Mr Dan Flinter of Enterprise Ireland gives Barry O'Keeffe an insight into Ireland's economy before stepping down from his chief executive postEnterprise Ireland's chief executive is leaving the agency as the global downturn creates opportunities

Enterprise Ireland will invest in more new start-up companies this year than in 2002, despite the economic downturn, the agency's chief executive officer, Mr Dan Flinter has said.

And, he predicts, commercialising companies formed in universities, and bringing their products to commercial reality will play a key role in developing Irish industry in future.

He also said he expected more consolidation among indigenous tech companies within the next 12-18 months, than has previously been the case, as investors seek to realise their investments.

Mr Flinter, who steps down from the role in September, after 10 years in the post, said the global slowdown was leading to employees, many of whom work in multinational companies, to examine the feasibility of starting their own businesses.

"The downturn presents interesting challenges for many people," he says.

He expects well in excess of 50 start-ups to be aided in some form by the agency this year.

He likens it to the early 1990s when computer group Digital shut down operations here and tech firm Parthus, which makes chips for mobile phones, led by Brian Long was formed.

Enterprise Ireland can invest from €500,000 to €2 million in companies depending on their stage of development, mainly through preference share investment, straight equity, grant aid or a combination of these.

The preference shares, which although have no voting rights, may carry a coupon and be redeemable within a specific period. The company also invests straight equity in companies, although it rarely takes more than a 10 per cent stake.

Enterprise Ireland did well out of the technology boom. It has taken stakes in many Irish IT firms, as well as the more traditional manufacturing firms. The agency has realised about €250 million from these investments in the past four years.

And how much did it invest? "A sinfully small amount!" says Mr Flinter.

There is no real shortage of funds willing to invest in the right business, he says. "Certainly since 1997, we have noticed that there is a lot more money available."

The agency has initiated several funds in conjunction with venture capital and other investors. He says consolidation in the tech industry has been slower than one would have thought, given the shake-out in the sector.

But he expects this to accelerate as investors put pressure on companies to realise a return on their investments either through trade sales or enhancing their investments by consolidation.

Perhaps, unsurprisingly, the nature of investment has changed. Two years ago, about 85 per cent of all new start-ups were in information technology. This figure has fallen to around 60 per cent.

Sectors which are experiencing growth include medical devices and biotechnology.

"What will distinguish Ireland will be how well we can commercialise research and development and how quickly we can get products to market," he says.

Flinter acknowledges that there are other issues, such as inflation which in turn leads to wage inflation.

He says it is interesting to note that domestic services inflation, where there is no real competition, seems to have the highest price inflation. He says this has to be addressed, but it takes time.

As for wage inflation, he says, Ireland is no longer a low-cost wages economy, nor would one wish it to be. "It is how we make the transition to a high-wage economy that is important."

In the past few years, Irish companies have become far more competitive, he says. They have managed to increase their margins, invest in research and development, improve their product lines and increase productivity. The dollar/sterling exchange rate also ran in their favour.

Flinter says he knows of many Irish business people who bought firms, especially in Britain, to give them better critical mass and access to customers and markets.

Although the strong euro is a concern, he points out that little can be done about it. "The key is to remain competitive."

Flinter says the international market has become a lot tougher, and far more competitive, especially in the past nine months.

He says the rate of growth in demand in Britain has slowed, with a subsequent impact on margins. "In many ways, it is a buyers market. In Britain especially, it has become very difficult to get access to buyers who have become very demanding," he says.

He sees some recovery in the southern European market and some recovery in eastern Europe, which he terms "quite buoyant". But the German market in particular remains tough for exporters.

Surprisingly, the public and financial sectors are holding up well and are being capitalised on by Irish IT firms.

"Most Irish exporters had been looking at the US as their first market, but that has changed in the last 18 months," he says. "They have repositioned their activities towards the UK."

The ultimate measure of competitiveness, he says, is to be able to answer the question: "Do companies have the capacity to sell their products on the international market?"

Although there is global downturn, Enterprise Ireland has found that Irish activity in overseas markets has been stronger in the first six months of the year than in the same period last year.

"There is no lack of drive or ambition among Irish firms to seek new markets," Flinter says.

Since he took over, Enterprise Ireland has undergone several transformations, changing its name from Forbairt to Enterprise Ireland, assimilating other agencies such as Eolas and the Irish Trade Board along the way. It has been repositioned several times and, more recently, restructured its approach to grant aiding firms.

Flinter is diplomatic, if not pragmatic. He is happy that the agency is fulfilling an important role in developing indigenous industry and it has the balance right, although, he says, "I can't forecast what my successor will do." The agency does not create jobs, he says, the firms it advises and financially supports do that through increasing exports.

If he was to point to the single most common mistake which firms make, what would it be? "Firms often underestimate how long it will take and how much it will cost to bring a product to market," he says. "Quite often, they simply run out of money."

And his biggest mistake? "That's between me and my family," he says, before considering: "I'll tell you in five years time!"

It is partly for family reasons that he has not sought a renewal of his contract, although he says the board was keen for him to stay on. "I always believed that 10 years was about the right length of time to be chief executive," he says. "It is a natural break point in terms of family and career."

He steps down in September and says he will spend the next three or four months considering his future. He knows he would like it to be something in business, working in business development, something not dissimilar to what he has been doing. In the meantime, he will continue to follow his passions of sport, especially football and theatre.

It is a safe bet to assume that as native of Kildare, he will be at the Leinster Final between Kildare and Laois on July 20th.