Ireland goes to seed

In an attempt to kick-start Ireland’s early stage venture market, Bank of Ireland (BOI) and Enterprise Ireland have launched the Bank of Ireland Seed and Early Stage Equity fund with €26m of commitments.

The fund will be managed by Dublin-based Kernel Capital, an Irish VC firm with a close relationship with Bank of Ireland, and will back export orientated start-up companies that operate in the technology, green technology, food and financial services sectors. It will also support patent and patent pending projects within universities. The fund is aiming to finance as many as 50 companies by allocating chunks of €500,000 – €1m to early stage companies.

Sources close to EVCJ revealed that Bank of Ireland was less than enthusiastic about the fund but was forced into backing the project through ‘government arm-twisting’.

The latest fund is the eighth new fund backed by the Irish government through Enterprise Ireland’s Seed and Venture Capital Programme 2007-2012. To make up the €26m, BOI invested €17m, Enterprise Ireland provided €8m and the University of Limerick Foundation committed €1m. It is also the second seed fund launch from an Irish bank in the past two years. In 2007, Allied Irish Bank (AIB) teamed up with Enterprise Ireland to create a €30m fund that would be available to seed and early stage companies.

Regina Brehany, director general of the Irish Venture Capital Association (IVCA), believes the gap between seed funding and growth capital has widened as traditional funds have moved away from seed financing in the downturn.

For the future the IVCA is not anticipating that there will be many new entrepreneurs coming to the market as there isn’t the safety net of a buoyant job market to provide a fall back plan for those who are taking a chance. Beneficiaries of the latest fund will therefore likely be repeat entrepreneurs. “The Bank of Ireland seed fund is part of a government emphasis on what they call a ‘smart economy’ which is aiming to create successful technology companies to attract foreign direct investment (FDIs),” says Brehany.

For more information on Irish venture see December/January issue of EVCJ