The next wave of Irish entrepreneurial start-ups is being stifled by a lack of funding, the Irish Software Association (ISA) has said in its pre-Budget submission.
The association has urged the Government to raise the ceiling on monetary funding for start-up companies in the software sector.
The ISA recommends that the ceiling on amounts available under the Business Expansion Scheme and Seed Capital Scheme should rise to €2 million. The association recommended more tax initiatives to encourage research and development (R&D) in Ireland. R&D expenditure here is far behind IT leaders such as Sweden, Finland and the US.
Recent figures from the OECD show that government spending on R&D as a proportion of GDP put Ireland 22nd of 24 member countries, compared to business spending on R&D, where Ireland ranks 13th of 27 countries.
Of the 10 top software companies globally, seven have bases here and exports from Dell, Microsoft and Intel alone make up 18 per cent of Irish exports.
The ISA, which is part of business representative body IBEC, said innovative measures were called for to encourage entrepreneurial start-ups.
ISA chairman Mr Paul O'Dea said the present ceiling of €750,000 on BES limits was too low and "out of touch with current capital requirements".
He said: "Establishing a software company in the current business climate is high risk and venture capital funding is proving almost impossible to secure for early start-ups in the sector."
Mr O'Dea said he realised the Minister for Finance had Budget restrictions but that the ISA proposals would result in a net gain to the Exchequer by encouraging more entrepreneurial activity in the economy.
ISA director Ms Kathryn Raleigh said: "One of the biggest problems facing technology start-ups is access to funds."
Meanwhile, ICT Ireland, the IBEC body representing companies involved in the information and communications technology sector, said current infrastructure deficits were undermining competitiveness and the long-term prospects for the Irish ICT sector.
Difficulties with transport, telecommunications, energy and regional shortfalls are affecting the development of the sector, the lobby group says.
It suggests that key transport projects currently delayed should be fast tracked through the system.
Measures should be taken to encourage investment in telecommunications infrastructure, the group said. ICT also suggests that developments in infrastructure be undertaken to redress the imbalance between the regions and encourage decentralisation and that the energy market and related grid networks need to be redeveloped to address such issues as regional deficiencies in energy supply and increasing costs.
