Ireland has a history of success when it comes to attracting foreign direct investment (FDI). It is now seeing increasing success among home-grown businesses too.
“Ireland has a strong reputation as a leading location for innovation and entrepreneurship, and this year’s Global Entrepreneurship Monitor [GEM] report reveals a strong commitment to entrepreneurship in Ireland. We rank third in Europe for entrepreneurs with ‘high jobs growth’ expectations and have the third-highest rate for early-stage female entrepreneurs across European countries,” explains Alan Bromell, head of private enterprise at KPMG.
According to the GEM report, one in seven people in Ireland aspire to start a business in the next three years. The country has experienced a surge in youth entrepreneurship too – the proportion of the 18-to-24 age group that are early-stage entrepreneurs was 16.4 per cent in 2021, up from just 6.7 per cent in 2018, boding well for the future.
It also helps that those starting out have world-class role models to follow.
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“Ireland has also punched above its weight internationally and large companies such as Icon, Ardagh, Aercap and Dole [formerly Total Produce] came from domestic Irish business and their entrepreneurial founders,” says Bromell.
“And when it comes to innovation, according to the recent European Innovation Scoreboard, Ireland is a ‘strong innovator’ with performance above the EU average.”
All of that matters because no country can rest on its competitiveness laurels.
“Promoting entrepreneurship and innovation will be vital to maintaining competitiveness for Ireland in global markets and providing jobs and sustainable economic growth,” he says.
To support this, Ireland is enhancing what is already a well-developed and comprehensive entrepreneurial ecosystem.
“The Government provides over 170 tailored supports for Irish start-ups and small businesses, from access to finance management development, mentoring support, business development programmes, market support and trade promotion,” says Bromell.
“Enterprise Ireland also works with early-stage entrepreneurs and high-potential start-up companies with the capability to start a business and sell in export markets. Their range of services is extensive, from research and funding to making introductions in key international markets, helping companies become more competitive to assisting with developing new technologies, products or processes.”
It’s a comprehensive offering that includes a number of specialist programmes designed to tap into cohorts whose potential for entrepreneurial success might otherwise go unrealised.
In recent years this has included tailored support programmes for everyone from senior entrepreneurs to those looking to relocate to Ireland to start a business, as well as Irish people who moved abroad to work and now wish to come home to start a business.
“Going for Growth is an example of a programme where government and private sector come together to support and give back to the next wave of entrepreneurs,” says Bromell.
“Successful female entrepreneurs give their time to participate in the programme as mentors, and with Enterprise Ireland we are delighted to support it. It aims to help female entrepreneurs achieve their growth ambitions, with 850 businesswomen having taken part over the last 15 years.”
Ireland’s entrepreneurial and innovation ecosystem is particularly strong at third and fourth level too, encompassing everything from world-class research centres to support for the commercial spin-outs of publicly funded academic research, facilitated by Knowledge Transfer Ireland and a network of technology transfer offices in Ireland’s universities.
“The ecosystem is strong. We see that every day in KPMG and marvel at the number of new businesses emerging in new areas. This is very much linked to our FDI community, bearing in mind many entrepreneurs emerge from senior roles within multinationals based here,” he points out.
However, the National Entrepreneurship Context Index 2021, which is an assessment by GEM of the environment for enterprise, suggests Ireland still has work to do, he cautions. “This ranked us 12th among cross-European comparator countries and looks at factors like access to entrepreneurial finance, tax policy and physical infrastructure,” he says.
“It’s very timely to be speaking about these things. The Government published its White Paper on Ireland’s enterprise policy in early December. This sets out government’s priorities for enterprise policy in the period to 2030 and it comprehensively covers many topics of relevance to continued success of Irish entrepreneurship.”
In the White Paper the Government commits to enhancing the economy’s resilience by strengthening the Irish-owned exporting sector and equipping locally trading businesses with the know-how to fulfil their potential.
While Ireland’s track record for globally successful Irish founded and located start-up businesses continues to improve, with several companies achieving unicorn status in recent years, both the pipeline of high-growth and population of scaled Irish firms need to be expanded, it admits.
In the years ahead, the Government’s aim is to match its ambition for continued strong FDI performance with a focus on strengthening Irish-owned firms.
According to the report: “We will embed sustainable business models and boost productivity in these firms through investment in innovation, digitalisation and management capacity, leading to increased exports from Irish-owned companies and a more diversified and resilient trade portfolio. As part of this, we will encourage Irish businesses to take full advantage of the EU single market and to strike out for global markets fully utilising the extensive network of EU free-trade agreements.”
Building on Ireland’s track record as a place to start and grow successful global enterprises, the Government aims to ensure Ireland’s proposition for foreign investment stays best in class. “As global competition for foreign direct investment intensifies, Ireland will need to stay agile and ambitious to win investment. Our exporting companies face increasing challenges in a fracturing trading landscape, characterised by geopolitical tensions and risks of regionalisation of trade. We also need to increase the domestic value capture from our Irish-based multinational enterprises by enhancing linkages and spillovers to Irish-owned firms,” it adds.
Local Enterprise Offices supports, currently available to businesses that employ 10 people or fewer, will now be made available to those with up to 50 employees.
The links and collaboration between public and business researchers, and internationally, will be strengthened, increasing entrepreneurship activity and encouraging innovative start-ups, with an ambition to achieve a 20 per cent increase in the number of Enterprise Ireland high-potential start-ups by 2024.
But changes to the tax code could help too.
“On tax, the paper recognised a need to consider our tax code reflecting the risk premium inherent in investing in new businesses as against other assets,” says Bromell.
“The fact is 33 per cent capital gains tax on exiting a business can be a major disincentive and while we have reliefs like entrepreneur relief, it’s not enough to motivate Irish entrepreneurs to build and scale their business in Ireland, and not to exit prematurely, which we see in a lot of cases.”
