'War on talent’ creates need for start-up funding

The woman in charge of developing Dublin’s start-up ‘ecosystem’ is confident the Government will introduce tax breaks for people looking to invest in early stage companies which would unlock a huge warchest of crucial funding.

Dublin Commissioner for Start-ups Niamh Bushnell is optimistic that a proposal made by the Dublin Start-up Leaders Group, which aims to make it easier for ordinary workers to invest in start-ups, will be unveiled in the upcoming budget, releasing up to €100m of early stage funding forcompanies.

With Central Bank figures showing more than €98bn being held in short-term deposit accounts, accessing just a fraction could provide a huge boost to start-ups and help them compete for talent.

“Are they going to do it this year? I hope so and I think so because sadly it’s going to take a while for it to be enacted anyway. It’s one of those things that should be announced this year and then we should get to it as quickly as possible. It won’t be a month or two it will hopefully be less than a year before it comes to fruition but I’m very optimistic about it,” said Ms Bushnell.

“The real issue around talent is that start-ups need to be funded well enough at a certain stage to be able to compete for the talent and that’s one of the things we’re talking about with this SEIS programme. If you’re a company that has come out of the blocks, you’ve got some initial very small funding, you have a minimum viable product and what you neednow is €100,000 to €200,000 to really make the product whole, get actual customers and revenue on board and start that early scaling process. That’s where companies fall down here.

“If companies could get that money more easily they will be able to compete for the talent they need to keep moving forward faster. There’s awar on talent and funding is a massive part of that; those two are massively interconnected.”

Ms Bushnell and her colleagues in the Leaders Group have lobbied the Government to establish a scheme along the lines of the UK’s Seed Enterprise Investment Scheme (SEIS) which offers tax relief to potential investors.

Investments of up to £100,000 (€140,000) have an income tax relief sweetener of 50% while investors also benefit from 50% capital gains tax relief if assets are reinvested in an SEIS qualifying company.

While Ms Bushnell accepts the scheme won’t be for everyone, there is a significant proportion of the population that would be more than willing to invest if SEIS makes it into this year’s budget.

A wider range of funding sources including the SEIS scheme is needed forstart-ups to fulfil their potential and create a wider discussion around which type of funding is right for each individual company.

Some start-ups are overly focused on gaining the backing of venture capitalists to the detriment of their business, she added.

“Sometimes start-ups just see funding as kind of like a badge of honour or a credibility thing when the product could be in the background and they could be spending all their time getting funding,” said Ms Buchnell.

“There’s way too much hype and there is a machine pushing you towards getting funding. You have to step out of that machine.”

Most B2B companies should try to get paying customers as early as possible, Ms Bushnell said, whereas for B2C firms, focusing on revenue too early could distract from the overall product vision to its long-term detriment.

The serial entrepreneur, who returned to Dublin after more than 15 years in New York to assume her new role last October, said that the ecosystem she has found upon her return has impressed her greatly.

Specifically, the potential that lies in the mix of start-ups and multinationals is particularly exciting and one of the capital’s largest selling points.

“One of the things that Dublin has that no other city has pretty much is that confluence of great start-ups, great multinationals and a great ecosystem. No one else has that,” said Ms Bushnell. “No city I know of has the multinational influence we have here and the potential that that brings to the start-ups and vice versa.”

As part of a survey of multinationals seeking to determine their level of engagement with start-ups in the city, a number of companies have expressed a desire to do more in that regard — a sentiment Ms Bushnell feels is genuine rather than a deflection tactic.

“I’m sure in some cases it might be an excuse but these companies need to be influenced by the innovation that’s happening around them and they’re hungry for that,” she said.

Seeing a start-up co-ordinator appointed by multinationals would be a welcome development as would the marketing of programmes those firms offer start-ups.

Some firms such as financial services company Citi and Bank of Ireland are offering start-ups space in which to work which is something Ms Bushnell would like to see replicated elsewhere adding that landlords need a better understanding of entrepreneurs’ needs.

“People invested in all stages of property here, whether it’s Dublin City Council, the Office of Public Works, or private developers — they need to understand the needs of start-ups and how they change over time; why they need flexibility and simple things like they’ll pay,” said Ms Bushnell. “Look at Dogpatch [Labs], it’s full and they’re all paying. Look at the co-working spaces around town, they’re all paying for their desks.

“What I’d love to see is us having more space for the early-stage companies in the city, that elbow-to- elbow stuff is absolutely crucial forstart-up communities to start and thrive and there is more of that comingon stream.”


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