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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:
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
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,
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:
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,
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.
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.
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;
& 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 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 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
. 1m EVP Early Stage Technology Fund â 10m ICC Regional Venture capital Fund*â 7. 6m Seroba Bioventures â 20m 88
& Venture capital Scheme 2007-2012***Trinity Venture Fund 2 converted to TVC Holdings plc. in July 2007 FO Trinity V 4th Leve Seed
& 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
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
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,
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,
(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.
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.
Small (high-tech) companies, usually financed by venture capital funds, represent another interesting wellspring of external knowledge for large companies.
Classic venture capital funds (VCF) were somewhat reluctant to finance Isobionics at the time it was established,
The start-up was financed combining investments from VCFS, a regional venture capital investor in which DSM participated, bank loans,
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
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.
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:
14 Measuring Irish Entrepreneurship †International Benchmarks 15 Entrepreneurship Index 16 GEDI †2014 16 Basic characteristics †Ireland 17
Alternative and innovative sources of financing 41 4. 3 Microfinance Ireland & Credit Guarantee Scheme 41 4. 4 Venture capital 41 4. 5 Access
we must benchmark ourselves against the best in each area and promote improvement across the system.
and international venture capital investors and continue to develop the domestic venture capital sector. Ensure that the banks develop the skills
Measuring Irish Entrepreneurship †International Benchmarks Measuring a country†s entrepreneurial profile is not a straightforward exercise.
Benchmarks are required to measure the impact of entrepreneurship and compare performance across a number of variables and between comparator countries.
Ireland is performing well against a number of international benchmarks on various business environment indicators.
IRELAND GEDI Benchmark or Indicator Reference point Size of population (million) 4, 588,252 Per capita GDP Euro (PPP, World bank) 40,375 Rank in Doing Business index 2013 15
and the availability of venture capital. GEDI addresses many of the deficiencies of previous measures by combining some of the basic requirements.
A number of the larger EU countries, such as Britain (10th), France (13th) and Germany (17th), all perform below their potential because of a shortage of venture capital.
while India has a shortage of venture capital. The capital-rich Gulf states score very low on launching new products and on starting new companies.
Given that Ireland is performing strongly across international entrepreneurship benchmarks, as measured by GEDI, Ireland†s entrepreneurial profile is that of an innovation-driven economy.
and data for Ireland compiled across international benchmarks. This analysis will reveal the particular conditions that are driving high
DJEI) Develop a consistent benchmark index for Ireland that will measure and track trends across the national entrepreneurship system.
This strategy will set out performance indicators and measures to benchmark entrepreneurial activity in Irish higher education.
HEA) Set out performance indicators and measures to benchmark entrepreneurial activity in Irish higher education. DES, HEA) Develop an Entrepreneurial Phd programme with a view to training more scientists in SFI supported research teams to launch their own businesses.
The availability of seed and venture capital funds The availability of tax breaks under various startup tax reliefs An expanding suite of easy-to-use regimes that take unnecessary compliance costs out of the requirement to meet
500 Startup Training 4. 0 3, 800 Seed & Venture capital 55.0 186 Commercialisation Fund 15.7 64 Incubation Centres (26) 2. 0
355 National Policy Statement on Entrepreneurship in Ireland 29 The supports available range from startup training and feasibility study grants to direct support, access to seed and venture capital and various levels
A wider range of performance indicators will be developed on foot of this Policy Statement to benchmark progress
Benchmark the quality and outcomes of these courses in Ireland against international best practice. DJEI and other Depts./Agencies) Vigorously promote the full range of supports to startups under the Action Plan for Jobs brand to ensure startups are aware of and avail of the full range of available supports.
For example, the seed and venture capital markets in Ireland have tripled in size in the past decade, with almost half of this finance coming from funds leveraged by Enterprise Ireland.
and impact of both schemes. 4. 4 Venture capital Venture capital is an essential source of funding for innovative
In the last 10 years Irish venture capital firms have invested â 1. 5 billion in Irish SMES
The sizes of the venture capital funds have increased and the skill set of Irish venture capitalists has deepened considerably in recent years,
a Government initiative designed to attract leading international venture capital fund managers 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 â 80 million, out of a total EI allocation to the fund of â 125 million.
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.
EI, NPRF) EI will issue a second call for expressions of interest under the Seed and Venture capital Scheme 2013-2018.
The private sector supported Seed and Venture capital framework in Ireland, including the current AIB Seed Capital Fund,
and data for Ireland compiled across international benchmarks. Many of the performance indicators listed below focus on output.
Further indicators will be added from international benchmarks such as the Global Entrepreneurship & Development Index (GEDI. Culture, Human Capital & Education The Global Entrepreneurship Monitor (GEM) provides an annual assessment of the entrepreneurial activity,
Performance indicators will be developed to benchmark progress to compare best practice at home and abroad and to set stretch targets.
Seed & Venture capital Scheme: Aims to increase the availability of risk capital for SMES to support economic growth through the continued development of the Seed
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.
and Venture capital Schemes and minimum of those commitments are invested in Irish companies. The funds do
Seed & Venture capital Scheme: Aims to increase the availability of risk capital for SMES to support economic growth through the continued development of the Seed
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.
We are introducing closer monitoring of impacts to measure performance and to test areas of opportunity against international benchmarks in the areas of job creation, startups, market penetration, innovation, efficiency of public sector interface with enterprises, cost competitiveness, finance
Benchmark metrics are supplemented with key data from the annual surveys of the Enterprise Agencies, such as employment, expenditure, sales,
650 respectively between 2011 and 2013 and further progress is needed to get to international benchmarks. Across the EU
ï§Increase researchers in enterprise to international benchmarks; and ï§Target to double patent and trademarks and registered design performance.
equity provision or venture capital support. 7 Central bank SME Market Report 2014 H2 26 Selected Targets for 2015:
which is below international benchmarks. Increasing intellectual property management and exploitation capabilities within firms across all sectors of the enterprise base is an important step in addressing this gap.
ï§The commitment by EI of â 99.5 million to a number of funds under its Seed and Venture capital Scheme (2013-2018;
& Venture capital Scheme (2013 †2018) to stimulate job creation and support the 68 funding requirements of young innovative Irish companies.
The overall vision of the Seed & Venture capital Scheme (2013-2018) is to increase the availability of risk capital for SMES to support economic growth through the continued development of the Seed
& Venture capital Sector in Ireland to achieve a more robust, commercially viable and sustainable sector.
D/Finance, DJEI) 120 Issue a competitive second call for expressions of interest under the Seed and Venture capital Scheme 2013-2018.
Under each objective we shall identify key benchmarks and develop actions with public agencies and private actors in the field to deliver continuous improvement. 7. 1 Progressing the National Policy Statement on Entrepreneurship The six key elements that make up the ecosystem for entrepreneurship in Ireland are:
HEA) 187 Set out performance indicators and measures to benchmark entrepreneurial activity in Irish higher education. DES, HEA) 188 Work with the Department of Social Protection to promote the Back to Work Enterprise Allowance,
D/Taoiseach, All Departments) 247 Benchmark key business costs and publish a report highlighting areas where Irish enterprise costs are out of line with key competitors.
researchers in enterprise to international benchmarks ï§Target to double patent and trademarks and design performance 2. 3-Europe†s Energy Innovation Hub 2. 6
Capital Scheme SEAI Sustainable Energy Authority of Ireland SVCS Seed and Venture capital Scheme SFA Small Firms Association SFI Science Foundation Ireland SME
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