Willie O'Dea (Limerick City, Fianna Fail)
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6. To ask the Minister for Jobs, Enterprise and Innovation the way the venture capital fund he recently announced will operate; the process to ensure it does not suffer from a slow take-up similar to the microfinance fund; and if he will make a statement on the matter. [42737/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Last May, I announced a new call for expressions of interest under the €175 million Seed and Venture Capital Scheme 2013-18, which will see the continuation of the Government’s support for innovative Irish SMEs. The scheme is targeting an additional €525 million in funding from the private sector, which will mean a total fund of €700 million available for investment over the lifetime of the scheme.

This new Seed and Venture Scheme 2013-18 will proceed by way of a series of calls for partners to establish individual funds tailored to different sectors and strategies in line with Enterprise Ireland targeted areas. These are competitive calls and funding partners will be selected based on sectoral expertise, track record and supporting networks which they bring to the funds.

Venture capital schemes tend to have a ten year time horizon during which drawdowns of funds investing in high potential companies are rarely linear but become easier to forecast after the initial investments have been made. Different funds have different timelines depending on the release of calls for expressions of interest and come on stream as and when fund-raising is completed.

I am confident the venture capital funds will be fully utilised. This scheme builds on EI’s engagement with seed and venture capital which goes back almost two decades. It has been successful in assisting the growth of high potential start-ups, attracting leveraged funds, bringing top level managers to Ireland, and attracting interesting first-time international money to the Irish SME market.

Investments under the predecessor funds numbered 159 in 2012 with an investment of €81 million. This compares with 134 in 2011 when it was €60 million, and 107 in 2010 when it was €42 million. This is encouraging progress and justifies the commitment to this new scheme to sustain investment in enterprises with high growth potential.

Dara Calleary (Mayo, Fianna Fail)
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The Minister mentioned 150 investments in 2012 worth €81 million. How many jobs are they currently sustaining? I am concerned that it will go the same way as the microfinance and loan guarantee schemes in terms of ignorance. What specific role will Enterprise Ireland have in this regard or will it be using its high potential start-ups client base to promote this scheme? What kind of system has the Minister put in place to review the scheme in order that my first concern does not happen, viable long-term jobs will be supported, and supported companies can continue to draw on and access other sources of finance?

Richard Bruton (Dublin North Central, Fine Gael)
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These programmes, of their nature, take time to evaluate. An evaluation of the scheme that is coming to an end would not be complete at this stage. However, sample indications from 69 companies suggest a total employment of 691 to date. Typically, these companies are export oriented. Total direct employment in companies in 2009 was 9,733. Generally speaking, these are high growth companies and it is only at the end of the fund that one can undertake a commercial evaluation. All or most of the high potential start-up companies have a target of delivering ten jobs within three years. Their performance is encouraging. Enterprise Ireland and Forfás regard the programme as being their best in terms of providing a return to the taxpayer. This is a source of continuing mixed source funding for these high growth companies.

The Deputy's question did not focus on evaluation, although I could assemble some more data for him. By and large, these companies have been successful and we can prove the leverage from the money we put in. It started out as 50:50 so we had to put in a euro to get a euro, while now we have to put in a euro to get three. Therefore, the leverage is improving as it goes along.

Eoghan Murphy (Dublin South East, Fine Gael)
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Under the heading of microfinance schemes or venture capital funds, there is a more efficient way of using that money to get greater returns, which is through peer-to-peer financing or credit funding, about which the Minister knows a lot. We talk about new financing models for SMEs, but this financing model does not involve banks or the Government.

It will provide greater returns for the lender and borrower. It is an efficient way of getting funding for SMEs. There is a role for Government supports from somewhere.

There is a huge market in the UK for peer-to-peer financing. The UK Government has done a little to help this market through changes in the taxation laws and by way of funding. For example, where certain borrowing arrangements are met through peer-to-peer financing and the Government provides a top-up, on which it gets a return. Will the Minister consider the introduction of similar measures to assist the peer-to-peer financing model in Ireland?

Dara Calleary (Mayo, Fianna Fail)
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I support Deputy Murphy's proposal. Many of the high potential start-ups, HPSU, companies being targeted would be comfortable with the model of financing he suggests. While I welcome the venture capital scheme, again it focuses on the export orientated sector, which is fine, but our home grown businesses are still a little lost in terms of financing initiatives. There is no home for them in terms of the continued emphasis being placed on other sectors. While I welcome that emphasis our home grown industries, which do not necessarily have or will ever have an export orientation, are still being ignored. We must collectively ensure supports are put in place for them.

Richard Bruton (Dublin North Central, Fine Gael)
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I agree that crowd-funding is an interesting area. I am aware of one such initiative in Ireland and recently met with the sponsors of it. It is beginning to have a track record. What I found interesting was that much of the funding came from the local customer base rather than from remote locations. As such, a community of interest was built around a business so that people were not only using it but were investing in it. I will look at how the Government can better support this idea. It can form part of the picture which, as Deputy Calleary rightly said, will be a mosaic. Banks internationally and globally are retreating from some areas. Our dependence on banks as a source of funding is pretty high. We need to construct a mosaic of sources of funding. I am aware that there are a number of the initiatives referred to in the field and that they have the potential to grow further. We have not reached any conclusions in terms of access to finance. The suggested area is one that we can develop. The Government is open to credible suggestions from Deputies on this issue. As stated by Deputy Perry, the establishment of the local enterprise offices as one-stop-shops will provide us with a better window on the needs of these companies. We have created a centre of excellence in Enterprise Ireland. It is a two-way process and it is hoped we will get better intelligence to mould effective policy instruments.