In a country in which half the population is less than 30-years-old, Ireland seems to be teeming with start-up entrepreneurs or people with aspirations to become a startup entrepreneur.
The most obvious example of this phenomenon is the recent Web Summit conference in Dublin, which saw attendance nearly triple to 4,000 from last year.
Featuring a who’s who of the digital world such as blogger and tech evangelist Robert Scoble, Niklas Zennstrom (co-founder of Skype and Kazaa) and Pinterest co-founder Paul Sciarra, the conference attracted more than 100 start-ups, including a growing number from outside Ireland.
The enthusiasm about startups can also be found in small gatherings such as the Open Mic Idea Jam, a standing room-only event that was held at a popular pub in downtown Dublin in which entrepreneurs have three minutes to pitch their ideas. Many of the ideas are half-baked, idealistic or charmingly flawed but they reflect the optimism about or, at the very least, growing interest in start-ups.
“I think Ireland is slowly but surely gaining global attention with a startup ecosystem that has real substance,” said Noel Ruane, Entrepreneur in Resident with Dogpatch Labs, a Dublin-based accelerator funded by Polaris Ventures.
In some respects, the eagerness surrounding startups is a contrast to the Irish economy, which is just starting to recover the global recession that required a massive bail out of many of the country’s banks.
While Irish banks are still struggling to recover from their over-exposure to real estate market, the startup scene is vibrant, robust and oozing with potential.
So, what’s driving the startup landscape other than young entrepreneurs looking to do their own thing?
The simple answer is the Irish government, which is making a major bet that start-ups will be a way to establish a fast-growing sector that will create thousands of much-needed domestic jobs and, at the same time, fuel exports, which drive the country’s economy.
The government’s commitment isn’t just financial but a willingness to institute structural change and create new agencies to make it happen.
The engine driving this plan is Enterprise Ireland, a 700-person state agency with an annual budget of €350 million and offices in 30 countries around the world.
Billing itself as Europe’s biggest venture capitalist, a crucial element is an ambitious effort to invest in the development of the country’s startup ecosystem – everything from incubators and accelerators to direct investments in start-ups and financing venture capital funds.
This includes an annual budget of about €30 million to invest in 50 “high performance” startups, and 100 early-stage startups that receive €50,000 as part of an incubator program.
Enterprise Ireland is making a huge bet on an industry fraught with risk and high failure rates but there is little doubt the government believes the rewards could be significant if the start-up ecosystem can become a vibrant, self-sustaining sector and, in the process, produce successful entrepreneurs that go on to start and finance more companies.
“We are being very aggressive but the reason we are being aggressive is not based on blind faith but solid belief and sales that show the entrepreneurs and technology workers here in Ireland are internationally competitive and have world-class capabilities,” said Kevin Sherry, manager of Enterprise Ireland’s international sales and partnering division. “They are gaining traction. It doesn't happen by accident. It requires a lot of support.”
Enterprise Ireland’s investment activity consists of two programs – a “high potential” program that invests €200,000 to €1-million in “high potential” startups that have sales and are looking to accelerate their growth. These investments are done based on a matching basis with outside investors.
Enterprise Ireland also has a “Competitive Start Fund” that gives €50,000 to about 100 companies that are pre-revenue or still developing a product. More than 3,000 start-ups a year apply for the program.
Enterprise Ireland also raised €175 million to make fund-to-fund investments in venture capital firms focused on seed and early-stage investments.
To help drive the start-up ecosystem, Enterprise Ireland created a €10 million (Euro) fund a year ago to attract and provide funding to entrepreneurs from other countries. This is a tactic being pursued by other countries, including Chile, which offers $40,000 of equity-free seed capital to international entrepreneurs.
Another important part of Ireland’s start-up ecosystem is the support from the large multi-nationals such as Google, Twitter, Zynga and Facebook, which have established international headquarters in Dublin.
These multi-nationals not only employee thousands of people who serve the European market but they provide people with much-needed experience, as well as important connections.
While the local start-up community welcomes Enterprise Ireland’s support for startups, there is also a realization start-ups alone can’t resuscitate the Irish economy.
“I hope they are not depending completely on startups,” said Paul Quigley, founder and CEO with NewsWhip Media, a Dublin-based start-up that recently launched service that provides media organizations with insight into the stories attracting the most attention with social media. “They are making a big push and it could make Dublin the tech hub of Europe.”
From the outside looking in, Ireland is aggressively focused on putting together all the ingredients to create a world-class ecosystem. While success is far from assured, the commitment is impressive. If the program fails, it won’t be for a lack of effort or enthusiasm.
