Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

The issue of funding for early start-ups is one in which my Department takes a very keen interest. Enterprise Ireland is the largest funder in Europe of seed capital to start-ups and has 800 companies in its portfolio. It invests through a mixture of different types of seed capital arrangement, including preference shares or, more often, through joint holdings with venture funds. Enterprise Ireland has gone out of its way to promote the development of venture and seed funding. As recently as the last budget, the Government announced an additional €178 million round of funding which will leverage up to approximately €700 million in seed and venture funding over the next few years. We have put a great deal of money into incentivising the availability of seed and venture capital because the risk many companies represent is such that bank loans are not the appropriate vehicle for funding them. We are trying to create a range of funding options. We have also introduced various tax driven schemes, including the seed capital scheme which allows promoters who have previously been PAYE workers to invest the last six years' tax they have paid in their newly established companies. There is also the EIIS, which allows individuals who are at arm's length from a company to invest in funds to provide for its growth.

A great deal of the effort by the State has not been on the exit side, it has been directed at providing funding to get start-ups off the ground and to establish jobs. The issue of exit is a vexed one. As the Deputy rightly points out, venture capital funds will want to exit a company. Sometimes this is achieved by a second round of funding, whereby a successful company will see new venture capital coming in while those who want to exit can do so. Sometimes, the company is placed on the shares register, which is very rare in Ireland, and sometimes exit is achieved by trade sale. Trade sales are a mixed blessing, although they are rare. There were two major sales last year involving Polar Lake and Cúram Software, both of which have added employment in Ireland since they were sold. It is not, therefore, an unmitigated disaster to see a company which cannot grow to the next level being purchased and then expanding. It is not always the case, however.

We are certainly willing to consider the Deputy's proposal, especially if he has developed it in some way. It is fraught with difficulty, however, not least in terms of the obvious State aid issue. Why would the State favour an owner of a certain nationality as against another? Would it be viable to offer this concession to Irish entrepreneurs? One must consider what the market failure is and what are we trying to subsidise. Are we trying to subsidise ownership by particular individuals or the most rapid development of a company? It would have to be demonstrated and argued successfully that the best way to develop a supported company was to retain the founder's shareholding. We are willing to look at this and we are continuing to look at the market. The Deputy will have seen that we have taken initiatives in the last 12 months, including the €700 million seed fund. The NPRF has recently emerged with €850 million in new sources of funding. These initiatives are all about getting new funding into companies rather than to subsidise the exit of some funding to allow the owner or owners to expand their shareholdings. More study is required to determine whether this is the right route to go. The difficulty in funding start-ups and obtaining bank loans has led us to focus in the last two to three years on getting money into companies which have the potential to grow.

If Deputy Kyne wants to elaborate on it, I will have it examined by Enterprise Ireland and my officials to see if there is scope in the area.

See this speech in context