Paul Gogarty (Dublin Mid West, Green Party)
Link to this: Individually | In context

Question 15: To ask the Minister for Enterprise, Trade and Employment his views on the recent Enterprise Ireland report on start-up companies and the action he plans to take on the basis of the findings of that report; and if he will make a statement on the matter. [6219/05]

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context

Question 47: To ask the Minister for Enterprise, Trade and Employment his views on a recent publication (details supplied); if more can be done to reduce the 25% of start-up businesses that failed in the period; and if he will make a statement on the matter. [6188/05]

Micheál Martin (Cork South Central, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 15 and 47 together.

The report referred to is the Review of Enterprise Ireland Supported High Potential Start-ups 1989-2004, conducted by Enterprise Ireland. I should point out that the report is an internal report of Enterprise Ireland and as such is an operational issue for the agency and not one in which I have a direct function.

Enterprise Ireland has informed me that the report is a review of the performance of 470 Enterprise Ireland supported high potential start-up companies, HPSUs, that started between 1989 and June 2004.

Of the 470 HPSUs that started in this period, 357, or 76% of firms are still trading as EI clients, 21, or 4%, were taken over and 92, or 20%, are closed. Enterprise Ireland considers that the failure rate is low by most standards given the normal risk of starting a new business.

It should be noted that the average number of start-ups per year has also increased significantly between 1989 and 2004. It has risen from an average of 17 new HPSUs per year in the 1989 to 1996 period to an average of 58 HPSUs per year in the period 2001 to 2003. During 2004, 65 new HPSUs were started and supported and I will be announcing the names of these companies on 2 March 2005. The review also found that there has been no appreciable increase in the failure rates, despite the substantial increase in the volume of start-ups.

The economic importance of HPSUs is not underestimated by Enterprise Ireland. In 2003, the 357 companies still trading as EI clients had a combined direct employment of 7,458 people — the majority of which were highly skilled jobs — and total sales of €979 million. This represents a very substantial positive economic impact.

EI will not be complacent and will seek to further increase the success rate of HPSUs. Of the 52% of HPSUs that fail, this failure occurs within the first three years. This "valley of death" period has been highlighted as an area where EI is to devote more resources and effort including: a team based approach to bring the extensive experience and a range of expertise to bear at this critical stage; a joint approach by EI staff in Ireland and overseas to assist early stage companies to identify and secure key customer reference sites; a more direct and supportive approach to assisting companies to develop and augment their management team and board capabilities; and a milestone funding based approach to the provision of EI funding to an increased number of the start-ups phasing funding in line with realistic targets.