Mr. Alex Hobbs:

On behalf of Dublin Business Innovation Centre, BIC, I thank the committee for the invitation to appear before it today. By way of introduction, I will tell the committee about Dublin BIC. It is part of a national and European organisation of business and innovation centres that identify, select and support entrepreneurial start-ups. We assist in the creation and development of enterprise and innovation in the Dublin region by providing practical support and assistance to entrepreneurs and start-up enterprises with the potential for strong growth. We work in close partnership with Enterprise Ireland, in particular, to support its high potential start-up companies, including the EnterpriseSTART 2 programme.

The Dublin Business Innovation Centre was established in 1988 and was one of the first ever public private partnerships formed in Ireland to assist SME development. It has strongly supported the economic growth and performance in the Dublin region over the past two and a half decades.

We are a member of the association of business and innovation centres in Ireland along with West BIC, South East BIC and Cork BIC. All of which provide key enterprise support and services to entrepreneurs nationally. As the BICs enterprise support is nationwide, it provides a deep regional reach for new sets of entrepreneurs and provides a valuable network for identifying investor-ready seed and early stage start-ups.

We are proud of our strategic role as the initiator of new funding and support models to stimulate and nurture the development of new SMEs in Ireland. These included the groundbreaking initiative that led to the launch of the first seed fund for SMEs in Ireland in 1991, which was done in partnership with private, banking, EU and public funded support.

We also initiated the setting up of the first private investor forum for investing in start-ups in 2006 called the Halo Business Angel Partnership in Ireland. That was done in partnership with InterTradeIreland and Enterprise Ireland. This promotion of private angel investing has resulted in a significant growth in the number of angel investors and funding for SMEs.

The BICs act selectively and effectively become a partner to accompany and hand hold the entrepreneur through all the stages of the development of his or her business. Dublin BIC's companies are knowledge-based, export-oriented and high-potential companies with a requirement for early stage hands-on support and advice over the critical first three to five years of their development.

Dublin BIC works with high potential entrepreneurs at seed, start-up and growth stages. We differ from most forms of enterprise support in that we project manage the entrepreneur through each stage of the SME start-up process, basically from seed to market growth stage. Our activities complement the assistance and services provided by the State agencies and the private sector.

We are run by a professional, multidisciplinary team with extensive experience in start-up and developing SMEs. We have specialist technology sectoral expertise and international marketing and fund management expertise. Dublin BIC is supported by a board of directors comprised of some of the most respected senior executives in Irish business. We are a full member of the Irish and European venture capital associations, IVCA and the EVCA, and we are regulated by the Central Bank of Ireland.

I shall outline the range of integrated financial services that we provide. For example, we provide access to seed and start-up venture capital through the €53 million AIB seed capital fund which is co-managed by Dublin BIC. We also provide access to business angel investment through the Halo Business Angel Partnership. That, too, is managed by Dublin BIC and has national partners throughout the country, including West BIC, South BIC, South East BIC and Cork BIC. Finally, we manage incubation-enterprise space which is located at the Guinness Enterprise Centre based in Dublin. The facilities provide enterprise space for start-ups and early stage companies.

I shall now drill into each of those elements and shall begin with investor-ready business planning support and mentoring. We work alongside the entrepreneurs through project evaluation and the various start-up stages and continue to assist the business through the first three to five years. Through our client assistance programme, we provide intensive investor-ready business planning support in order to hopefully graduate them to the high potential start-up stage. Dublin BIC has assisted in creating over 500 new businesses and employs approximately 4,460 people, including over 2,428 directly.

The annual turnover of supported start-up companies was €172 million in 2012. The economic impact of assisted start-ups in 2012 was €229 million which is based on independent research by DKM Economic Consultants.

Over the past 25 years, Dublin BIC has provided guidance to over 12,000 inquiries; provided business plan assistance to over 4,000 entrepreneurs; nurtured from conceptual-stage to 500 start-up enterprises while completing 780 business plans and encouraging entrepreneurs to achieve progress in building their enterprises; and supported 135 business expansions. Independent evaluations have established that 80% of Dublin BIC-assisted projects survive through their first critical five years.

With regard to access to start-up investment for SMEs, we have seen that innovative and high growth potential companies at the start-up stage are typically funded by equity investment, rather than loan finance. Basically, that is due to the high risk profile. They are often pre-revenue and conducting the product development and planning market launch. That means that they are at the very early stage. To address the funding gap at the seed and start-up stage Dublin BIC took strategic initiatives to provide access to both seed capital funding and angel investors nationally.

Ireland has seen an increase in recent years, since 2007, in seed fund investment activity. A total of €134 million has been made available to back entrepreneurs at the seed and start-up stages. The €53 million AIB seed fund is a limited partnership between AIB Bank and Enterprise Ireland. The fund is the most active seed and start-up fund in the Irish market since its launch in 2007. Dublin BIC and Enterprise Equity, the investment partners, are co-fund managers of this Fund. Dublin BIC's mandate is to invest in the Dublin region while Enterprise Equity invests mainly in the regions nationally. To date, the fund overall has invested €28 million in 75 innovative export-led SME companies, including follow-on investments. This is expected to increase before the primary investing period for new first round investments concludes at the end of 2014.

As a lead cornerstone investor in many co-investment investment rounds, the investee companies have succeeded in leveraging in investment rounds of almost €100 million. Co-investors in these rounds would typically comprise angel investors, other private investors, Irish and international venture capital funds, and Enterprise Ireland. Currently, these companies collectively employ 720 people directly and a corresponding number of support jobs.

Dublin BIC has made 54 investments to date in 38 start-up companies in Dublin. This number is expected to increase before the primary investing period ceases at the end of 2014.

I shall now refer to the Halo Business Angel Partnership. Dublin BIC initiated the setting up of the first business angel partnership in Ireland in 2006 in partnership with InterTradeIreland and Enterprise Ireland. Since then the Irish market has seen a sizeable growth in angel numbers and funding for start-up and early stage enterprises.

The Halo Business Angel Partnership, or HBAP as it is better know, is managed by Dublin BIC. We match angel investors with pre-screened investment opportunities at start-up and early stages. HBAP is a joint initiative between Enterprise Ireland, InterTradeIreland and the Irish Business and Innovation Centres. HBAP has offices in Dublin, Waterford, Cork, Limerick and Galway and provides a nationwide business matching service to select companies. HBAP works in partnership with HBAN which is the national federation of business angel networks in Ireland.

Our role is to act as facilitators for both angel investors and start-up companies seeking investment. HBAP works to increase the number of angel investors investing in start-up and early stage companies and supports the formation of new and existing angel networks, both regionally and nationally.

Companies and investors are pre-screened, initial meetings are arranged between investors and companies and we provide support throughout the fund raising process. The average angel investment per deal to date has been around €175,000. To date, business angel investors have invested a total of €26 million in early-stage companies that leveraged in investment rounds of €65 million.
Dublin BIC provides important added value for the start-ups, apart from cash, including hands-on business planning and pre-investment mentoring. In our role as seed fund manager, our extensive experience in managing the investment process, including access to angel and private co-investors, contributes to an efficient and successful fund raising experience for companies. We believe strongly in providing high quality and significant after care resources to support the companies post-investment. That is a critical piece of the jigsaw because the challenge is to help companies to get early traction in the marketplace. In addition to investment, we provide support through attendance at board meetings and other strategic sessions. Assuming companies progress with their business, they will move on to a "Series A" investment round with later-stage VCs. That is delivering added value for entrepreneurs. We also believe we deliver added value for the co-investors.
The Dublin BIC investment strategy, from the beginning, has been to promote and cultivate a co-investment approach for start-ups, leveraging our established network of contacts and referrals from other parties.This means that we get good co-investment coverage in terms of the round and the kind of expertise and skills that come to the table from various investors, apart from ourselves. We have successfully worked with many within our network, including the AIB seed capital fund, Halo Business Angel Partnership, HBAP and other private investors and seed funds to participate in investment rounds with us. Our approach has produced key benefits for these investors including giving them the opportunity to co-invest in a larger round, spreading the investor risk and expediting their investment decisions by dovetailing with our own seed fund term sheet, for example. Furthermore, our deal structure and due diligence helps to speed up the whole investment process.
The Dublin BIC seed fund team would typically project-manage the investment process from beginning to completion, including drawing up legal share subscription agreements and so forth. This benefits the angel and private investors by reducing the amount of time they have to spend on investment completion. Both seed fund and angel or private investors invest on the same commercial terms and share the same upside and downside risks.
The other key deliverable of Dublin BIC is the Guinness Enterprise Centre.