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News : Innovation Last Updated: Jan 23, 2014 - 2:32 PM


Ireland is Europe's most entrepreneurial country: Fact or fiction?
By Michael Hennigan, Finfacts founder and editor
Nov 22, 2013 - 5:33 AM

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A survey of venture capital per capita suggests that Ireland is "Europe's most entrepreneurial country." Is this a fact or a fiction?

Earlier in the week, we reported that the European Commission's top 1,000 corporate R&D spenders included 16 Irish companies - - which last year was a big factor in Ireland being included in a fantasy 'Innovation Indicator.' This issue was easy to explain as most of the companies were American and were nominally 'Irish' because of the location of their headquarters in Ireland for tax purposes, while most or all of their R&D was not done in Ireland.    

Last July we reported on an officially financed study: Number of early-stage entrepreneurs in Ireland is low and falling

The Irish Venture Capital Association said [pdf] in a Pre- Budget submission last September, that of course was in a pleading mode: "The shortage of entrepreneurs has reached crisis levels as evidenced by the findings from The Global Entrepreneurship Monitor."

"Ireland is becoming a 'development ghetto' with high growth start-ups doing development here but building other functions e.g. sales and marketing elsewhere. Many of these companies are becoming Irish in name only and the opportunity to build essential skills in Ireland is lost."

On Thursday, The Wall Street Journal reported in a blog post, that  "it looked at Dow Jones VentureSource data on the total amount of venture capital raised by tech companies in each European country since 2003, divided by population to get the per capita figure, then averaged it out over the 39 quarters."

Ireland's VC per capita was $279 compared with a $69 average for 28 European countries, $1,093 in Israel and $661 in the US.

The Journal says that after Ireland, the next nine are: Sweden, the U.K., Finland, Denmark, the Netherlands, Norway, France, Germany and Switzerland. The bottom three are Croatia, Romania and Bulgaria.

Of Ireland’s 311 VC-backed deals since 2003, 131, or 42%, came in 2009 or later, VentureSource says. By contrast, the UK closed 1,441 such deals, or just 34% of its 10-year total of 4,208, in the post-crisis period. And across Europe as a whole, the past five years account for 39% of the total for the decade.

In the 3 years 2010-2012, Irish companies raised €850m in venture capital and the Irish government provided VC companies with over 40% of that total.

The Irish government also provided the VC-financed startups with significant cash and other supports.

Total permanent jobs in ICT firms supported by public agencies grew by 2,300 from end 2009 to end 2012 while currently the broad level of unemployment is over 480,000.

Patent applications at the Irish Patents Office in 2012 were at the lowest since 1982 and tradeable services exports from Irish-owned firms were at 5% (not a typo!) of headline services exports.

So lots of public funds have been available for the high tech sector during a time of austerity. However, the limited output metrics are not encouraging.

Liam Boogar, a commentator on the French startup scene, told the Journal:. “I am not sure it tells us very much, and what it does tell us isn’t that useful,” he said. “I am much more interested in looking at how many companies start and get a successful exit. That is more interesting and a better measure of entrepreneurial activity.”

That key data is not available in Ireland.

Finfacts reports:

Irish Innovation: Evidence of science policy failure mounts

More US VC-backed new companies fail than succeed - - 76% of US tech companies acquired in 2012 had not raised institutional investment (VC/PE -private equity) prior to acquisition.

Call for pension funds to invest €500m in Irish tech firms; Bruton announces €20m VC fund

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