and increase future incomes)
To distinguish between taxes and PAGE 4 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 spending that support investment versus consumption,
but by increasing investment and spurring more work effort, America can begin closing its three deficits
Tax Cuts and Investment Increases Tax increases and Spending cuts Corporate Tax Reductions Tax increases Establish an innovation
and investment tax credit Lower the corporate tax rate Increase taxes on individuals Introduce new taxes (e g.,
, carbon taxes) that do not significantly slow growth Broaden the tax base Increased Outlays Reduced Outlays Research and development Education Transportation infrastructure Federal IT investment Limit entitlements Boost government efficiency Reduce industry
which, for many of the tax reductions and investment increases, we believe would be significant.
INCREASE INVESTMENTS, INCLUDING CUTTING BUSINESS TAXES A growth-oriented budget plan needs to encourage productivity-enhancing investments by the private and public sectors. This means reduced taxes on business, particularly on investments,
while also cutting the corporate rate will help move the United states away from a consumption-centered economy to an investment-centered one.
whether Congress should increase tax incentives for investment or reduce the corporate tax rate. Congress should do both.
Increase Tax Incentives for Investment Business investment in R&d new equipment and software and workforce training drive PIC.
However, in the last decade, the United states has fallen behind other nations in investment in these key building blocks. 8 As a result,
Congress should create a comprehensive tax credit for business investments in R&d, new equipment and software,
Such action would provide a tax credit of 45 percent of business investments on R&d and skills training,
However, once the effects of induced investment and higher economic growth were taken into account, ITIF estimated that the expanded credit would pay for itself after 15 years. 9 In other words,
whether Congress should increase tax incentives for investment or reduce the corporate tax rate. Congress should do both.
a lower rate would spur more investment, in part by increasing the after-tax returns from investments
and by reducing the incentive to move production offshore and encouraging more foreign companies to locate business activity here.
Policies that reward productive investment clearly increase the capital stock of the economy in turn producing higher incomes and more tax revenue.
Investment in R&d, Education, Infrastructure and Government Efficiency Federal public investment can be defined as those expenditures made today by government that produce income for the United states with a net present value greater than the cost of the expenditure.
While some on the left want to call all favored spending investment in order to place a greater veneer of respectability on it,
Federal spending is truly investment only if it yields returns in excess of PAGE 7 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 expenditures.
America faces an investment deficit and increased public investment along with incentives to spur private investment is needed to remedy it. 15 In particular, Congress needs to increase public investment in four key areas:
science and technology, education and skills, surface transportation infrastructure and federal information technology (IT) investment. Although these policies would also increase the deficit,
they would have similar dynamic effects to those discussed above, which would partially or perhaps fully offset the cost.
Science and Technology The United states is in a global competition for innovative advantage. 16 Our international competitors have been strategically ramping up their public investments in research over the last two decades
while U s. investments have grown much more slowly. In terms of federal funding for nondefense R&d as a share of GDP
the United states ranked just twenty-eighth out of thirty-four nations studied by the OECD in 2010.17 And in terms of government investment in university research, of thirty-nine nations,
There are several areas that should be targeted for investment, including science, technology, engineering and mathematics (STEM) education, manufacturing skills standards,
while the required investments amount to nearly $100 billion per year. 25 Congress should increase the gas tax by 35 cents per gallon
Congress needs to increase public investment in four key areas: science and technology, education and skills, surface transportation infrastructure and federal information technology investment.
PAGE 8 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 Federal IT Investment A strategy to boost the productivity of the federal government should be a key part of any budget reduction strategy.
Mckinsey & Company finds that a 15 percent improvement in the efficiency of federal government operations could generate $1. 3 trillion in savings over the next ten years. 27 These sorts of efficiency gains have been routine
The kinds of investments and tax cuts proposed above are critical to boosting productivity. But to address the budget deficit without even larger cuts in spending
as noted above, increasing critical PIC-inducing investments and increasing incentives for expanded work hours.
but to the extent possible, cuts should not harm productivity, investment, or competitiveness and should also lead to increased work hours.
as commodity prices are enough to encourage future investment in the development of oil and gas.
and investment. 70 One reason for the lack of effect on the former is that as Moffit and Wilhem found,
there is not much evidence that they affect investment, which is what really matters. Currently, ordinary dividends are taxed at roughly 25 percent,
up from 15 percent before the ATRA passed. 73 Rather than leading to more investment,
there is some evidence that reduced taxes on dividends actually lead to lower levels of investment by companies as they pay out more earnings in dividend payments.
and a cutback on larger investments that take longer to receive a payback. 74 Given the significant decrease in investment in structures, equipment and software by companies in the United states over the last two decades,
the much more persuasive argument is that investment managers are essentially getting paid a salary for their investment advice.
and competitiveness, it will need to move from a consumption economy to an investment one, and policies that reduce spending on housing will move us in that direction.
and competitiveness, it will need to move from a consumption economy to an investment one, and policies that reduce spending on housing will move us in that direction.
As such any debt reduction plan should focus on expanding growth and reducing the debt-to-GDP ratio, both by increasing growth through increased investment and reduced corporate taxes,
An Investment Guide to American Renewal (ITIF; Breakthrough Institute, November 2011), http://www. itif. org/files/2011-taking-three-deficits. pdf. 3. For an example, see:
A. Stewart and Robert D. Atkinson, Restoring America's Lagging Investment in Capital Goods (ITIF, October 2013),
http://www2. itif. org/2013-restoring-americas-lagging-investment. pdf. 9. This is a net cost with approximately $34 billion of offsetting savings coming from eliminating expensing.
This also includes the credit on the induced expansion of investment. See: Matthew Stepp and Robert D. Atkinson, An Innovation Carbon Price:
Djakov et al. conclude that a 10 percentage point increase in the 1st year effective corporate tax rate reduces the aggregate investment to GDP ratio by about 2 percentage points.
and Andrei Shleifer, The Effect of Corporate Taxes on Investment and Entrepreneurship, NBER Working Paper no. 13756 (2008), www. nber. org/papers/w13756. 12.
An Investment Guide to American Renewal. 16. Robert D. Atkinson and Stephen J. Ezell, Innovation Economics:
The Affordable Care Act added an additional 3. 8 percent tax on net investment income
Luke A. Stewart and Robert D. Atkinson, Restoring America's Lagging Investment in Capital Goods (ITIF, October 2013),
http://www2. itif. org/2013-restoring-americas-lagging-investment. pdf. 76. Congressional Budget Office, Options for Reducing the Deficit:
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