Tech bodies welcome Budget 2021

Sarah-Jane Larkin, Irish Venture Capital Association
Sarah-Jane Larkin, Irish Venture Capital Association

Alliance for an Innovation-Driven Recovery, Technology Ireland praise establishment of €30m innovation fund

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13 October 2020 | 0

There was broad enthusiasm for measures announced in today’s budget that would favour the indigenous tech sector among industry bodies.

The Alliance for an Innovation-Driven Recovery has praised the decision by the Minister for Finance Paschal Donoghue to review the Employment & Investment Incentive Scheme and the establishment of a new €30 million equity funding to invest in domestic, high innovation enterprises.

The five member organisation of the Alliance are Euronext, Halo Business Angel Network, Irish Venture Capital Association, Scale Ireland and TechIreland.

 

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Speaking on behalf of the Alliance, Sarah-Jane Larkin, Irish Venture Capital Association director general, said: “With the right structures there is major scope to attract more private investment into early stage indigenous tech start-ups and build a pipeline of scaling companies that will reduce our economic dependency on foreign direct investment.

“According to Ibec, households saved €9.8 billion in the first seven months of 2020, holding €20 billion more in Irish banks than they owe in debt. With zero or negative bank interest rates there is a pool of funds that could help to drive an Irish economic recovery if the right EIIS incentives are available, which they aren’t at the moment.”

However, Larkin added that comparatively high levels of capital gains tax remain a drag on entrepreneurship in Ireland and she hoped that the Minister would address this in future.

“As the Minister has pointed out we have to prepare for a post Brexit future. This includes being competitive with post Brexit incentives which will be offered in the UK,” she said.

More flexibility needed

Also responding to this afternoon’s budget, Una Fitzpatrick, director of Ibec group Technology Ireland, said: “There were some positive announcements, but as always the devil will be in the detail. We were very happy to see that our call for Knowledge Development Box relief to be extended has been included. The plan to set up an equity fund for domestic high-innovation enterprises, which will leverage European capital to match venture capital funding is very welcome but must be delivered without delay.

“The proposal to develop a detailed strategy to support employers and employees adapting to remote working is also welcome, but we need to see real and tangible progress. The current working from home allowance of €3.20 a day is rigid and a more flexible approach is needed. Equally the adjustment to CGT Entrepreneur Relief to include passive investors who have owned 5% of shares for three years is a step in the right direction but needs to be expanded.

“The large increase in capital investment overall is welcome and brave. We are calling on the government to use some of that investment to maintain and strengthen the health of the technology ecosystem, not just with passive support but by modelling best behaviour in GovTech with regard to digital transformation.

“The technology sector in Ireland has undoubtedly been one the keystones of Ireland’s economic and social growth in the past 30 years. Ireland is now the envy of many countries, but our current achievements are no guarantee of future success. Ireland’s technology sector is the engine that will drive Ireland’s recovery. It is vital that every aspect of government policy is focused on clearing the way for that recovery.”

Bringing more businesses online a necessity

The lack of supports for small, independent businesses has caused concern for the digital, online and ecommerce representative body.

Digital Business Ireland CEO Lorraine Higgins said: “The supports announced for small independent retailers to help them get online and develop capability falls short of what is required to help one of the most vulnerable sectors. With many independent shops struggling with a lack of footfall brought about by the pandemic, the lack of meaningful support is concerning”.

“An obvious solution would have been an increase in funding under the existing Digital Trading Online Voucher which is generally the first step for businesses that want to establish an online presence. Currently funding under this scheme amounts to €2,500 but the reality is it costs many multiples of this in order to have a fully functioning ecommerce website capable of processing orders and taking payments”.

Higgins continued: “While further funding for the Online Retail Scheme is welcome the reality is the eligibility criteria prohibits small businesses from applying because you must have ten employees. While many of these companies availing of this support are scalable and targeting other markets we can’t lose sight of small indigenous businesses servicing their communities and beyond.

“Never before has the need for digital, online and business been more acute. The Covid-19 pandemic, which is engulfing our world, has brought to the fore the pressing need for an omnichannel, bricks and clicks approach to business. This model is entirely compatible with public health requirements given the reduction in human-to-human contact which is essential to curb the spread of the virus until a vaccine is available,” Higgins concluded.

TechCentral Reporters

Updated 14 October to include comment from Digital Business Ireland

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