Big deal: Enterprise Ireland goes from strength to strength

The government-owned export credit agency last week added four funds with a total of $200m in capital to its arsenal as it revealed it had supported a record 229 startups last year.

Enterprise Ireland, the export credit agency owned by the Irish government, is one of the most active startup investors being tracked by Global Government Venturing. Last week alone, the agency backed four new funds totalling €188m ($200m) in capital, including the $65m Frontline Ventures Fund II and a $107m fund for Seroba Life Sciences.

That was not the only news to emerge from Dublin, where the agency is based, over the past seven days – Enterprise Ireland also revealed it had supported 229 startups in 2016, a record for the agency and an increase of about 5% over the previous year.

Enterprise Ireland invested a total of €32m in these startups through its Competitive Start Funds (CSF) and High Potential Start-Up programs (HPSU).

CSF injected early-stage capital into 128 companies, while HPSU made 101 investments, with each of the latter expected to generate 10 new jobs and up to €1m in sales within three to four years.

Of note here is that a total of 28% of investments were female-led businesses with 19 of these startups as portfolio companies under HPSU and 44 under CSF. The figure is a slight improvement over 2015’s total of 61 female-led startups.

Diversity, of course, was also a core theme at our GCVI Summit in California in January, where experts from companies including software developer Microsoft and conglomerate Alphabet agreed that a diverse team was beneficial in a wide range of factors, including financial.

Enterprise Ireland has also made an effort to seek more opportunities outside the Irish capital, and more than half (53%) of new portfolio companies are located outside Dublin. The agency also supported 15 spinouts from higher education institutions, while 33 startups were formed by entrepreneurs who moved to Ireland from overseas locations such as mainland Europe, the US and Russia.

Fintech startups attracted 17 investments, made up of seven through HPSU and 10 through a dedicated CSF fund.

The fintech sector has been receiving increasing attention not only because it is seen widely as highly disruptive, but also because Ireland is making a play for financial services firms based in London’s City district which have begun the process of relocating thousands of jobs to other EU countries to secure continued access to the world’s largest economy and trading block.

Cyril Roux, deputy governor of Ireland’s central bank, told the Guardian in December 2016: “Since the UK referendum, there has been a material increase in the number of authorisation queries from UK-authorised entities.

“We are seeing applications throughout the whole spectrum. We have applications for new business, the licensing of firms who are not present here, but we also see very significant indications from regulated firms that are small today but want to be big tomorrow.”

These moves are set to increase following UK Prime Minister Theresa May’s admission last month that she will seek to remove the country from the single market – the very factor that enables banks in one EU country to operate freely in another without the need to open separate offices there.

To boost fintech investments in the future, Enterprise Ireland on Thursday also committed capital to the Suir Valley Venture Fund of Suir Valley Funds, launched by investment firm Shard Capital Partners. This VC vehicle is the first initiative in the country that uses a regulated fund with a fully regulated alternative investment fund manager.

Suir Valley, which has achieved a first close with commitments of up to €20m from Enterprise Ireland, the Irish Government Agency and Shard Capital, will focus on fintech startups as well as the internet of things, augmented reality and virtual reality.

The fund management will be led by Barry Downes, founder of mobile app development platform FeedHenry, acquired by software developer RedHat in 2014 for €63.5m. It will operate out of Waterford Institute of Technology’s Research and Innovation Campus.

Toby Raincock, chief executive of Shard Capital, said: “We are delighted to launch, in partnership with Enterprise Ireland, Suir Valley Funds ICAV, which complements our existing award-winning fund management business.

“Barry’s proven expertise and successful track record in seed funding early-stage companies with innovative and disruptive technologies is a welcome addition to Shard Capital’s existing broking, asset management and corporate capital services businesses.”

The same day, Enterprise Ireland announced it was putting cash into the AIB Startup Accelerator Fund 2 established by ACT Venture Capital.

The fund, also supported by ACT’s main expansion fund, which is in turn backed by financial services firm Allied Irish Banks (AIB) and private investors, will focus on seed-stage startups in sectors including software, internet, digital media, communications and mobile.

The vehicle is the successor to AIB Startup Accelerator Fund 1, whose exits include the aforementioned FeedHenry. The fund will target 25 new businesses over the next four years, contributing up to €1m to each startup.

That commitment may be increased by ACT, which has the option to invest an additional €7m from its main fund in successful businesses.

Orla Battersby, manager of the high-potential startup division at Enterprise Ireland, said: “In the past week we have seen the launch of four new funds, in which Enterprise Ireland is involved, including fund announcements by Seroba Lifesciences, Frontline Ventures, ACT Venture Capital and Suir Valley.

“These four new funds combined bring, on their first closings, €188m of available new capital to the market, helping companies to reach out to global markets. The Irish startup ecosystem will continue to strengthen as a result of these investments, building a platform for HPSUs that is strong, effective and sustainable.

“Our strategy for 2017-20 is to support more startups using innovation as a key driver of competitive advantage to build scale and expand reach to global markets. As part of our mandate to develop and maintain an appropriate funding environment for early-stage companies, Enterprise Ireland continues to help our companies start, innovate and scale.”

See more from this Government Report: Ireland

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