INNOVATION TALK: WITH THE CENTRAL Bank slashing its forecast for Ireland and predicting that GDP growth will moderate to a level of 0.5 per cent in 2012, it’s time to do some critical analysis of the programmes and policies that are designed to support entrepreneurship and job creation.
If we were to strip all multinational activity out, the picture for a return to potential growth would be even bleaker. While hugely welcomed and recognised as being largely responsible for much of the innovation in our economy and our society, Ireland is overly reliant on the likes of Intel, Google and Microsoft, and the rest of the multinational community. It’s great to see continued investment from global technology leaders and to see commitments made by Facebook and Paypal, but the question has to be asked: where are the Irish-based multinational companies of the future?
I would like to see a programmed approach taken to the creation of high-potential start-ups. Right now, while Enterprise Ireland is doing a great job in many areas, there is limited visibility in terms of targets and ambitions for success in the indigenous start-up community. How many high potential companies do we have now? How many would we like to have in the future? Based on the numbers and the expected failure rates, how many substantial success stories do we aim to have in the future?
It seems a no-brainer that a stronger indigenous business community is something we need in order to ensure a more sustainable economic model in the future. Not only do they need to be good employers, but almost hand in glove with that is the need for them to be export-led companies – ones that will contribute to GNP as well as GDP.
At Intune Networks, we have now moved from the capital-intensive period of development to a point where our target to break even by 2014 is now within reach. Based on a technology breakthrough, we designed a set of network equipment products that will make the network tunable for any service, any time, anywhere. This quarter, we are moving to full commercial trials with some of the largest telcos in the world, which will act as a launching pad for broader sales traction.
The case of Intune proves that when you create disruptive technology that provides a solution to a global problem, the opportunity and potential to be a multinational of the future is a realistic aim. But what other companies are in the same position? How many more will there be in 2013, 2014 or even in 2020?
There is definitely a lot of buzz and activity within the technology community and in the online space, and clearly we have a lot of home-grown talent in the area. But the majority of start-ups are small services-based companies. Some have the potential and ambition to grow and to export internationally, but many don’t.
The real barrier to success for those who have intellectual property and have developed and created something that addresses a global need, is the lack of venture capital to fund their growth. There are inadequate levels of finance available in Ireland. While there is more than €400 million notionally up for grabs through Enterprise Ireland venture capital funds, the problem that many start-ups find is that there is no real understanding – or appetite for – the kind of long-term investment that is needed to grow and develop a company that has the potential to become a global leader.
A real breakthrough or development in the technology space takes a long time to get to market, so what is required is patient investors. In the case of Intune, we have been lucky to have attracted a mix of valuable investors from the outset – many that not only brought financial support but also relevant commercial expertise. In addition, they understood the pathway to commercialisation and were willing to stick with us through the development cycle. In fact, many again participated in our recent funding round which raised €17.5 million at the end of last year.
The lack of availability of long-term capital locally and an inability to tap into the global venture capital (VC) funds is a challenge for Irish start-ups. Some €42 million was invested in 74 companies through Enterprise Ireland VC funds in 2010. While this is not an insignificant amount of money, the fact that it was divided among so many different investments indicates that it is early-stage funding and is not being used to fund deep technology development – the type that is needed to grow a multinational of the future.
While the €500,000 investments are invaluable and are available here in Ireland, what we need to tackle is ways of increasing the availability of funds to the value of
€5 million, €10 million and €20 million to Irish-based companies. This is something that, if addressed, could help to spawn a whole new generation of technology global leaders – ones that are based in Ireland, employing in Ireland, exporting from Ireland and contributing significantly to our GDP and GNP figures.
We have the ideas and the ambition, but Ireland’s high-tech entrepreneurs also need the deep and long-term funding support to attract execution expertise and global attention for their breakthrough ideas. It would be great if we could crack the funding challenges as then, the world truly would be the oyster of the Irish tech visionary.
John Dunne is co-founder of Intune Networks, the overall winner of The Irish Times InterTradeIreland Innovation Awards 2011