Dáil Éireann debate -
Tuesday, 20 Nov 2001

Vol. 544 No. 3

Written Answers. - New Business Projects.

John Perry

Question:

161 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the level of funding to which emerging business projects with commercial potential will continue to have access; her views on whether such funding is vital to the success of new and early stage business projects; and if she will make a statement on the matter. [28816/01]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

Since 1995 Enterprise Ireland, through its investment services directorate, has implemented a policy of forming partnerships with private sector institutions, corporates and other venture capitalists to establish new venture capital funds to invest this funding in Irish SMEs. At the end of 2000 all of this funding was committed to investments.

Investments made in 2000 by the Enterprise Ireland partnership funds with the private sector were £28.8 million. This represents a 40% growth rate over the previous year, with the significant change that £13.7 million – 47% – of the total was in follow-on investments, compared to £5.1 million – 24% – in 1999. This is a measure of the continuing need of companies to have access to venture capital at various stages of their growth cycle.

Highlights to the end of 2000 were as follows: 15 funds fully operational; investments of £28.8 million in 2000 compared to £20.6 million in 1999; investments in 67 companies in 2000 compared to 51 in 1999; investments of £15.1 million in 29 new companies and £13.7 million in 38 follow-on investments in 2000, compared to £15.5 million in 32 new companies and £5.1 million in 19 follow-on investments in 1999.

The areas of investment included software, communications, multimedia, manufacturing, life sciences and services: 87.1% of the investment in 2000 was in start-up and early stage companies; 71.54% of invested funds in 2000 was in software related products; investments in regionally located projects outside Dublin in 2000 was £8.4 million. The total invested to December 2000 in the regions was £17.7 million, representing 26.6% of invested funds. Employment levels in companies at the time of the initial investment was 1,620 at 31 December 2000, this number has increased to 3,505.

Venture capital investment, both in Ireland and globally, has changed during the year with a new and more basic investment environment emerging. With the slowdown in the world economy, particularly in the US from mid year, Enterprise Ireland expects this to change further as fund managers become more selective on new investments particularly for the seed and early development stage. Furthermore, companies' access to the capital markets has slowed requiring fund managers to continue their support of existing investments, resulting in less finance being available for new seed and early stage companies.

To ensure that new and early development stage companies continue to have access to capital a new seed and venture capital scheme is being rolled out by Enterprise Ireland. The key focus of this funding is to develop the early stage venture capital business nationally with particular focus on the regions and new emerging sectors.

In addition to working with the venture capital sector to leverage these new funds, Enterprise Ireland continues to work with its client companies on a case by case basis to facilitate their growth in sales and exports. A key element of this is funding assistance by way of ordinary equity, preference shares and non-repayable grants.

Regarding funding made available by the city and county enterprise boards, under the National Development Plan 2000-2006, capital grants up to a level of 50% of the cost of the investment not in excess of £100,000 are available under the local enterprise development sub-programme of the south and east and Border, midlands and west operational programmes.

The portions of financial assistance in excess of 40% in the BMW region and in excess of 35% in the south and east region are grants in refundable form. Micro-enterprises may also avail of employment grants up to £5,000 when labour shortages can be demonstrated and feasibility grants to a maximum of 60% on the BMW region or 50% in the south and east region, subject to limits of £5,000 and £4,000 respectively.