| Venture capital (1181) |  |
| Venture capital (1181) | |
The emphasis is made on involving the venture capital (VC) industry at the early stage of start-ups lifecycle.
a new headline indicator allowing as part of the EU 2020 strategy to benchmark the EU€ s performance against its main trading partners.
and provides a tool for policymakers to benchmark regions. The interest of this attempt to develop a National Innovation Strategy is in its overall approach,
But it fell short of surviving a shot at normal speed from a. 22 caliber rifle, the benchmark for protection for a type 1 bulletproof vest.
As a benchmark, the initial individual reference models or other models can be used. •Evaluation based on an existing framework:
She worked in the large projects carried out with Duodecim (the Finnish Medical Society), Pfizer Finland Ltd, Nokia Ventures, Nokia Mobile phones, etc.
SMES and new business ventures are important players in this new environment. They have a key role in processes of creative destruction
and improving institutional environments for social entrepreneurship. 1. INTRODUCTION SMES, ENTREPRENEURSHIP AND INNOVATION Â OECD 201024 The creation of new business ventures and innovation in existing small
Venture capital firms can now provide capital quickly to the most promising ventures whether or not they are in a large firm context.
hence providing an exit to the original innovators and venture capital investors. They may also be involved even more closely for example in venture investing
provision of complementary assets and technologies, and even the provision of key people, including the would-be innovating entrepreneur.
but can occur either through or independent of business ventures. Social entrepreneurship and social innovation are of fundamental importance today
Our emphasis in this book is on two parts of the spectrum, namely the new start-up venture
Creative destruction Venture creation and SME growth renew economies by forcing the contraction, exit or upgrading of incumbent competitors.
Knowledge spillovers New venture creation and knowledge exchanges between knowledge-generating organisations and SMES also enable the commercialisation of knowledge that would
the University of British columbia has a venture fund, the University of Guelph has raised money for commercialisation by listing its intellectual property portfolio on the stock market,
Considering entrepreneurship as all venture start-ups, Audretsch et al. 2006) and Acs et al. 2004,2005, 2009) suggest that commercialisation of knowledge by new start-ups explains part of the link between entrepreneurship
and new ventures are active in breakthrough innovation in sectors such as biotechnology and information and communication technologies.
Policy responses such as grants, loans, loan guarantees, mezzanine finance, seed capital, venture capital, business angel finance and investor readiness programmes need to be explored (OECD,
or spun-out to create new ventures. Knowledge Creation Entrepreneurship Mobilising Resourcesselection 11 Missing an open goal?
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,
KLM€ s innovation fund acts as a venture capital mechanism to fund product and IP development among start-up businesses.
(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
5 Enterprisestart2 Programme 60 6 Enterprise Ireland Propel Programme 66 7 Enterprise Ireland Ideagen Programme 81 8 Enterprise Ireland Seed & Venture capital
& Venture capital Programme-in terms of its contribution toward improving the eco system for start ups County and Enterprise Board Programmes:
Venture C he HPSU pro e advisory serv RT-UPS & E ups programmes,) and the CE Capital Fund gramme deli vices and guid ENTREPRENE, the majori Bs†Start You ds (17 per ce ivered by En dance provide EURSHIP 7 ty is ur
or to identify at an early stage that a proposed venture is unlikely to be viable.
and 141 in Enterprisestart2 for the period 2009 to 2011 FORFà S 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.
the VC market in Ireland was still relatively young and underdeveloped vis-Ã-vis international benchmarks
which the Enterprise Ireland Seed & Venture capital Programme is delivering on its stated objective which is to:
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,
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) FORFÃ S 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.
and is similar to a Venture capital approach. Clients receive funding towards the achievement of an overall business plan,
or (b) projects that realise through structured consideration of the idea that the venture is not viable.
They also reviewed the programme vis-Ã-vis international benchmarks and other enterprise supports such as the Enterprise Platform Programme (EPP) run by the Institutes of Technology.
FORFÃ S 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,
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
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 development of a venture-backed company has three basic financing stages: Seed capital is provided to research,
According to the US National Venture capital Association â€oefor 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;
The overall aim of the Seed and Venture capital Programme is to: Further develop The irish VC sector
whereby the State does not have an operational role in running the funds and making 73 National Venture capital Association, 2011,
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,
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, â€oeengineering 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 FORFÃ S 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
the VC market in Ireland was still relatively young and underdeveloped vis-Ã-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:
& 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.
Department 81 National Venture capital Association, 2011, Venture capital Industry Raises $2. 7 Billion in Q2 2011, Press release 96 challenges in raising VC in recent years.
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.
and build on the success achieved over the (1994-99 programme) by continuing to provide support through the seed and venture funds mechanismâ€.
This report stated that there is a clear role for the State in funding ventures at the seed stage.
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
and the Enterprise Ireland Seed & Venture capital Scheme in developing the domestic Irish VC industry
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 â€oesupport the development of seed
and venture capital funding in Ireland†and that it will â€oeengage with investors (financial institutions, private investors,
and Venture funds are especially important in ensuring a flow of venture equity into companies.
and the absolute need to support economic growth committed to introducing the Innovation Fund Ireland86 to â€oeattract international venture capital fund managers to Ireland,
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,
Through this initiative, the Government made available â 125 million for Enterprise Ireland to invest in international venture capital funds that establish a presence in Ireland
and evaluating seed & venture capital opportunities. The calculation is based on the aggregation of salaries for all staff levels in the first instance.
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.
and Venture capital Scheme 2000-2006 are still open for making investments FORFÃ S 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,
& Venture capital Scheme providing detailed updates of the three VC initiatives undertaken in partnership with the private sector.
Investment Model The irish Seed and Venture capital Scheme is run on a â€oepari passu†basis whereby the Government is a direct investor in the funds
and sharing risk. 8. 6 Outputs The primary outputs of the Seed & Venture capital Scheme are:
Enterprise Ireland Partner Funds established under the Seed & Venture capital Schemes 2 & 3 Scheme 2, 2000†200688 Size Scheme 3, 2007†2012 Size Total
Fund II â 51m BOI Venture capital Ltd*â 8m BOI Seed and Early Stage Equity Fund 2009 â 27m Delta Equity
Ireland Ulster Bank Equity Fund Limited Partnership â 19m Ulster Bank Diageo Venture Fund â 75m Hotorigin Fund I*â 2
. 1m EVP Early Stage Technology Fund â 10m ICC Regional Venture capital Fund*â 7. 6m Seroba Bioventures â 20m 88
*Closed for new and follow on investment**c. â 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
ORFÃ S EVAL Venture Fund el Ventures U nd nds ents made to r of Compan he end of 201 ise Ireland p erstate the e
& 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
supporting blication â€oeth iding the ess llowing area team format of realistic b echnology d e companies of internatio onitoring of p f Investment d & Venture
Venture Capit th, have add objectives; h experience th; rger VC syndi eation of sha tive to Dece 0 Report succeed com and seed fun es.
& ENTREPRENEURSHIP 103 8. 7 Outcomes & Impacts There are a number of outcomes from the Enterprise Ireland Seed and Venture capital Programme †some
and Venture capital Programme †and others result from a range of factors relating to the overall business environment.
& 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.
European Venture capital Association The State commitment to the partner funds has a leveraging effect which is demonstrated in two key ways:
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 has not been included in this analysis 94 Venture capital Fund size: â 25 million plus; Seed Fund size:
9 36 Yes BOI Venture capital Ltd. â 8m 7 7-Delta Equity Fund II Limited Partnership â 90m 26 167 Yes Enterprise
10m 6 18 Yes ICC Regional Venture capital Fund*â 7. 6m 6 11-Seroba Bioventures â 20m 10 27 Yes Trinity Venture
Fund II â 138. 7m 17 40 Yes 4th Level Ventures University Seed Fund â 17. 2m 13 79 Yes Total Funds
Fund II â 75m 7 4 Yes Ulster Bank Diageo Venture Fund â 75m 8 0 Yes Total Funds â 550. 6m
Danish Venture capital Association, 2008, Active ownership and transparency in private equity fund; Background report and Guidelines for responsible ownership
& VC firms shows that The irish VC industry has followed much the same trajectory as in benchmark countries;
European Venture capital Association 0 100 200 300 400 500 600 20 00 20 01 20 02 20 03 20 04
European Venture capital Association Significant Private Sector Involvement As discussed above, there is significant private sector involvement in The irish seed & VC industry.
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
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
Secondly, data from the IVCA states that there has been â 3 billon of venture, angel and related investment in Irish SMES since 200099.
Venture capital Association, Yearbook 2011, Of this, approximately â 425.3 million (44 per cent) has been through the Enterprise Ireland Partner Funds,
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.
& Venture capital Programme and the equity supports available through the HPSU package. Of the 186 companies that have received seed
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
& 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
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 across jurisdictions shows that The irish VC industry has followed much the same trajectory as in benchmark countries104
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
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.
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
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.
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, â€oeengineering 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,
and advice on setting up or expanding a micro business venture. This involves signposting of services and supports for existing and would-be entrepreneurs.
(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:
They also reviewed the programme vis-Ã-vis international benchmarks and other enterprise supports such as the Enterprise Platform Programme.
These stories about applying open innovation in small firms successfully can barely be compared with the open innovation ventures of large manufacturing companies, such as Xerox, P&g, Philips, Lego, and IBM.
we focus on how fostering a good relationship between the new venture and the company that developed the technology is instrumental in producing a commercially successful venture.
The second example illustrates the opposite case: A small engineering company licensed its technology to a large company to develop a new product for the large company.
therefore also not surprising that it took Toine Janssen only a week before he decided to pursue the venture.
Many venture capital-backed high-tech ventures have been established to explore business opportunities that can be exploited based on a new applications of technologies.
It is interesting to note that small ventures such as Isobionics need not have required all the technology in-house.
Combining people with strong ideas and reputation with green technology projects is an interesting recipe for successful new ventures.
Because Outlast was the engineering partner in this venture, its technical competencies were crucial in developing the microcapsules.
they should be able to extract more value from the venture. The most important take-away is that value cannot be extracted from the collaboration to the detriment of the partners.
Adapting the arrangements to collaborate comfortably for all partners is necessary in most collaborative ventures. ï Patenting is expensive for small firms,
Small (high-tech) companies, usually financed by venture capital funds, represent another interesting wellspring of external knowledge for large companies.
large companies have a strong incentive to become a preferred partner of these high-tech ventures.
which allows them to attract the ventures with the best technology. Open innovation also implies that large companies have to monetize their unused technology 38.
selling it, spinning off a venture, or even divesting a new venture that is ready to sell its first products.
Several large companies succeeded in increasing the productivity of its knowledge base 78 by searching for different external paths to the market.
Some companies have a corporate venturing department, which among other activities spins off internal ventures.
The first, Isobionics, illustrates how an external entrepreneur can establish a successful venture by licensing technology from a large firm.
Classic venture capital funds (VCF) were somewhat reluctant to finance Isobionics at the time it was established,
because the venture needed considerable investments which were too big a risk for VCFS 80 in an early investment stage 42.
The start-up was financed combining investments from VCFS, a regional venture capital investor in which DSM participated, bank loans,
and are eager to work with the venture. Finally, Toine also had to license the technology from DSM.
Isobionics illustrates how a promising venture can be established by l icensing unused technology of a large company.
and/or monetize unused technology by licensing the technology or spinning off internal ventures. Consequently, new opportunities exist for small companies,
The venture manager, therefore, must be experienced in finding the innovation champions in the company and contact the decision makers directly to keep the project on top of the pile. ï A start-up relying on the technology may be in an advantageous position compared to other start-ups
Business model innovations are high-risk ventures because a firm must search for new technologies and develop new products.
This, in turn, may endanger the open innovation venture. Licensing deals can also be negotiated in a way that allows both partners to profit maximally from the technology.
which emphasizes the role of experimenting in new venture management. Finally, the cases point to the need to integrate different management disciplines to understand open innovation in SMES.
Technology Ventures, Defense mechanisms and Corporate Relationships, Administrative Science Quarterly, 53: 295†332.36 See National Research Council (2004:
and pharma ventures. 43 Two inspiring articles to understand how complementary assets play a role in the valu e appropriation of innovations are Teece, D. J. 1986).
published innovation performance data from the Innovation Union Scoreboard (IUS) 11 and the Regional Innovation Scoreboard (RIS) 12 has been used to benchmark performance against the EU-27 average and the UK.
supporting the idea that a relatively large well-educated workforce is available to the ecosystem. •There is a gap in the data for financial organisations regarding venture capital in Northern ireland,
While there is limited data to benchmark their contribution, Intertradeireland research from 2009, on the design services sector on the island, suggested that such services were utilised under both because of lack of design companies (the sector is approximately one third the relative size of the UK€ s) and also a lack of understanding of the application and benefits
Microfinance Ireland should ring-fence money for a Micro Youth fund to facilitate youth-led business ventures.
and actions are required to improve the culture and support of all entrepreneurial startup ventures across all business sectors.
Learning from Billion-Dollar Startupsâ€, Cowboy Ventures, Techcrunch 2 november 2013. http://techcrunch. com/2013/11/02/welcome-to-the-unicorn-club/Sooner or later,
Microfinance Ireland should ring-fence money for a Micro Youth fund to facilitate youth-led ventures. 15.
With little or no funding available to small businesses from venture capital firms, banks or state agencies, the country didn†t ostensibly look like fertile startup territory.
and empowered entrepreneurs who are learning the basics of founding startups and launching successful ventures in an activity packed weekend.
Frontline Ventures: http://www. slideshare. net/Frontlinevc/the-irish-tech-startup-guide Many elements of a co-working space support the entrepreneurial ecosystem:
twenty-four of the top 50 venture-backed companies of 2011 were founded by immigrants (http://upstart. bizjournals. com/news/wire/2013/02/27/immigrants-could-create-jobs. html). 33
Raise awareness of the HBAN network and help its expansion. 6. 1. 2. Venture Finance For a small number of businesses
later stage growth can be funded by venture capital. The Department of Jobs, Enterprise and Innovation has set-aside â 175 million in the 2013-2018 budget with the target of leveraging an additional â 525 million in third-party capital for growing Irish startups.
Typical funding rounds for traditional venture capital range from â 2m to â 5m per round of funding,
Most startups tend to think of venture capital as a ready source for capital. In fact the venture capital industry these days is used primarily as business expansion capital after a company has achieved product market fit and just needs to scale.
Angel funding and accelerators are more often a source-42-How are funded entrepreneurial businesses in Ireland?%
Venture capital Investment from state agency Bank finance Bootstrapped or self-funded State aid 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:
Microfinance Ireland should ring-fence money for a Micro Youth fund to facilitate youth-led ventures. 15.
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