Seán Kyne (Galway West, Fine Gael) | Oireachtas source

I thank the Office of the Ceann Comhairle for selecting this matter and I welcome the Minister for Jobs, Enterprise and Innovation to the House to discuss it. The Minister was in Galway a number of weeks ago for a very informative meeting on the jobs action plan. The businesses and entrepreneurs in attendance got a great deal out of it. One of the benefits of such meetings other than the formal information session is the conversations one has during the tea breaks. One such conversation I had with a constituent, who is also the entrepreneur behind a successful Irish company in the medical devices sector, concerned finance for business. It is an area which can be complicated and require a great deal of time and scrutiny by policy makers as well as by those in the business community. I take this opportunity to commend the work the Minister has done to tackle many of the issues and barriers around access to credit and finance, in particular for small and medium sized enterprises. One such innovation is the microfinance scheme. I was delighted to hear today that Microfinance Ireland has approved its first €1 million in loans to 60 viable microenterprises to which the banks had declined credit. I am certain we will see the benefits of this worthy and effective scheme into the future.

There is another innovative idea which would help us to establish, grow and retain start-up companies in Ireland. Currently, the process is that an entrepreneur with an idea, which comes from myriad sources - often their work in a particular sector - conducts research, draws up a business plan and establishes a company to develop the idea. However, to grow the company finance is required. Unfortunately, many financial institutions are reluctant to take the chance with a start-up company, which leaves the entrepreneur with few alternatives other than to avail for a loan-for-equity arrangement with a venture capital fund. While the funding provides a much-needed boost to the new start-up and facilitates growth and expansion, the fund generally has a fixed term. If one receives funding in year five of a seven-year fund, one must repay the loan when that fund matures only two years later. Such an eventuality often results in entrepreneurs having to sell their companies to obtain the finance necessary to repay the loan. Sadly, it means the innovative product or service is snapped up by another company - often one which is based abroad - while the original company is asset-stripped, merged or wound down. As a result, Ireland loses out on jobs, both existing and potential, tax revenues and custom for other local businesses.

The process I have set out applies in almost all industries and certainly to the ones we are fortunate to have in the west, including those in the medical devices, pharmaceutical, ICT, energy efficiency and other sectors. There is a way to combat the loss, retain innovative start-up companies in Ireland and harvest their massive potential. The State could establish a special investment fund accessible to start-up companies for the sole purpose of meeting repayments to venture capital funds. This would allow companies to continue to innovate and expand in Ireland rather than have to be sold off. Further, the scheme could include a tax incentive feature whereby a citizen could opt to reduce his or her tax liability by contributing to it.

I ask the Minister to consider these plans.

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