After last week’s column with Shane McCarthy on growing a startup ecosystem in Limerick, Kehlan talks with Eoin Costello of Startup Ireland about the budget
What did you make of Budget 2016 from a start-up point of view?
In our pre-budget submission, we highlighted a couple of areas. Capital gains tax for exits was one area that we highlighted and one where Ireland is at a big disadvantage compared with the UK.
Another issue would have been the ability for startups to raise capital quicker and more effectively.
Looking at this year’s budget, it has to be seen as an opportunity missed. The capital gains tax saw some headway, but the limit of a million euros doesn’t go far enough. If you’re a serial entrepreneur or investor, you’re going to peak at that million fairly quickly.
Our goal is make Ireland a global startup hub. In order for companies to see Ireland as attractive, foreign and domestic businesses alike, you need the ability for them to scale fast. The Collison brothers and Stripe would be a great example of what that means. A company that’s grown quickly, with jobs and innovation as part of its effect.
What the Government has done in this budget is certainly a step in the right direction, but will need to be addressed again within the next 12 months. Don’t forget, just over the border in the North, companies can register there, start up a company and avail of all the UK system’s advantages.
That puts us at a significant disadvantage to our nearest neighbour. We have to make sure that we are, at the very least, as competitive as the UK. Right now we’re not.
The Knowledge Development Box (KDB) was a positive announcement though?
That is a positive thing. We recently had the Startup Gathering event across Ireland and at the Cork event we had the head of R&D from Motorola come and speak. He spoke about how the R&D facilities of the multinationals located in Tel Aviv have become a significant advantage to the startup ecosystem in Israel.
The more Ireland can create knowledge- intensive jobs, the more Ireland can benefit from that by spilling over knowledge, skills and talent.
The great thing about the KDB is that it is OECD-compliant. Ireland has had excessive focus on our corporate tax rate and that distracts from our really positive story in terms of our track record with top multinationals coming to Ireland.
That will allow us to change the narrative to one that is much more constructive. We would argue that start-ups are the new FDIs. A lot of foreign direct investment companies look at the startup picture of a city now.
How a city or country treats its startups is a good indication of how innovative and competitive it really wants to be. Startups can also develop technologies much faster than large multinationals can.
So, multinationals want to be in places where they can invest in start-ups, they can partner with them or even buy them out to fill a whole product set they might need.
So there were some positives, but they were just few and far between?
It’s a work in progress. It hasn’t delivered all that was hoped for the startup sector. However, there does seem an attitude change on behalf of the Government to recognise the importance of having a startup ecosystem and that it can be advantageous in acquiring innovative FDI companies to set up here in Ireland.
The Department of Jobs and Innovation has made a point to recognise start-ups in the past number of their ‘Action Plan for Jobs’. This, I think, shows the growing strategic importance that start-ups play in our economy.
So it’s a work in progress and we’ll keep highlighting the changes that need to be made until we’re at least on parity with the UK.
A number of people have mentioned that there now needs to be practical solutions for startups in Ireland, rather than simply talking about solutions; would you agree?
Yes, I would and I would say that that is what Startup Ireland is all about. What can we practically do tomorrow to positively impact on start-ups? Not next week or a month from now, but right now.
I met two gentlemen while we were travelling around Ireland for the Startup Gathering. One created and developed his company in the Gaeltacht area and sold it for €170m.
The other developed his company in Tralee and sold it for €130m. It’s very possible with digital technology, 3D printing and open source architectures to build a scalable business anywhere in Ireland.
You don’t need to be located exclusively in cities. That is a key message we’re trying to put across. The practical steps forward are about starting with early stage startups. How does each city create a much bigger pipeline of people looking at exciting ideas and moving towards implementing them.
The analogy I often use is rugby. If you want an elite top 20 that can compete on the international stage like we were at in the World Cup, you start with the schools. Developing the right startup ecosystem is no different.
You start with the early stages and you build that talent pipeline from the earliest opportunity. That is one of the things we need to practically and proactively do here in Ireland.
What was your impression of the Startup Gathering, it seemed to project a great image of Ireland?
Well, Kehlan, I must that say it was really positive. Every city has grabbed the startup agenda and ran with it. It was great to have the forums we did in each city. It was important to note the talk wasn’t just about creating a startup community but creating ones which played to the strengths of the cities.
If we look at what the Netherlands did; it looked at all the industries located within it and looked at the strengths of each region. So, instead of cities competing against each other we’re going to focus on the strengths of each city.
So, in Limerick it could be life sciences or ICT, for Waterford it could be agri-food and technology and instead of competing against each other, the focus turns internationally.
Let’s start differentiating our startup ecosystems in each city and then build the narrative internationally as to why that city would be great for entrepreneurs and investors. So we had great speakers and people talking about, as you said earlier, what they are practically doing in their area to develop startups.
It is something we have to keep working on. We had 410 events this year and it created a real buzz with new partnerships and collaborations being made.
We would really like to keep it going because we feel an annual event will help build a much stronger and longer lasting startup ecosystem across the country.
I know you’re going to be at Startup Weekend Limerick at the end of November. That is more of what we need to keep doing.
Bringing ‘learning by doing’ activities out into the open. Entrepreneurship is a ‘learning by doing’ activity. It is not an academic activity, it’s not something you can study. It is something that you have to experience and refine and get better and better at.
As I said earlier, our goal is to be a country that is recognised for our startup community globally. We know what needs to be done, so it’s time to start doing it.
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