Venture capitalists seek to raise €1.5bn for investing in Irish tech firms

IVCA chairman John Flynn
IVCA chairman John Flynn

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3 October 2014 | 0

Irish venture capitalists face a critical need to raise €750 million to help existing Irish tech firms scale to the next level, said John Flynn, chairman, Irish Venture Capital Association (pictured) at the organisation’s annual dinner in Dublin last night.

Flynn said the Irish venture capital industry can leverage this to €1.5 billion in order to help indigenous technology firms become global players. He also called on entrepreneurs and their backers to become more ambitious in growing larger Irish technology  companies rather than settling for an early exit. “Ten times the employment growth occurs in the five years post-IPO so the prize for the Irish economy in building independent sector leaders is significant.”

He said that opportunities for the indigenous Irish technology sector have never been greater. “It has become easier to launch a business. Prototypes can now be developed with two to five person teams over six months with investment of less than €1 million versus the €5 million which was common place not so long ago.”

Flynn added that the growth of new categories such as the Internet of Things, Big Data, mobile and cloud computing open up significant new opportunities for Ireland.

“This is a strong endorsement of Ireland’s activity rate and positive momentum and underpins the country as one of the top tech hubs in Europe… Over €200 million has been invested in the first half of 2014 and our start-up entrepreneurs are better supported and funded than in any other European country.”

However, he noted that Irish risk takers in future could be enticed to Northern Ireland or the UK where entrepreneurs’ relief reduces the rate of capital gains tax to 10% compared to 33% in Ireland. He also called for a reduction in CGT to 12.5% or 15% for innovation activities as defined under existing tax legislation.

Flynn added that Ireland’s corporation tax rate has been a factor in attracting foreign direct investment but that with increasing international focus on this “it is more vital than ever to encourage indigenous enterprise and start-ups”.

“The market for Irish tech firms is healthy. Multinationals are sitting on large cash piles and are keen to fill in portfolio gaps through acquisition. We need to attract more pension fund investment by addressing regulatory issues and communicating the recent wave of positive returns.”

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