VC-backed companies created more than 1,600 jobs a year since 2003 – report

IVCA
Michael Murphy and Regina Breheny, Irish Venture Capital Association

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1 September 2016 | 0

Venture capital-backed firms created 20,000 high-level jobs since 2003, adding 3,672 jobs between 2013 and 2015, according to an economic impact study by DCU Business School.

The DCU study found that VC-backed companies increased employment by 19.7% in 2015 and by 14.4% per annum in the three year period 2013 to 2015. This compares to an overall increase in employment in the economy of 3.4% in 2015 and 2.8% per annum 2013-2015.

Author of the report, Dr Eric Clinton of DCU Business School, said: “We found that VC-backed companies grow faster, create more jobs, exports and invest more in R&D than other SMEs.

“VC-backed firms are an important constituent in helping to build a knowledge economy. We found that high-tech companies account for 98% of funds raised which is the highest technology weighting in Europe and more equivalent to Silicon Valley.”

Between 2013 and 2015, Irish SMEs have raised €1.2 billion in venture funding. Michael Murphy, chairman, Irish Venture Capital Association said, “The level of venture capital investment and the added value that it brings has been due to the well capitalised Irish venture capital infrastructure which has been developed over many years. This has enabled Irish VCs to nurture quality companies from start-up through early and expansion stages of development and to attract overseas investment.”

The average annual growth rate in revenues since 2012 was 29.4% with over 80% of this generated through exports. In the three-year period to 2015, VC-backed companies generated exports of €1.5 billion, at a rate of 25% growth per annum.

Technology companies increased R&D by 21% per annum in the same period and in 2015 represented 34% of all Irish SMEs share of total spend on BERD (Business Expenditure on Research and Development). Expenditure on sales and marketing has increased by 23.6% annually over the same time period.

Regina Breheny, director general, IVCA, said: “An active local venture capital market plays an important role in leveraging the success of the Government support for the IDA in attracting FDI [foreign direct investment]. These organisations are often breeding grounds for the entrepreneurs of tomorrow and regularly spin out new ideas and companies from existing operations with venture capital support.

“The DCU report also confirms that VC investment helps to commercialise Government investment in third level research, Science Foundation Ireland Centres for Science, Engineering & Technology (CSETs) and Strategic Research Clusters (SRCs). Approximately 75% of Irish university spin-outs go on to access venture capital and 66% of the SMEs collaborating within the CSETs and SRCs are venture backed.”

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