The Irish lead the way

This isn’t a post about The Open. Something bigger than chasing the white ball around a course in Scotland.

Courtesy of AltAssets, I’ve come to learn that the Irish Government has re-launched a 500 million euro venture capital fund:

The Irish government has initiated plans for a €500m venture capital fund to help finance innovative small companies in the country.

Half of the capital for the Innovation Fund is to come from the state, with the intention being to raise the other half from private funding. Irish Prime Minister Brian Cowen launched the fund at the New York Stock exchange earlier this week, with the US presented as one of the key targets for fundraising.

The fund had been on the government’s policy books since 2008, but was put on hold as a result of the downturn. Ireland was particularly hard-hit by the global economic downturn, with real GDP falling to -7.5 per cent in 2009, and predicted to contract by a further three per cent, according to the IMF.

Venture capital has been presented as a solution for funding the growth and start-up of new companies in a difficult economic environment. Funding for Irish technology firms increased by 18.6 per cent in 2009 according to the Irish Venture Capital Association, to €288m.

Cowen said, “Venture capital is an essential ingredient for supporting entrepreneurs and ensuring that businesses can scale and create jobs. Lack of finance consistently emerges as a key impediment for innovative firms.”

As a sum of money, this is huge for a nation with about 4.5 million people — 111 Euros a person, or C$147 (of which half will come from the private sector). If you add up all of the Federal buckets of venture capital in Canada (BDC, EDC, SODA, SDTC, etc.), you might math your way to $1.6 billion; and much of those funds were invested years ago.

For a population of 34 million, we are garnering merely $47/head; Canada needs to procure an additional $2.2-$3.4 billion of new venture capital just to match what the Irish Prime Minister is trumpeting at the New York Stock Exchange.

Representatives of the CVCA had a great first meeting with our Prime Minister last May (see prior post “Venture Capital gets on PM’s agenda” May 25-10). Let’s take the next step as a Nation, and declare that the Innovation Economy is important.

MRM