Irish tech firms poised for expansion

By: March 28, 2014

Many in the Irish government and state services are quick to label Ireland as the ‘tech capital of Europe’, due mainly to the enormous amount of global tech giants who are here, not just for the weather, but also our proximity to European labour markets and generous tax laws. But what of our indigenous tech sector? How do small and medium Irish tech companies fare in an economy dominated by the big guns?

On the face of it, the indigenous Irish tech sector appears to be in rude health. 60% say they grew their turnover by 30% in 2013 and our home grown tech industry is estimated to be worth €2 billion in annual sales.

Over 30,000 people are employed in some capacity in Irish-owned tech firms – more and more of them appearing on the books of start-ups.

Irish techies are also quite optimistic. The Amárach Research ‘Technology Outlook Report’, commissioned by AIB, suggests 87% of indigenous firms feel their outlook for 2014 is better than 2013 and three quarters (74%) plan to grow their workforce this year.

Start me up
Starting a digital company, or being part of a start up, is now no longer regarded as something people do with their redundancy, or delve into while in-between jobs. Start-ups, over 700 of them, are now a sector in themselves. “There are 27 accelerator/incubators in Ireland,” says John O’Dwyer, head of technology, media and telecommunications at AIB. “However, what our research shows is that there are not enough spaces available for Irish start-ups. Just 21% of start-ups get accepted to an accelerator programme in Dublin, while that figure is 42% for the rest of the country. The top tier accelerator programmes accept just 10% of the start-ups applying for space, mentoring and funding.”

So, while start-ups may be cool – getting support for your start-up is a different job entirely. “I do think Ireland, especially in the larger urban areas, needs more general office space for start-ups,” suggests O’Dwyer, “just general work sharing spaces where start-ups can go to receive affordable rent and share the same building as others with the same outlook.”

The cash pitch
Starting a tech firm is difficult and getting funding for your idea is even more difficult. While AIB claims to be the largest tech investor in Ireland, through its AIB Seed Capital Fund, only those start-ups that can prove demonstrable returns will be considered by investors.

AIB’s head of business banking, Ken Burke, says that while “start-ups and SMEs in the technology sector are poised for major expansion and job creation and the banking industry must respond positively to support our indigenous companies”, the same banking rules apply to any loan or investment. In other words, you must show the potential to create sustainable cash flow.

The report also profiles a few Irish start-up success stories like Trustev, Storyful and Soundwave. However, the clear message is this: it’s all very well to dream up the next billion dollar idea that will transform society in the digital age but you won’t get funding or support unless you can convince the purse string holders that your idea can earn cold, hard cash.