Some of the country’s most promising State-supported startups are creating jobs at a net cost of €28,254 per position.
Hundreds of young firms identified by Enterprise Ireland as high-potential startups (HPSUs) have received over €110m from the State’s enterprise agency since 2010.
Of that total, €6.1m has been funnelled into companies so far this year meaning €104.7m was given to startups to the end of 2014.
In that time, the State-supported HPSUs created 3,706 jobs — 88% of which are full-time positions — meaning one job was created for every €28,254 of funds distributed by Enterprise Ireland.
The agency said the vast majority of its investments are equity-based and as such deliver additional payback over time.
It argues that the net cost per job is significantly lower than €28,254 as a result of the financial return on investment it achieves and the long-term jobs gain.
“Enterprise Ireland invests by way of cumulative convertible redeemable preference shares or on similar terms as private sector business angels or venture capital funds,” said a spokesperson.
“Enterprise Ireland thereby achieves both a financial return on the investment it makes in HPSUs as well as achieving economic impact.”
The high-potential startup programme is a central tenet of Enterprise Ireland’s job creation strategy.
Its role in funding early-stage firms deemed to be among the most likely to succeed fills an investment gap that often holds firms back.
“Enterprise Ireland support is primarily by way of direct investment in HPSUs in part to alleviate the limited market availability of early stage funding for startups in Ireland,” said the spokesperson.
“HPSUs are early-stage innovative companies that are targeting significant growth resulting in job creation over the long-term.
“Startups by their nature are risky investments and a number will achieve significant growth and job creation and others will fail or achieve limited growth.”
A 2014 review of the HPSU programme conducted by Forfás found it had a positive long-term benefit relative to its cost.
The most recent trade data — based on a voluntary survey which achieved a response rate of 69% — shows that 331 of the 476 HPSUs approved between 2010 and 2014 reported exports totalling €157.7m.
© Irish Examiner Ltd. All rights reserved