I have been slightly surprised that few commentators in the general business media in Ireland have apparently appreciated the significance. In my own view, the announcement today is as immense to Ireland’s economy policy as was the 1958 decision to open Ireland up to foreign direct investment (FDI), resulting in a re-focus by the IDA and the establishment in Ireland of overseas companies such as the LEO Group and Liebherr.
Ireland has an outstanding, and extremely highly envied, track record in attracting FDI. Whilst continuing our leadership and focus on attracting overseas multinationals, we now have a wonderful opportunity to augment this with attracting foreign risk capital. Indeed, the two are mutually synergistic: multinationals can exploit an economy of highly vibrant dynamic innovative young companies, licensing and acquiring exciting new technologies and bringing these to the global market; and young companies can exploit the channel opportunities, the exit possibilities, and dormant IP licensing available from multinationals. Further, the multinationals present in Ireland are increasingly collaborating with each other in cross-discplinary, cross-market synergies: as one senior manager told me, “the only time in the US we talk to company XYZ is in the courts; but here in Ireland we are sharing and working in ways which would be extremely unlikely to ever occur in the US..”
Israel, rightfully, has been lauded as the success for venture capital put to work in Europe. However it is my view that the Israeli model is faltering, not least due to political considerations, the continued threats to the State (including from Iran), and the damage to international perception caused by the ongoing challenge of the Gaza strip. Further, as Dan Breznitz writes, it is unclear to what extent Israeli society at large has benefitted from US based venture capital: wealth has been created for a relatively few Israeli nationals, but much of the generated wealth has benefited foreigners (in the US…) rather than ordinary Israelis. This is one lesson from Israel to which we in Ireland should pay careful attention: we need to put our own risk capital to work alongside foreign risk capital…
I sincerely, powerfully believe that Ireland has a unique opportunity. Only Ireland has the depth and breadth of multinationals, built up since 1958: no other jurisdiction or location has this. Ireland has an international reputation as a politically stable, neutral, and friendly jurisdiction – as well as one which combines a strong artistic and literary tradition with a propensity to innovate and overcome challenges. There is an enormous global Irish diaspora – larger than the Israeli and Indian diaspora combined! – which creates immense opportunities for Irish based companies. Europe does not yet have a strong hub for commercial exploitation of innovative R&D: there is a vacuum in Europe. Ireland has had the strongest track record in attracting foreign direct investment. It is now about to extend this with foreign risk capital, augmented – unlike Israel – with its own risk capital, both private and State.
If you are an innovator and entrepreneur in Europe – or indeed anywhere else – Ireland now really should be on your radar screen.
PS: since this was originally posted, the full composition of the Advisory Group to the Taioseach for the Innovation Fund has been announced. The members are: Damien Callaghan (Chair), of Intel Capital; Hugh Brady of UCD; Bernard Byrne of AIB; Peter Clinch, Taoiseach’s economic advisor; John Corrigan of the NTMA; Bernie Cullinan of Clarigen; Frank Gannon of SFI; Martin Kelly of IBM’s VC Group; Barry O’Leary of the IDA; Frank Ryan of Enterprise Ireland; and Helen Ryan of Creganna-Tactx.