The Irish financial technology sector needs more regional venture capital firms and a greater number of investments of up to €2m to realise its full potential, a leading expert has claimed.
Con Quigley, corporate finance partner and venture capital analyst with financial services firm BDO, said Ireland has an “exceptional ecosystem” for financial technology companies but said it must also address some key issues.
Chief among these issues is the lack of investments of €500,000 to €2m to help companies scale.
Mr Quigley said the dearth of available funding of this scale is the big problem for Ireland, which otherwise punches above its weight.
His comments echo those of Trustev founder Pat Phelan, who recently launched a €25m investment fund along with financier Illann Power to help startups moving past seed funding and looking to scale globally.
Mr Phelan argued that the Irish venture capital sector is not strong enough and does not have enough funding to support companies looking to scale in the US and elsewhere across the world.
“We don’t have enough funding, venture [capital funding] isn’t strong enough here,” said Mr Phelan.
“There are companies that are raising small amounts of money that have opportunities to grow much larger, much quicker and are kind of stuck in that space of post-seed round, pre-A round where they haven’t the money to go global.”
Irish companies struggling to scale has also been an issue with Enterprise Ireland-supported companies for some time, leading the agency to place an increased focus on addressing it in the last year or so.
Responding to figures released by the Irish Venture Capital Association which showed major regional imbalances in where firms were securing venture capital funding, Mr Quigley said that more venture capital firms need to be based outside Dublin to help support the technology sector.
While the success of Dublin, which attracted 80% of first quarter 2016 Irish venture capital funding, is very important for Ireland’s success generally, more regional focus is needed to support companies in Cork, Limerick, Galway, and elsewhere.
“It’s not a case of Dublin doing too well, it’s that the rest must do better,” he said.
More boutique, or specialised, venture capital firms would also be of significant benefit to individual sectors such as financial technology, Mr Quigley added.
Rather than seeing Ireland’s proximity to London as a disadvantage to our technology sector, having one of the world’s most important financial hubs an hour away is a major advantage.
“There’s a great opportunity in Ireland, we need to maximise our closeness to London,” said Mr Quigley.
“It costs multiples of what it costs in Ireland to set up in London.”
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