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Loading the Venture Capital Pipe

In a discussion with an external colleague today, we were talking about how Ireland has a lot going for it (perhaps not as much as some entrepreneur reports suggest, more on this in a different blog entry) in terms of being a home for high potential start-ups. One of the biggest issues we face is the venture capital pipeline. Ireland has always had issues around venture capital – basically the fact that we don’t have enough of it. Last year overall venture funding dropped significantly in Ireland. But the biggest problem is the relative level of funding in each part of the pipeline. Most Irish venture money has moved ‘down-stream’ – a less risky and more conservative place to be.

Yes, there is some new funding in the earlier stages, and we welcome the announcement from the Irish angel network HBAN (HALO Business Angel Network), that an additional Eur 10 million will be made available via 4 new early stage funding schemes (funding levels from Eur 250,000). There is a funding level below this – what the American venture capital sector calls ‘bird-seed’ funding. This is the first fifty, seventy-five or one thousand in funding, what gets you through the first year.

And in Ireland this is very hard to get, and we in the Ryan Academy have been seeing this issues across the sector in the last year. It is fine that in the past the three F’s worked well enough (friends, family and fools!) but in this age of high-tech start-ups, with intellectual property protection, prototypes and sale and marketing costs, there is a gap that many entrepreneurs find hard to cross. In the depths of this recession, with people thinking about becoming entrepreneurs who may have not taken the risk during the boom, we need to solve this issue.

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